One-stop Accounting, Taxes, and Payroll services for foreign companies

Ranging from startups without dedicated staff to handle accounting, tax and payroll processing , to medium-sized MNEs desiring to focus on core business activities by outsourcing back office operations, we at EY are able to customize our services to your needs - whether it be for a single service (e.g. payroll calculations) or a combination of services (e.g. accounting and tax return preparations).

Accounting services

Accounting services include collection of bookkeeping data and preparation of reports.

  1. Settlement of monthly or quarterly accounts; Our USCPAs and tax accountants will provide assistance with the preparation of financial statements in compliance with basic accounting guidelines for Japanese SMEs, generally accepted accounting principles (GAAP) of the US or International Financial Reporting Standards (IFRS) and conduct periodical reviews thereof.
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  3. We also support the preparation of monthly financial statements and accounting reports that are submitted to overseas parent companies.
  4. By using our unique online accounting application known as WebAccountingManager, your company’s headquarters will gain access to accounting data.
  5. Accounting data that have been entered can be uploaded to various enterprise resource planning (ERP) systems (e.g. NetSuite and other Oracle products, Microsoft Dynamics NAV and SAP).

Tax services

Through our tax services, we comprehensively support tax-related operations in partnership with Ernst & Young Tax Co., beginning with the preparation of notifications.

Tax return services

  • Corporate tax
  • Corporate enterprise tax and corporate inhabitant tax
  • Consumption tax returns
  • Depreciable assets tax
  • Business facility tax
  • Company business overview

With regard to tax audit compliance and coordination of tax matters with overseas parent companies or overseas head offices, we can provide explanations to parent companies to facilitate smooth communication.

Payroll services

Payroll services include the following operations:

  1. Salary-related operations, starting from payroll calculations to the sending of salary statements, payment preparations and preparations of withholding income tax and residence tax payment statements
  2. HR support such as preparation of labor insurance and social insurance documents and the drafting of employment rules (EY Social Insurance and Labor Advisors Corporation will provide this service.)
  3. Calculations other than payroll calculations, such as gross-up calculations and estimates

Payment support services

Payment support services include a series of coordination work until payments are completed. We also provide fund procurement support while reporting to the headquarters concerning the status of deposits and payments.

  • Review of accounting data that has been input by your company

    We will examine journal entries that have been recorded in light of foreign accounting standards and group policies, and propose adjusting entries for the purpose of preparing financial statements that will be attached to tax returns. Besides comprehensive accounting reviews, we also provide area-specific support such as, reviewing employee expense reimbursements, AP module input and management.

  • ERP/Shared service support (overseas journal entry support and services to optimize consumption tax recording)

    ERP/Shared service support

    Do you find the recording of journal entries into the accounting system and ERP system of your parent company burdensome? If that is the case, EY staff can visit your office and carry out this task on your behalf, or from an EY office by establishing a VPN connection. We will efficiently provide effective co-sourcing services by assigning the right staff for the right task. EY staff have experience working with various systems such as SAP, Oracle or Microsoft Great Plains. We also may contact your parent company as necessary to carry out operations.

    Service support for handling shared service center operations

    The number of companies relying on overseas shared service centers (SSC) to carry out their bookkeeping operations has increased, and relevant ledgers are usually created in English. There have even been cases in which Japanese consumption taxes and withholding taxes have not been processed accurately. Furthermore, when accounting and tax treatments differ, there has been an increasing number of companies that must go through the additional burden of communicating with overseas SSCs to maintain consistencies between their ledgers and prepare tax return documents. EY provides SSC service support by contacting SSCs, clients and contract accounting firms that prepare tax returns in order to prepare financial statements and account breakdowns required when filing tax returns, consumption tax statements and documents required for pro forma standard taxation. We can also prepare worksheets that are necessary for filing tax returns.

    Consumption tax record optimization service

    Due to the turbulent economic environment in recent years, branches and subsidiaries of foreign companies located in Japan are being forced to cut down on costs.
    As part of such efforts, there is a trend of relocating back office functions (accounting, HR, payroll calculations, etc.) to SSCs in other countries or parent companies. As a result, the accounting systems used by SSCs or parent companies have a tendency to produce errors of not recording Japanese consumption tax transactions properly. The issue becomes even more complicated due to the fact that Japanese consumption tax is not always indicated in invoices, statements, receipts and other evidential documents. For this reason, such issues tend to surface at the end of the fiscal year, and some companies are unable to submit consumption tax reconciliation worksheets which are required by Japanese tax authorities to be prepared for the submission of consumption tax returns.

  • FAQ

    Financial report accounting

    Q1. Are you (i.e., EY) able to input data into our (i.e., the client’s) ERP (NetSuite)?

    A1. Yes. We are able to input data directly into your company’s ERP accounting system. In many cases, it is more efficient to initially input data into our cloud application from the perspective of handling consumption tax. The standard outsourcing procedure is to input your company’s transactions in accordance with your company’s chart of accounts using a Japanese-English cloud application (“WebAccountingManager (WAM)”). If you would like to import accounting data to your headquarters’ ERP system, We have several EPR interfaces (e.g. NetSuite, Dynamics and SAP).

    Q2. How will monthly reports be prepared?

    A2. After closing the monthly ledgers, we will notify you once the latest reports (e.g. trial balance, the general ledger, income statements by segment) in WAM becomes available for viewing. We are also able to provide English monthly BS account prepared in a format of your choice or based on our standard template reconciliations.

    Q3. Are you able to book entries based on generally accepted accounting principles of the US ( i.e.US GAAP)?

    A3. In general, we are able to prepare ledgers based on US GAAP so long as your company does not have specific regulatory reporting requirements. We have a large number of qualified staff in our professional team who have passed all sections of the USCPA exam.

    Q4. Communication in English is required, but are EY staff able to communicate fluently in English?

    A4. We provide in-house training and educational allowances and regularly have our employees take the TOEIC test to ensure they maintain a certain level of English proficiency. The majority of our employees have scored 900 points or more on the TOEIC test and are able to correspond with English-speakers via email without any issues. In situations where you a high level of English-languageis necessary, other EY staff from inside or outside the Client Service Team will participate in telephone conversations and meetings.

    Q5. Is it all right to dispose of invoices and receipts that we have received in paper form?

    A5. If you are unable to meet the following requirements, you will be required to print them and preserve them for a period of seven years in preparation of future tax audits:


    Invoices and receipts received in paper form:
    In order to scan and store paper invoices issued by vendors or receipts submitted by employees to be reimbursed for company expenses:

    a. For 31 December 2021 or earlier
    approval from the tax office is required. *Furthermore, some of the major requirements that must be met are as follows: 

    (1) Appendage of a timestamp 
    (2) Retention of a search function
    (3) Placement of restrictions on the period data can be entered
    (4) Appropriate administrative process requirements

    b. For 1 January 2022 or thereafter
    approval from the tax office is not required.
    Utilization of a system where the act of revising or deleting electromagnetic records can be confirmed (or a system where such revisions/deletions cannot be conducted in the first place) may be permitted in place of the appendage of a timestamp mentioned in a. (1) above. Also, requirement (4) will be abolished.


    PDF invoices:
    For clients to store PDF invoices sent by vendors in the form of electromagnetic records, one of the following requirements must be met: (1) Appendage of a timestamp; (2) establishment of administrative process rules; or (3) utilization of a system in which data cannot be modified.

     

    Payroll calculation, social insurance and labor insurance procedures

    Q1. Please explain details of new employee acceptance procedures.

    A1. Responsible HR personnel (the Human Resource Administrator (hereinafter, the “HRA”)) will access EY’s personal information management system known as the Employee Profile System (EPS), enter basic employee information (including corporate email addresses, but excluding salary information), and issue EPS links to each new employee. The new hires will access the EPS via the links and enter their personal information. The HRA will then confirm the details and, afterwards, the responsible EY personnel will receive a message. We will receive salary information from you via the Excel-based “Monthly Gross Pay Spreadsheet” template.

    Q2. How will overtime payments be calculated?

    A2. We will retrieve work hour information from the “Monthly Gross Pay Spreadsheet.” Another option is for us to obtain work hour management data from your company’s ERP system and calculate gross salaries pursuant to Japanese labor laws and your company’s policies.

    Q3. How should we communicate revisions in salaries?

    A3. Please inform us of any revisions in salary information via the “Monthly Gross Pay Spreadsheet.” Personal information will be obtained via the EPS system.

    Q4. Will you make arrangements for the payment of salaries, social insurance and employee insurance premiums?

    A4. We support clients to whom we provide “Payment Support Services” by preparing payment data and having the clients grant final payment approval.

    Q5. Will we be able to ask you to prepare notifications for receiving deductions of statutory benefits, and social insurance and labor insurance notifications?

    A5. EY will carry out procedures related to social insurance premium deductions, resident taxes and year-end adjustments for income taxes. Furthermore, in partnership with EY Social Insurance and Labor Advisors Corporation, we will carry out notification procedures related to social insurance, etc. We will also make arrangements to issue health insurance cards for employees and their family members who are deemed as dependents.

    Q6. How will we receive salary calculation results?

    A6. We will submit to you detailed salary statements in English or in Japanese. Preparations of salary statements by department will also be possible. In addition, we will prepare reports such as personnel expenses per employee that may serve as your company management or accounting materials. We will prepare paperless salary statements available on the web for each employee every month.

    Q7. Do you have in place a system where we can view employee information?

    A7. The above application, Employee Profile System (EPS), fulfills that function. Under ordinary circumstances, personal information of employees and their dependents and commuting expense information are collected using this application. HR managers will be able to view the data of all employees.

    Q8. Do you provide advice concerning the dismissal of employees?

    A8. We will respond to such matters in partnership with EY Social Insurance and Labor Advisors Corporation or EY Law Co. depending on the circumstances.

    Payment support services

    Q1. Can we have you manage our bank accounts and pay expenses on our behalf?

    A1. It is possible for us to open bank accounts for you at MUFG Bank, Ltd. under your Japanese corporation’s (or Japanese branch’s) name and make payment arrangements on your behalf. Furthermore, we can set up SWIFT MT940 services which will allow notification of transaction information on a daily basis through your foreign bank’s portal site.

    Q2. How should we send payment invoices to you? Should we send them directly to EY via post?

    A2. Please have the representative of your Japanese corporation, etc. or other designated persons sign the invoice. You will then be able to store the approved invoice in the portal site in PDF format. EY staff will enter payment data in the online banking portal site, and then ask you to grant payment approval. We are also capable of summarizing unprocessed invoices in English for the purpose of obtaining secondary approval from your parent company.

    Tax

    Q1. In the event we wish to outsource to you the preparation of tax returns, will we also need to outsource accounting services to you?

    A1. Even if you do not outsource accounting services to us, EY will prepare corporate income tax returns, local tax returns and consumption tax returns provided that you manage your accounting ledgers in Japan and in accordance with Japanese tax laws and regulations. If that is the case, we will request for you to complete a separate questionnaire.

    Q2. Do you provide transfer pricing advice?

    A2. We will introduce to you the department within our group that specializes in transfer pricing.

    Q3. Are you able to prepare BEPS’ country-by-country reports? How about master files?

    A3. Our assumption is that parent companies usually submit country-by-country reports (CbC reports). We are able to submit master files on behalf of your Japanese subsidiaries. It is the responsibility of shareholders to decide whether to preserve local files (documentation required to calculate arm’s length price) until the final tax return submission due date.

    Q4. Prior to filing the tax return, we need to have our US Tax Department review the tax return and grant their approval. Do you provide direct support for such a process?

    A4. Yes. We provide a service which includes preparing ledgers and tax return adjustment worksheets and directly contacting overseas tax departments.
    Additional fees will be charged for this service.

    Other

    Q1. Do you provide advice and support for registering a company in Japan?

    A1. This is an area that must be handled by Japanese lawyers and judicial scriveners. We will introduce you to EY Law Co.

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