According to the Nikkei newspaper, the Japanese government plans to punish 48 tech companies, including Twitter Inc., Facebook owner Meta Platforms Inc, and Alphabet Inc’s Google, for failing to establish their headquarters in the country.
Japan Set to Fine – Details
Foreign firms must register their headquarters in Japan by the end of March, according to the Ministry of Justice, so that headquarters can be formed by June 13. According to the newspaper, the government also stated that enterprises will be fined if they fail to comply with registration deadlines.
Nikkei said that if IT companies register their headquarters in Japan, consumers will have an easier time launching lawsuits when issues arise, such as defamation on social media sites. The government feels that appropriate registration is critical for consumer protection.
The following legislation is in line with Japan’s corporate code, which requires foreign enterprises to register their headquarters in the country regularly. However, foreign technology companies claim that they deliver their services over the internet and have no plans to develop their business in Japan.
These corporations also appear to have insisted on registering their Japan-based entities, such as those in charge of marketing operations, according to Nikkei. They’re also less likely to register because of the $7,400 corporate rectification charge.
According to the modified telecommunications statute, which went into effect in 2021, the 48 firms that the Ministry of Internal Affairs and Communication and the Ministry of Justice required to register have indeed posted notices of their commercial ventures.
Numerous businesses failed the June 13 deadline but alerted the Justice Ministry of their intention to register nevertheless. The ministry has a policy of not imposing sanctions on these companies.
Background Story of this Situation
Approximately 2 years ago, Japan’s Fair-Trade Commission (FTC) announced that it would collaborate with the United States and Europe to look into any market violations by the four Big Tech companies, also known as GAFA – Google, Apple, Facebook, and Amazon – which are addressing antitrust inquiry in various western countries.
Last month, the UK’s Competition and Markets Authority (CMA) said that it had launched an investigation into Google’s online advertising practices, which will last until early next year.
Meanwhile, Australia’s competition watchdog launched a lawsuit against Meta platforms in March, alleging that the social media giant participated in “false, misleading, or deceptive behavior” by spreading scam advertisements representing prominent Australian public figures.
Furthermore, fears of rising corporate taxes are causing overseas tech firms to postpone their registration in Japan. To address this, the Justice Ministry is establishing a method that ensures that a company’s tax burden is not increased if its agent’s power in Japan is restricted.