Japan — Major Financial Jurisdiction

Japan is the world's fourth largest economy (third-largest until 2023, before being overtaken by Germany) and hosts Tokyo as one of the most significant financial centers in Asia. The Financial Services Agency (FSA) regulates the Japanese financial sector, which is characterized by high market capitalization, a strong banking sector, and one of the largest bond markets globally.

• FSA (Financial Services Agency): Central financial regulator for banks, securities, and insurance.
• BOJ: Bank of Japan — central bank with unconventional monetary policy (negative interest rates until 2024).
• Capital Markets: Tokyo Stock Exchange (TSE) is one of the largest exchanges globally by market capitalization.
• Crypto Regulation: Japan was a pioneer in cryptocurrency regulation (Payment Services Act amendment, 2017; renamed to "Crypto Assets" in 2019 with derivatives regulation under FIEA).

Japan's modern financial system was built after World War II and heavily regulated by the Ministry of Finance (MoF). The 'Big Bang' deregulation of the 1990s opened the Japanese financial market to foreign competition and led to the restructuring of the banking sector after the financial crisis of the late 1990s. The FSA was established in 2000. Japan experienced another phase of regulatory reform after the 2008 global financial crisis, particularly in corporate governance and strengthening shareholder rights (Stewardship Code 2014, Corporate Governance Code 2015).

The Japanese financial jurisdiction regulates:

• Banks and credit institutions (Banking Act)
• Securities trading and capital markets (Financial Instruments and Exchange Act, FIEA)
• Investment funds and fund managers
• Insurance (Insurance Business Act)
• Cryptocurrency exchanges and digital assets (Payment Services Act)
• Financial and investment advisory
• Data protection (Act on the Protection of Personal Information, APPI)

• FSA Registration/Licence: Mandatory for all regulated financial activities in Japan (e.g., Type I/II Financial Instruments Business).
• Corporate Tax: Effective rate approx. 29.74% for large corporations (capital > JPY 100m); approx. 34.59% for smaller corporations. From April 2026, rates increase due to defense surtax.
• Withholding Tax: 20.315% for residents on dividends and interest (incl. surtaxes); 20% (15% for listed shares) for non-residents under domestic law, reducible by tax treaties.
• AML/CFT: Strict anti-money laundering requirements; Japan is a FATF member.
• Corporate Governance: Compliance with Corporate Governance Code for listed companies.
• Data Protection (APPI): Compliance with the Act on the Protection of Personal Information; significantly reformed in 2020/2022.

2 corrections:
- Japan is no longer the third-largest economy
- No standalone 'Virtual Currency Act' — Amendment to Payment Services Act
6 clarifications.
3 notes.