Representative offices, etc., through which a foreign corporation engages in business in Japan are not supposed to derive any income subject to corporation tax from publicity/advertising, information provision, market surveys, basic study and other activities auxiliary to the performance of its business. It is not permitted to engage in sales activities.
When the activity exceeds the auxiliary activities described above, the representative office is taxable as Permanent Establishment (PE)*. Also, since the business year commencing on or after January 1, 2019, even if the activities of the foreign corporation or a person who has a special relationship with the foreign corporation are preliminary or supplementary in nature, they may fall under the category of PE if they fulfill a complementary function for an integrated service.