Navigating Construction Business and Permitting Requirements
The term “construction business” within the Construction Business Act encapsulates activities involved in the fulfillment of construction work, spanning main contracts, subcontracts, and various designations related to construction. Contracting refers to an agreement where one party commits to completing work in exchange for remuneration. However, it’s essential to note that activities like the sale of ready-built houses, commission contracts, research studies, or goods sales are distinct from contract work. Yet, even the sale of goods, if intertwined with construction activities for a client, might fall under the purview of engaging in the construction business.
Instances Mandating Permission:
Engaging in a construction business usually doesn’t demand a construction license if the contract value remains below specific thresholds. For most cases, a construction license isn’t mandatory if each contract is less than 5 million yen (except for general building work). In instances of general building work or wooden house constructions with floor areas below specified limits, termed “simple construction,” a license might not be required. However, in scenarios where a project is divided into multiple contracts, the total value of each contract is aggregated unless under justifiable grounds. Importantly, the Construction Business Act applies solely within Japan and doesn’t extend to construction projects in foreign nations. Foreign companies can obtain licenses if they fulfill the stipulated criteria.
Permits by Authorities:
The issuance of permits varies based on the company’s business office distribution across prefectures. Companies with offices in multiple prefectures are licensed by the Minister of Land, Infrastructure, Transport, and Tourism. On the other hand, if a company operates solely within a single prefecture, the licensing authority is the governor of that specific prefecture. It’s important to distinguish a business office conducting substantive activities related to contract conclusion, from a liaison office focused on clerical tasks. A governor’s permit isn’t restrictive to operations within a single prefecture. For instance, a construction business licensed by the Governor of Tokyo can undertake projects in various prefectures. However, relocating a business office may necessitate acquiring licenses from the new location. Additionally, foreign companies aspiring to establish construction businesses in Japan must meticulously consider the location of their business office. Failure to do so might require obtaining licenses from additional prefectures if the office relocates. Understanding these permitting intricacies is vital for seamless operations and compliance within the construction sector in Japan.
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