A. Background:
Recently, the Immigration Service Agency of Japan proposed changes in its immigration regulations. These changes may have an impact on the Indian nationals intending to travel to Japan for employment purposes. These changes pertain to the expansion of eligible industries and the reduction in processing time for obtaining a Certificate of Eligibility by Information Technology (IT) professionals.
Further, Luxembourg authorities have made changes in the penalty imposed in case of certain immigration violations. This includes higher fines imposed on employers for employing foreign nationals without proper work or residency rights.
We, at BDO in India, have hereunder analysed and summarised the key changes1:
B. Change/Development:
1) Japan:
a) Special Skilled Worker-2 Visa expansion:
The Japanese Immigration Services Agency has announced the Cabinet's approval for expanding the list of industries eligible for the Specified Skilled Worker (SSW-2) visa, set to take effect later this year. This move is in response to the pressing need to alleviate labour shortages in the country.
Previously, the SSW Type 2 Visa was exclusive to workers in the construction and shipbuilding industries. However, in July 2023, the Japanese government proposed significant changes to broaden its scope.
The proposed expansion encompasses nine additional industries, including building cleaning management, industrial machinery manufacturing, automobile maintenance, aviation, agriculture, fisheries, food and beverages manufacturing, food service, and lodging. This initiative is designed to attract skilled workers from these sectors, offering them the opportunity to establish a permanent presence in Japan under the SSW Type 2 Visa.
b) Reduction in time for obtaining Certificate of Eligibility for IT professionals:
Foreign nationals planning to work for IT companies in Japan are required to undergo the process of applying for a Certificate of Eligibility (CoE) and a work permit before they enter Japan, which typically takes around three months. However, a significant alteration to this system is on the horizon, with the proposed change expected to take effect later this year. This change will be implemented within designated National Strategic Special Zones, where IT professionals can potentially secure COE in as little as one month. To further streamline this process, Japan will implement a system wherein local governments will pre-certify companies. Regional authorities will scrutinise a company’s financial standing and job particulars, to assess its proficiency in managing resources for hiring foreign talent. Companies meeting these requirements will be granted official approval to employ foreign IT professionals.
2) Luxembourg:
Tougher Penalties for Immigration Violations
Luxembourg has recently implemented substantial changes in its immigration policies. As of 1 September 2023, an enhanced penalty regime has been put in place to regulate the employment of foreign nationals without appropriate work or residency rights.
The new penalty regime introduces several key modifications:
i) Increased Administrative Fines: Employers who hire foreign nationals lacking appropriate work or residency rights now face higher administrative fines. The maximum fine has been elevated to EUR 10,000 per foreign national hired, up from the previous EUR 2,500.
ii) Introduction of 'Irregular Situations' Offence: The regime introduces a broader offence – hiring foreign nationals in 'irregular situations.' Employers found guilty of this offence will also be subject to an increased administrative fine.
iii) Severe Breach Consequences: Employers who severely breach these rules may face fines ranging from EUR 2,501 to EUR 125,000 and/or imprisonment lasting between eight days and one year. The severity of the penalty depends on the gravity of the offence and the presence of aggravating circumstances such as repeated violations, simultaneous illegal hiring of multiple foreign nationals, hiring victims of human trafficking or minors without authorisation, or imposing abusive working conditions, including gender or other forms of discrimination. In the past, the maximum penalty for such aggravated offences was a fine of up to EUR 20,000 for each foreign national illegally hired, while prison sentences remained unchanged.
C. BDO in India Comments:
Japan's expansion of eligible industries offers new work opportunities for skilled individuals looking to work in Japan. However, it's essential to recognise that despite these broader prospects, the application process will remain demanding, with stringent requirements such as Japanese language proficiency exams posing a challenge for prospective candidates.
Additionally, Japan's forthcoming system is set to substantially alleviate the administrative burden on regional immigration offices by reducing the processing period for IT professionals' Certificate of Eligibility from three months to a much more efficient timeline. These changes indicate a significant improvement in the immigration process for qualified professionals.
Luxembourg's stricter penalties for immigration non-compliance are substantial. Employers are now required to exercise increased diligence when hiring foreign nationals to ensure compliance with work and residency rights. The elevated fines serve as a potent deterrent against non-compliance, underscoring the paramount importance of adhering to immigration regulations.
BDO in India will continue to monitor these changes and provide clients with the necessary guidance to navigate them effectively.