If you do business in Japan through a subsidiary company or office then that company or office will be directly liable for Japanese income tax and you should expect it to be audited by the tax authorities within 3 - 5 years of starting Japanese business. If you do business in Japan solely through a bona-fide economically independent 3rd party distributor then you will not be directly audited because you will have no Japanese income tax liability. Japan's tax codes place the initial burden of collection and payment of applicable withholding taxes, consumption taxes and tariffs on the Japanese importer. The independent distributor will be subject to audit though; at which time its contracts and the transfer prices paid to you, may come under scrutiny.