Business Registration in Korea : What are the Benefits?

TOPIC : Business in Korea Incorporation

Knowing the Benefits of Doing Business in Korea

Doing business in Korea is not about ‘What is Good?’ but it is all about ‘Why Wait if it is So Good?’

Korea is one of the liveliest and happening countries around the globe. Within a period, after its sensational and outstanding development, it has successfully retained its extraordinary history and heritage and also absorbed all the facilities and technology of the present times.

Korea is just the right place for the operational requirements of your business and also one that offers the best quality of life. A premium framework for MICE (Meetings, incentives, conferences and exhibitions), a secure and maintainable meeting place, a range of exclusive places to visit and experiences to appreciate and a lot more is provided by the MICE cities of the Republic of Korea.

The South Korean government has taken a number of steps since the last few years to attract more investment and entrepreneurs. The country is loaded with opportunities in various sectors, specifically electronics, agro foods, engineering, and automobiles.

The Process

If you are a foreign entrepreneur wanting to set up or run a sole business or a partnership/joint venture in South Korea, you will require a business or partnership visa. An application must be presented to the Korean embassy or consulate in your country (see Visa section).

A residence permit is also required from the South Korean immigration department. This takes a great deal of research and connecting with the authorities to know the type of business in South Korea that is best for you.

Businesses to Choose From

An entrepreneur can select from five different types of businesses in South Korea: the joint-stock company (Chusikhoesa), the general partnership company (Hapmyunghoesa), the limited liability company (Yuhanhoesa), the private limited company (Yuhanchaek-Imhoesa) and the limited partnership company (Hapjahoesa).

The choice of your business relies heavily on your objectives, tax impact and trade rules in South Korea. Majority of the foreign entrepreneurs start with a liaison office since its registration formalities are simple, apart from getting it registered with the national bank and the taxation office. The Foreign Exchange Transactions Act and the Commercial Act regulate the liaison office.

A foreign entrepreneur can also set up a branch of a foreign company in South Korea. For this, the branch must be reported to a defined foreign exchange bank and get the court registration, as well as the business registration done.

To form a commercial enterprise or limited liability company, the lowest capital requirement is 50 million Korean Won (about 36,000 euros).
Furthermore, the company repute must be endorsed by a notary and a founder must be hired for registration. Once this is done, the responsibility of managing the company will lie with its Board of Directors.

Incentive

Foreign direct investment (FDI) incentives work to recompense international investors in South Korea for their additions to the economy and at the same time lowering their startup costs. Presently, the government provides tax rebates to international businesses that can significantly contribute to the Korean economy.

Simultaneously, the government provides these businesses with manufacturing land (or helps them locate and acquire a site) and grants cash incentives and other forms of capital assistance.

Government-assigned free trade zones invite more expansion, inclusive of business-friendly laws related to manufacturing, distribution and trade; inexpensive rents on land and buildings; tax relief; and single-window administrative services. Also, undemanding customs reporting processes are implemented on a variety of value-added logistics goings-on.

The government is also making free economic zones to boost businesses in free trade zones, for the purpose of enhancing the infrastructure at key international hubs and set up likeable conditions of life for foreigners. Currently, Korea has eight free economic zones.

Geographic Presence

Ideally positioned between China and Japan, South Korea is within easy reach of more than 60 cities, populated in millions (average flying time: three hours). The signing of the 2007 United States-Korea Free Trade Agreement has worked as a thrust for South Korean businesses by making them easily access the world’s largest consumer market.

The Republic of South Korea has an elaborate Free Trade Agreement (FTA) with the Association of Southeast Asian Nations (ASEAN) and also a provisional agreement with India. An FTA has also been signed with the European Union and going forward, with Canada, Mexico, Australia, New Zealand and a number of other nations.

Intelligent Customers

South Korea’s digital-savvy clients have made chunks of contribution to the development of the country’s home market since the last 10 years. Korean mobile phones companies and home appliances — famous for their high-standard products all across the globe— have flourished, thanks to their sharp local consumers.

This is the reason for tech firms such as Microsoft, Motorola and eBay and also consumer goods firms such as Procter & Gamble and L’Oréal, South Korea is a testing ground for their new commodities.

Outstanding Infrastructure

South Korea has superbly planned and designed seaports, airports, roads and rails. As of 2008, Incheon International Airport (the country’s biggest airport, bordering Seoul) caters to 63 airlines and 30 million passengers traveling between 49 nations.

The best of the rest, six years after its 2001 start of operations, it had become the world’s number two airport, concerning cargo flow.

Korea Business Setup, Doing Business in South Korea, Korea Company Incorporation

Conclusion

South Korea continues to be comparatively a favorite business destination for foreign companies and its potential is gradually reaching new heights. Despite being a seemingly closed economy, and because of language and cultural barriers, it is a fruitful business destination.

Also, the special features of this economy present interesting knowledge opportunities and a doorway to the bigger Northeast Asian markets for the adventurous entrant. To be successful, one must focus on the efficiency and quality, and also hiring, marketing and brand building (usually through off-the-record networks.

For those who ready to take this plunge, get to live in and work with one of the most self-motivated economies in the world, providing well-qualified, hardworking and determined workforce and joining forces with a few of the major and fastest-growing international companies.

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All About Korea Business – Foreign Investment Firm, Branch, Liaison Office Registration

Table of contents 1. Domestic business forms of foreign companies 2. How to install/establish a domestic branch (office), required documents 3. How to set up a contact office, required documents 4. Tax from Branch and Contact Offices 1. Domestic business forms of foreign companies There are mainly two ways for foreign companies to enter and operate in Korea: (1) Establish a foreign investment firm, and (2) establish a branch office in Korea. 1.1. Foreign Investment Firm A foreign investment corporation is a corporation that is invested by a foreigner and becomes a shareholder. This is a way for foreign law persons to establish new corporations in order to enter the country. The established corporation is an independent corporation separate from a foreign branch and is the same as a general law in Korea. It is characterized by the fact that the shares of the corporation are mainly owned by foreign companies and are often elected by foreign officers. Foreign-Investment Corporation has the advantage of securing local and independent growth of business, as well as being able to participate in domestic and local companies as shareholders. Foreign-invested companies are based on the Foreign Investment Promotion Act, and the established capital must be at least KRW 100 million. Please refer to the links below for details on the establishment of a foreign investment firm. 1.2. Korean Branch Office Foreign companies can set up branches in Korea based on the Foreign Exchange Transaction Act. The Korean branch, or local branch, is divided into branches and liaison offices, depending on whether they are engaged in profit activities. Whether it is a branch or a liaison office, it tends to be referred to as a branch office in Korea, but it is strictly divided by law, so please note that the installation/establishment method and tax handling methods are completely different. (1) Branch (Sales Office) The branch is the name of the Foreign Exchange Transaction Act, and the sales office is the name of the commercial law, and the branch and sales office have the same meaning. Branch (Sales Office) refers to the domestic branch of a foreign company that operates in Korea. To install/establish a branch office, you must be registered as a company or a limited company in the same form as the company of the foreign headquarters. However, unlike the regular registration of a corporation, you do not have to have an initial capital when starting it. (2) Contact office The liaison office is a domestic branch that does not operate in Korea. Mainly perform reverse operations such as market research, city center research, data collection, after-sales, advertising, etc. It is mainly used as a preliminary stage for overseas flag industry, or as a way to enter the country by international organizations and non-profit public interest organizations. You do not need to register a separate corporate registration, and you will be issued a unique number card according to your business registration card. 2. Branch (Sales Office) Installation 2.1. Procedure To establish or install a domestic branch, complete the necessary documents and report the establishment of a local branch of a foreign company, and apply for registration of the office. You can register a business entity only after the registration is completed. Procedure 1 Installation of Korean branch of foreign company and appointment of representatives 2 Other than Designated Foreign Exchange Bank or Finance 3 Korean office of foreign company established in court of jurisdiction 4 Application for Business Registration (1) Notification of the installation of a foreign company Generally, you must issue a notification of the installation of a local branch at the designated foreign exchange bank. However, in the following cases, you must submit a notification to the Ministry of Finance and Finance, not to the foreign exchange bank. 1. Banking and other banking businesses such as financing, brokerage of overseas finance, card business, installment financing, etc. 2. Business-related to securities and insurance business 3. It is not allowed under the provisions of other laws such as the Foreign Investment Promotion Act. (2) Application for registration at a foreign company office Under the Foreign Exchange Transaction Act, falls into “branches” or “business offices” under the Commercial Code. When applying for registration, you must apply for registration with a foreign company office. You can apply at the registry office of a competent court with a local branch. (3) Application for Business Registration The jurisdiction tax office will apply for registration of a foreign corporation's domestic business office within 20 days from the start of business. Please refer to the link below for more information on the business registration application. Please check the procedure for registration of corporation business at once. 2.2. Required documents (1) Branch notification and registration application documents The accompanying documents required to declare the installation of a domestic branch and apply for registration are as follows. Required documents Description Office Establishment Notification for Foreign Companies Exchanges Regulations No. 9-8 form/Generally provided by the bank Application form for foreign company establishment provided by the court registry. Resolution of the BoardThe meaning of the establishment of the Korean branch, the place of installation, the name, address, and resident registration number of the representative of the Korean branch must be entered. A written acknowledgment of the existence of the CompanyApostille confirmation is required, which means a certified copy of the corporate register or the date of establishment, address and capital.Articles of incorporationApostille confirmation is required.Copy of passport of head office representative- Korea Branch Business Plan-Korea Branch Lease AgreementRequired if renting the place of businessSeal stamp, certificate of seal, copy of resident registration, or Copy of passportIf the representative of a domestic branch is Korean, a seal stamp and a copy of resident registration are required. If a foreigner, a copy of the passport is required.Approval of Inauguration of Korea Branch RepresentativeApostille confirmation is required.Power of attorneyIt is necessary when declaring a representative. The required documents must be notarized or certified as apostille as they cannot be used directly in the country. Please refer to the link below for more information on checking the apostille. (2) Application Documents for Business Registration The documents required to apply for a foreign corporation in Korea are as follows: As with the announcement of the establishment, documents made in foreign countries must be notarized or confirmed by apostille. Required documents • Business Registration Application Form • Copy of the installation/establishment certificate of foreign company • Balance sheet on the day of having a domestic business • Documents that can prove the contents of the business in Korea • Documents on head office registration • Main article articles of association (HQ) • For industries requiring permission, a copy of the permit (registration, declaration) certificate • Copy of the lease contract of the company name if you rent a business place 3. Establishment of Liaison Office 3.1 Procedure Since the Liaison Office does not operate locally, the installation method is more convenient than the one from the branch. After reporting the establishment of a liaison office among domestic branches, you only need to visit the tax office and apply for a unique number for a non-profit company. Procedure 1 Installation of a foreign company's Korean contact office and representative Senior Board Resolution 2 Other than Designated Foreign Exchange Bank or Finance Legal Declaration of Korean Companies 3 Application for a unique number from the tax office 3.2. Required Documents (1) Domestic branch report documents The following documents are required to report the installation of a local Liaison Office As with the installation of the branch office, documents created in foreign countries cannot be used directly in the country and must be notarized or confirmed by the apostille. Required documents Description Office Establishment Notification for Foreign Companies Exchanges Regulations No. 9-8 formGenerally provided by the bank. Resolution of the BoardThe meaning of the establishment of the Korean branch, the place of installation, the name, address, and resident registration number of the representative of the Korean branch must be entered.A written acknowledgment of the existence of the CompanyApostille confirmation is required, which means a certified copy of the corporate register or the date of establishment, address and capital.Articles of incorporationApostille confirmation is required.Copy of passport of head office representative-Korea Branch Business Plan-Korea Branch Lease AgreementRequired if renting the place of business.Seal stamp, certificate of seal, copy of resident registration, or Copy of passportIf the representative of a domestic branch is Korean, a seal stamp and a copy of resident registration are required. If a foreigner, a copy of the passport is required.Approval of Inauguration of Korea Branch RepresentativeApostille confirmation is required.Power of AttorneyIt is necessary when declaring a representative. 3. Tax Processing Domestic offices of foreign corporations declare VAT the same as domestic corporations and calculate and pay the corporate tax for each business year. On the other hand, the Liaison Office is not a place to conduct business, so there is no obligation to declare corporate tax and VAT. 3.1. Branch (Sales Office) The branch is recognized as a fixed place of business under tax law as it is operating activities that generate revenue in Korea. Accordingly, the same corporate tax rate as the domestic corporation will be applied to the income generated from the domestic business. Foreign-invested companies can benefit from tax reduction under certain conditions, but foreign-company branches do not have such benefits. Accordingly, branches are obligated to pay value-added tax declarations, obligation to pay tax returns, withholding tax returns, and four major social insurance subscription and payment obligations under the tax laws of Korea. In addition, branch tax may be taxed in some cases. 3.2. Liaison Office The liaison office performs preliminary and auxiliary activities only for the headquarters, so it is not recognized as a place of business and is not obliged to report corporate taxes and VAT. Just like a non-profit corporation, you are obliged to obtain a unique number card, pay a withholding tax declaration and submit a tax statement. Since it is not a commercial business, it is not possible to issue a tax invoice. If you do business, you must return your unique number card and apply for business registration again to your local office (sales office). For any enquires regarding Korea company or branch establishment, please feel free to contact us local specialists for assistance.

Weekly Business Korea – Week 42

South Korean Startups Step on Gas Breakthroughs in technology in South Korea have turned the country into a seedbed for startups. A country in which large firms still rule the roost, Seoul’s startup sector is flourishing all the way. The western hemisphere of Seoul has a nine-storey edifice covered with vibrant colors and an enormous red bull sculptured outside houses over and above 100 startups. Ranging from single-hand activities being managed only via a locker and a laptop on the ground floor, sprawling to fully developed and functional offices on the higher storeys, this startup hub in Seoul has been holding 1,282 operations through different phases of growth in the last two years. It has all the essential features are part and parcel of all startup hubs across the world – common cafeteria and work premises, a relaxation space with beanbags and oval-shaped settees, a modular kitchen with all the modern amenities for food science firms, a broadcast studio, a reading room-cum-book repository, a shaft separating two floors and even a convenience store for those working through late hours. Approximately 467 accelerators, venture capital funds and government establishments backed startups in Seoul and its neighboring states in 2018, a few were supported by large firms like Samsung and Naver. In all, Seoul alone has 85 accelerators and its angel investment has soared from US$170m ($250m) in 2015 to US$250m in 2017. According to Forbes, since 2015, the South Korean government’s aid to startups has reached $4bn; the biggest per capita government aid to startups in the world. By 2022, Seoul endeavors to feature among the world’s top five startup cities. Startups especially prefer Korea for its high-speed internet, fast implementation of the 5G network and its super absorption capacity of technology. The pursuit for startups is being fueled by a gradual shift from the standard big firms. North and South Korea Soccer it Out in Pyongyang, after 30 YearsFor the first time since 30 years, North Korea played South Korea at men's football in Pyongyang. The FIFA World Cup Qualifier match on Tuesday, at Kim Il-Sung Stadium, ended in a 0-0 draw. Previously, the two sides played a friendly match in 1990, after which they had met in Japan in the 2017 East Asian Cup when South Korea beat North Korea 1-0. Though both nations are soccer lovers, the draw spells positive for North Korea as the South is already at number 37, higher than the North (ranked 113) in the world ranking. However, South Korean media and spectators’ presence was barred from the game and there was no live streaming either. Only FIFA's website could be accessed periodically for the latest scores. According to a spokesman for the South Korean Unification Ministry, officials had called upon the North to permit access and transmission, but the request was ignored. Apart from South Koreans, even foreign tourists who were in North Korea to see the match were disallowed from attending, as stated by various tour managers. South Korea has won entry to FIFA world cup many times and made it to the semifinals of the FIFA World Cup in 2002. Comparatively, North Korea’s best was reaching the quarterfinals in 1966. Both teams have to retain their top positions in this qualifying round to reach the next qualifier and boost their hopes of reaching the 2022 World Cup. Hypothetically, both teams stand a chance.South Korea launches KF-X Warplane Prototype The first larger-as-life prototype of the KF-X fighter jet was exhibited by South Korea. The country is crafting this mock-up in collaboration with Indonesia since its key design reviews were approved in September. The new-age aircraft designed and being built by Korea Aerospace Industries (KAI), is a cheaper, less-stealthy version of the American F-35. It is planned as a replacement for South Korea’s old fighter jets and also be exported. The prototype was exhibited on Monday at the Seoul International Aerospace and Defense Exhibition (ADEX). The first of the 40 advanced F-35A, purchased by South Korea from the US, arrived this year. Presently developing a KF-X prototype, KAI plans the ground and flight tests in 2021 and 2022, as stated by company officials. A top official also added that it would not have been possible to develop KF-X without being backed by the experience of designing and developing T-50 and FA-50. Subject to the condition that his identity is kept a secret as he was prohibited from interacting with the media, the top official said that the progress is advancing stage by stage.

Weekly Business Korea – Week 41

South Korea; outlined by a sensitive border with its volatile neighbor, has a fascinating range of experiences for travelers and tourists, along with mind-blowing sceneries and 5000 years of arts and enriching past. Let us look into what South Korea has been up to this week. Saudi Arabia: South Korea’s Chief Oil Supplier, Post Iran Sanctions In July, the US dispatched 14,782 barrels of crude oil to Seoul. This is three times the quantity shipped in the previous year. The Kingdom of Saudi Arabia retains its position as South Korea’s biggest crude supplier in a situation where there is no supply of oil shipments from Iran. This fact is confirmed by the customs data. Since US-driven sanctions against Iran were reinstituted in May, South Korea’s oil imports from the second-largest country in the Middle East have come to a standstill. The data, posted by the Korea National Oil Corporation, indicates that South Korea purchased an overall quantity of 209,316 barrels in the initial eight months of this year, which means a rise of 7.4% than the previous year. The US has been supplying more oil to South Korea. Statistics point out that crude imports from the US to South Korea have increased by 51%. Specifically, this July Seoul imported 14,782 barrels of crude oil from the US, a number that is three-fold of what it was the previous year. Because of this, the US turned into South Korea’s second major supplier of crude oil, surpassing Kuwait. Something that has never happened before. Through the previous eight months, oil imports to South Korea have reached a count of 86,069 barrels, at a cost of almost $5.7 billion. Apart from this, South Korea’s crude imports from Kazakhstan shot up by 39% than the previous year, and then the UAE, Kuwait and Saudi Arabia. UAE and Kuwait imported 33.7% and 13.8% more oil respectively. South Korean oil refiners are trying to find other sources of condensed provision. Earlier, majority of the country’s refiners preferred Iranian ultra-light oil as a natural resource to manufacture petrochemicals. South Korea was the chief buyer of naphtha-rich Iranian condensate, before the reinstating of US sanctions. Hanwha Total Petrochemical is the first South Korean refiner to expand its source of condensate outside Iran. The company received 500,000 barrels of condensate from Saudi Arabia in August. Hanwha Total runs a condensate splitter in its factory in South Chungcheong province to cater to 180,000 barrels of condensate daily. Previously, the company made its intention clear to hike the imports of condensate from Australia and Russia. As an attempt to support domestic refiners in finding alternative oil sources of supply, the government of South Korea is considering an extension of freight discounts for consignments of non-Middle East crude till the close of 2021, as reported in a release by the Ministry of Trade, Industry and Energy. LG to Launch V50S ThinQ in South Korea A close second to the US, South Korea is the vitally significant market for smartphones for LG and V50S the performance of ThinQ's will be the deciding factor about the chances of the business prevailing over its years-long depression.LG Electronics announced that it is all set to put on sale its prize smartphone, V50S ThinQ in South Korea on Friday. The electronics manufacturer will hand out its add-on second-screen fitment, free-of-cost when purchased in combination with the main phone. It offers a dual-screen experience. LG V50S ThinQ will only be available in black color, at a price tag of 1.2 million won ($999). One can get it in all three telecoms - SK Telecom, KT and LG Uplus - with the telecoms capable of giving it tremendous marketing back up to the model to get the largest possible number of 5G subscribers by the time the year closes. This phone runs on 5G technology and flaunts a 32-megapixel front camera, along with a 6.4-inch OLED display. In the near future, the company has plans to sell the phone in North America and Europe. In its income guide, LG expects a marginal increase in its profits for the third quarter, as against the same period of the previous year. The company foresees an operational profit of 781 billion won and revenue of 15.7 trillion won, which is 4.3% and 1.8% more every year. The company hopes to minimize its mobile business losses due to its latest reshuffle. LG has moved its smartphone manufacturing unit from South Korea to Vietnam in an attempt to save costs.

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