Company Registration in South Korea

The Republic of Korea is a well-developed state that makes special emphasis on technologies and innovations. The manufacturing, service, and e-commerce sectors are the most advanced in the country. At the same time, a high level of living standards and income also characterize this state. South Korea is attractive for and actively encourages investments in different forms. A decision of registering a business in Seoul or any other city of this state may be potentially beneficial in view of these advantages attributed to the jurisdiction.

Arguments in Favor of Company Formation in Korea

Purchasing a ready-made company in Korea or incorporating a new one may appear to be a fruitful business decision in view of these core advantages of the jurisdiction:

• 100% foreign ownership is acceptable;
• simplified incorporation process, including through a remote application;
• highly-qualified and skilled labor force;
• existence of different incentives (for creating a specific number of jobs, developing technologies, etc.) and grants;
• availability of free zones with tax exemptions;
• lots of signed free trade and double-tax treaties;
• no currency control limitations.

Legal and Organizational Forms Existing in Korea

Any business decision to incorporate a company in Korea or arrange your official presence there in any other acceptable way can be practically realized, among others, in these forms:

• Limited liability company – is the most popular form of doing business in South Korea for several reasons: (1) it may be established even by 1 person of any nationality, and (2) monetary and any other obligations of each shareholder are narrowed to one’s share under any circumstances. The amount of statutory capital formally may be even USD 1 but it may vary depending on the industry. One director of any residency is needed to manage this entity.
• <Branch – an option feasible for a non-resident enterprise that wishes to extend the scope of operations in the Korean market without registering a separate entity. 100% liability over all kinds of obligations of a branch always bears its mother company solely.
• Representative office (RO) – an option that is not associated with doing business but allows one to handle market research, quality control, or various representative tasks in Korea without registering a separate legal entity. As in the case of a branch, a parent company is fully liable for the results of the RO operation.

How to Register a Company in Korea?

The approximate steps needed to register a company in Korea are the next ones:

1. Making pre-registration arrangements:
2. Choosing the scope of business activities that a future Korean entity will be going to conduct.
3. Elaborating on and checking a company trade name.
4. Collecting and formalizing the details about the entity’s founders, final beneficiaries, and a mother company (if any).
5. Searching for and formalizing an official legal address for a future Korean enterprise.
6. Drafting statutory and registration documents.
7. Hiring management and secretary for a future company.
8. Obtaining authorization for a foreign investor according to the Foreign Investment Promotion Law.
9. Paying the incorporation fee and submitting the set of registration documents for consideration. Entering the information about a new entity in the Companies Registry.
10. Registration of a new entity for the purposes of paying taxes and social security contributions.
11. Opening corporate bank accounts for a new entity.
12. Applying for and keeping active permits/licenses that may be needed for specific types of regulated activities.

Legal and Regulatory Aspects

Korean laws were mostly influenced by Japanese and European standards. Establishing a new business is not bureaucratized in nature. The process is straightforward and clear from the point of drafting and executing documents.

Foreigners are allowed to establish a company reserving 100% ownership and control over it. At the same time, there is a requirement of investing KRW 100 million (around USD 90,000) to start an entity with foreign capital. Handling certain types of regulated activities may require a higher amount of starting capital and getting a license as well. Prifinance attorneys are ready to help you and tackle all possible local regulatory burdens.

Taxation in South Korea

If you seriously intend to open or buy a company in Korea, assessing the next tax parameters of the jurisdiction is inevitable:

• Profit tax (for business forms) – 25%
• Income tax (for individuals) – 45%
• Value-added tax – 10%
• Withholding tax (for non-residents) – (1) dividends – 20% (2) interests – 20% (14% for bonds issued by domestic corporations) (3) royalties – 20%
• Capital gains tax – (1) for businesses – see profit tax (2) for individuals – 45%.

How Prifinance Attorneys Can Foster Doing Business in Your Case

If your closest business goal is to buy or establish a company in Korea, Prifinance attorneys are prepared to bring this idea into practice. Lawyers possess versatile registration expertise. It was gained through more than 11 000 projects implemented worldwide, including in South Korea. Share the details and your expectations to get a personalized registration plan and full-scope legal support in the course of its fastest realization.