Company Registration in South Korea
                     
COMPANY 
REGISTRATION IN 
SOUTH KOREA
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SOUTH KOREA
South Korea is located Eastern Asia and occupies the 
southern half of the Korean Peninsula, bordering the Sea 
of Japan and the Yellow Sea. Over the past four decades, 
South Korea has demonstrated incredible growth and 
global integration, and has become a high-tech 
industrialised economy. In 2004, South Korea entered 
the trillion dollar club of world economies, and currently 
is among the world’s 20 largest. South Korea is a 
member of the Organisation for Economic Cooperation 
and Development (OECD), which allows for an attractive 
environment for foreign investment. According to the 
Doing Business 2012 survey by the World Bank, South 
Korea is in fact the world’s 8th-easiest place to do 
business. South Korea is hosting the 2018 Winter 
Olympic Games, and therefore will be an exciting 
country in the coming years. Licensehub.in can assist 
you in setting up a company in South Korea.
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MAIN FEATURES OF SETTING UP A COMPANY IN SOUTH 
KOREA
• South Korea company formation allows 100% foreign 
ownership
• The minimum number of shareholders required is one 
for a Yuhan Hoesa (limited liability company), with no 
restrictions on nationality
• Non-resident individuals are liable to personal income 
tax only on assessable income derived in Korea
• Companies are required to maintain accounts and keep 
a register of shareholders at the registered office. 
These records must be kept in Korean
• Annual tax returns must be filed to the National Tax 
Service of South Korea following South Korea company 
formation
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TYPES OF BUSINESS
There are five different types of businesses in 
South Korea: 
• Joint stock company (chusikhoesa), 
• Limited liability company (yuhanhoesa), 
• Private limited company (yuhanchaek-
imhoesa),
• General partnership company 
(hapmyunghoesa), 
• Limited partnership company (hapjahoesa).
 Your business will largely depend on your goals, 
tax implications, and business regulations in 
South Korea. Most expatriates begin with a liaison 
office as this does not require any complicated 
registration formalities, besides registering it with 
the national bank and the tax authorities. 
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TYPESOF BUSINESS CONTD
A liaison office is governed by the Foreign Exchange 
Transactions Act and the Commercial Act.You can 
also open a branch of a foreign company in South 
Korea. To do this, you will have to report the branch 
to a specified foreign exchange bank and complete 
the court registration and business registration.
If you wish to establish a commercial entity or 
limited liability company, you will need a minimum 
capital of 50 million Korean Won (about 36,000 
euros).
Moreover, the company status must be certified by 
a notary and a founder shall be appointed for 
registration. The Board of Directors of the company 
will then be responsible for its management.
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ADVANTAGES OF SETTING UP BUSINESS N SOUTH 
KOREA
1. A limited liability company can be incorporated within one week, with a 
minimum of one shareholder and one director of any nationality.
2. There are no restrictions on foreign currency accounts or the repatriation 
of capital earnings.
3. To attract foreign direct investment (FDI) on South Korea offshore 
company, the Korean government passed the Foreign Investment Promotion 
Act in 1998. The Act opened up 99.8% of Korea's industries to foreign 
investment and provided significant protection for investors' interests. 
4. South Korea boasts a technologically advanced air, land and sea transport 
network, allowing quick delivery of goods and raw materials within the 
country.
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5. South Korea boasts high skilled labor with a 
literacy rate of above 97% and a 
technologically advanced rate of 60%. Labor 
surveys show that 80% of adults aged 25-64 
have a university degree.
6. Incheon International Airport is a leading 
logistics and transportation hub in Northeast 
Asia, equipped with state-of-the-art facilities. 
Entrepreneurs can expect to have their 
customs clearance time cut by 50%.
7. South Korea has the world's highest 
estimated national IQ, with leading rankings 
in mathematics, science, problem solving and 
reading, as declared by the OECD.
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ACCOUNTING AND 
TAX REGULATIONS
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Before entering the South Korean market, global investors should be aware of the 
following accounting and tax regulations:
1. South Korea taxes on corporate income are 10% on the first 200 million won of income, 
20% for income between US$180,000 and US$20m, and 22% for income in excess of that.
2. VAT in South Korea amounts to 10% on sales and transfers of goods and services. 
Electronic VAT invoicing is compulsory, and failure to report electronically may result in 
penalties.
3. South Korea non-resident companies without permanent establishments (PEs) in South 
Korea are subject to a withholding tax on each income item.
4. Resident foreigners are taxed on their worldwide income if they have stayed in South 
Korea for more than 5 years out of a 10-year period. Those who have stayed for a shorter 
period are only taxed on their locally sourced income and foreign-sourced income.
5. There is a special concession for foreigners working in South Korea, where foreign 
expatriates and employees can apply for a flat tax rate of 16.5% on their income 
employment.
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6. Quarterly VAT filing is compulsory even though the company is dormant.
7. Annual tax returns must be filed to the National Tax Service of South Korea after setting 
up a business in South Korea.
8. There are no export duties in South Korea.
9. Following South Korean company formation, annual external audits must be conducted 
if a company has more than US$1 million total assets.
10. All goods being imported to Korea from foreign countries must have their customs 
duties prepaid. The tax amount is dependent on the type of imported goods and quantity.
11. Non-resident individuals are only liable to personal income tax on income derived in 
South Korea.
12. To attract foreign direct investment (FDI), the Korean government provides tax 
incentives for small and medium-sized enterprises (SME) such as i) a SME investing in 
industrial equipment or advanced office equipment may enjoy a 5% tax credit of the 
invested amount ii) the tax credit for developing technology and manpower increased 
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13. South Korea boasts 54 double taxation treaties, 
materially reduce local withholding tax on 
payments to non-residents.
14. A corporation must file an interim tax return 
with the Korean Government, comprising: i) 
balance sheet ii) income statement and iii) a trial 
balance.
Over the coming 5 years, South Korea will invite 
tenders from foreign construction companies to 
help develop infrastructure spending of US$300bn 
on airports, roads and railway by 2020. Therefore, 
the country will attract more global investors in the 
near future.
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(SOUTH KOREA) Not-For Profit Organizations
In South Korea, not-for profit organizations can exist as 
unregistered organizations or an incorporated, registered 
non-profit (public-interest) corporations. Registration 
provides tax and other financial benefits. Associations and 
foundations (public interest corporations) relating to art, 
charity, science, religion, social intercourse or otherwise 
not engaged in profit are considered juristic persons and 
are governed by the Civil Code.
As set out in the Civil Code, an association or foundation 
may be formed subject to permission of the competent 
authorities . Permission to incorporate must be obtained by 
drawing up articles of incorporation which detail the 
following: objective of the association; name; seat of office; 
provisions concerning assets; provisions concerning 
appointment and removal of directors; provisions 
concerning acquisition and loss of membership; cause of 
dissolution.
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For-Profit Organizations
There are three types of business forms available to foreign companies in South Korea: Foreign 
Branch, Liaison Office, and Foreign Owned Local Corporation. Each of these business forms has 
advantages and disadvantages, as well as differing scope of business activities, registration 
requirements and minimum capital requirements. In most cases it will depend on the degree of 
commitment a company has to South Korea and the planned business activity.
1. BRANCH OFFICE
A Branch Office is a form of business that generates profits in Korea, which is not locally 
incorporated and is not recognized as foreign direct investment. According to InvestKorea, 
headquarters and their foreign branches are treated as a single legal entity (the same accounting 
& settlement). There is no limit in investment amount or ownership.
Branches do not require formal incorporation, making them easier in principle to set up than a 
local corporation, and with less registration fees. Unlike liaison offices, branches are also allowed 
to engage in sales activity. They are considered a separate legal entity providing some separation 
of debts and liabilities from their parent. Generally, branch offices are suitable for smaller scale 
operations. Foreign companies can move on to a local subsidiary later as needed.
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2. LIASION OFFICE
A “liaison office” does not carry out business that generates profits in Korea, but instead undertakes 
a non-sales function such as market research, R&D etc.
While the liaison office does not need to incorporate or register like a company or branch office, it 
must still report to an exchange bank. A liaison office must however register at the tax department, 
where it is granted a distinct number, equivalent to business registration, at a jurisdictional tax 
office in Korea. There is no restriction on foreign ownership and amount of investment.
The restriction on sales activities is the main disadvantage of a liaison office, as with the typical 
representative office structure. However, it is relatively simpler and less expensive to establish.
Required documents usually include:
•     Company documents of head company
•     Board resolution of setting up a branch office
•     Certificate of appointment for the president of the liaison office
•     The passport or ID card of the president of the liaison office
•     Power of Attorney if a law firm is acting on the company’s behalf
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3. FOREIGN OWNED LOCAL CORPORATION
A foreign owned local corporation is recognized as a “foreign investment” under the 
Foreign Investment Promotion Act in South Korea. The company must invest at least 100 
million Korean won (KRW). If an investee corporation is a private business, the company 
cannot issue a business investment (D-8) visa. A trade (D-9) visa shall be issued if it 
invests KRW 300 million or more. Foreign investors and foreign-invested companies are 
of separate entities (independent accounting & settlement).
The Korean Commercial Act provides five forms of companies:
•     Partnership company
•     Limited Partnership Company
•     Limited Liability Company
•     Limited Company
•     Stock Company
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4. SOLE PROPRIETORSHIP
If you are thinking of a sole proprietorship, 
you only need to drop by a district tax 
office with the lease contract of your office 
and your Korean ID card alien registration 
card, or to get a business license. If your 
landlord agrees you can register your 
company at your house. Also, it is possible 
to register more than one person at a sole 
proprietorship. If you have revenue of 
around 50,000 USD or more, the tax rate 
can be quite high for a private business.
Licensehub.in provides you with an efficient, professional service, assisting you in all 
aspects of South Korean company formation. We aim to make this process as easy as 
possible. Contact us for more information on incorporating a company in South Korea.
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THANK YOU
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