There are three ways by which foreigners (foreign corporations) can enter Korea for business purposes: By establishing a local corporation, a local branch, or a liaison office.
|Category||Foreign-invested company||Domestic branch of a foreign company|
|Form of entry||Local corporation||Branch and liaison office|
|Governing law||Foreign Investment Promotion Act||Foreign Exchange Transactions Act|
|Type of corporation||Domestic corporation||Foreign corporation|
The foreign investor and foreign-invested
company are separate entities
(independent accounting & settlement)
The headquarter and branch are a
(consolidated accounting & settlement)
|KOTRA (Invest KOREA) or foreign exchange bank||Designated foreign exchange bank, Ministry of Strategy and Finance (secutiries, insurance, etc.)|
100 million won or more per case,
no upper limit
|No limit on the investment amount|
Scope of tax
Tax obligations for all domestic
and overseas income
Tax obligations for income from
domestic sources only
The procedure for establishing a local corporation consists of foreign investment notification, registration of incorporation, registration of business and foreign-invested company registration.
The Commercial Act recognizes five forms of companies - partnership company, limited partnership company, limited liability company, stock company and limited company. Most companies fall into the category of “stock company”.
|Ways of establishing a stock company||Registration of incorporation of a stock company||Cost of establishing a stock company||Business registration|
|Promotion of incorporation||Within two weeks from the date on which the investigation of the process of establishment is completed||
||Filed at a tax office or at KOTRA (Registration should be completed within 20 days from the date of business commencement)|
|Subscriptive incorporation||Within two weeks from the date on which the inaugural general meeting is closed|
There are two types of domestic branches: a branch and a liaison office. The establishment of a domestic branch is not recognized as foreign investment under the Foreign Investment Promotion Act, and is regulated by the Foreign Exchange Transactions Act.
Undertakes sales activities in Korea to generate profit
Carries out non-sales functions such as business contacts, market research and R&D