Establishing a Business Entity in Korea as a Foreigner

Foreigners can do business in Korea in four ways: by establishing a local corporation, opening a private business, opening a branch, or opening a liaison office.
December 14, 2023
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Foreigners can do business in Korea in four ways: by establishing a local corporation, opening a private business, opening a branch, or opening a liaison office. The Foreign Investment Promotion Act mainly governs the first two methods, while the Foreign Exchange Transactions Act regulates the other two. A liaison office is not allowed to engage in profit-generating business activities in Korea.

1. Local Corporation

Foreign investors who establish local corporations in accordance with the Foreign Investment Promotion Act and the Commercial Act will be subject to the same treatment as domestic corporations. However, the investment amount must be KRW 100 million or more.

2. Private Business

If a foreigner operates a private business in Korea with an investment of at least KRW 100 million, it will be recognized as foreign direct investment. Private businesses are treated equally to local corporations in their business activities. The opening, temporary closure, and permanent closure of a private business are less complex than those of a local corporation, and their corporate social responsibilities are not as heavy. Private businesses often face limitations in financing and securing manpower due to their lower credit rating. As a result, they are typically small in size.

In January 2012, the Daegu District Court of Korea ruled that private businesses run by foreigners cannot be recognized as foreign-invested companies. To operate a private business in Korea, foreigners who invest KRW 300 million or more will receive a D-9 visa instead of a D-8 visa, as per the ruling of the Ministry of Justice. To operate a private business in Korea, foreigners who invest KRW 300 million or more will receive a D-9 visa instead of a D-8 visa, as per the ruling of the Ministry of Justice. The investment amount requirement must be met for foreigners who operate a private business that is not a joint venture with a domestic private business. To operate a private business in Korea, foreigners who invest KRW 300 million or more will receive a D-9 visa instead of a D-8 visa, as per the ruling of the Ministry of Justice.

3. Branch

To conduct business in Korea, a foreign company must appoint a representative for its local branch, complete the branch establishment procedure outlined in the Foreign Exchange Transactions Act, and register with the court.

A branch is considered a permanent establishment under tax laws, and the same tax rate that applies to domestic companies will apply to the profits generated by a branch.

4. Liaison Office

A branch in Korea generates profit through sales activities, while a liaison office performs non-sales functions such as business contacts and market research on behalf of the head company.

Unlike branches, liaison offices do not require court registration and are given a unique business code number that is equivalent to business registration at a jurisdictional tax office in Korea.


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