Korea

Country starter pack
Business practicalities in Korea
55
Australians conducting business in Korea need to deal
with a host of local legal provisions, including laws
and regulations covering tax, employment, importing,
foreign investment, property, banking, and repatriation
of profits. This chapter provides an overview of the main
areas that need to be considered in the Korean business
environment. However, in addition to consulting this
guide, you should also seek professional advice in the
area for which you require specific information. Laws
and regulations that may apply to your business in Korea
are also subject to frequent changes as the Government
moves to attract more foreign investment and business
operations to Korea. Further reforms are expected in
January 2016.
5.1 LAWS AND REGULATIONS
Investment rules
Foreign investment in Korea is governed by the
Foreign Investment Promotion Act (FIPA). This act
provides the legal basis for tax incentives and numerous
benefits relating to foreign direct investment, while
also underpinning the procedures for investment in
Korea. Unless stated otherwise in the FIPA, the Foreign
Exchange Transaction Law (FIPL) and related regulations
will apply to matters related to foreign exchange and
external dealings related to foreign investments.
Foreign companies may invest in all but a small number
of protected sectors, mainly involving communications
and broadcasting. In some sectors, a joint venture (JV)
with Korean companies may be required, although
this has become less common in recent years. To be
considered a foreign investment company under FIPA,
foreign companies must invest at least KRW 100 million
and acquire 10 per cent or more of the voting shares or
interest of a Korean company.
Since foreign-invested companies are local corporations
established under domestic laws, the same laws that
apply to purely domestic corporations will apply even
if the foreign-invested company has gone through the
processes as prescribed in the FIPA. Therefore, approval
and permission may be required under each law before
business may be conducted.
The Government organisation: Invest Korea, provides
extensive services free of charge to foreign businesses,
including consultation, assistance with investment
notification and corporate establishment, support for
business activities in Korea, and grievance resolution.
Invest Korea also conducts investment promotion
activities abroad. If you are considering investing in Korea,
it is highly recommended you consult Invest Korea.