Korea

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34 Country starter pack Getting started in Korea Joining a business association is a great way to learn more about what is going on in the local business community and to meet potential colleagues and partners. In Seoul, there are several well-established country-specific business associations with memberships of hundreds of business people. Australian Chamber of Commerce in Korea (AustCham Korea), the peak body representing Australian and Korean business interests, was set up almost 20 years ago and has more than 240 members. AustCham Korea’s mission is to promote Australian business, the Australia-Korean business partnership and AustCham members’ interests as an effective source of information, connections and representation. The organisation facilitates business networking opportunities through a range of forums and networking and social events. It also strives to play a constructive role in promoting Australia/Korea business relationships. Website: www.austchamkorea.org Email: exec@austchamkorea.org Telephone: +82 (2) 2010 8831 The Korean Chamber of Commerce and Industry (KCCI) is Korea’s largest private economic association, with more than 135,000 members. It provides numerous services to its members, including seminars and conferences, human resources development services and government advocacy. KCCI operates eight human resources development institutes nationwide and administers exams to contribute to a developing a highly skilled workforce. KCCI’s external focus is placed on the strengthening of economic cooperation in the private sector. This includes supporting trade missions and market survey teams internationally, resolving trade disputes, providing trade inquiry services, as well as strengthening relationships with international organisations. Website: www.english.korcham.net/ Australia Korea Business Council (AKBC) seeks to foster friendship and understanding between the business communities of Australia and Korea and to promote technical and economic cooperation, trade, investment, education and tourism between the two countries. The major corporations involved in trade between Australia and Korea (up to 80 percent) make up the membership of the council. Recently its constitution has been revised to accommodate more business and professional members to reflect the changing nature of the relationship between Australia and Korea, as more small and medium-sized business enterprises begin operations between the two countries. Website: www.akbc.com.au
Country starter pack Getting started in Korea 35 2.3 POSSIBLE BUSINESS STRUCTURES Now that you have decided to set up a business in Korea, there are many elements you need to consider. What type of business structure will you use? Will you appoint a local agency, open a branch office, or set up a Korean subsidiary? And what legal and administrative processes must you go through to get established? There is no single business structure that holds the key to unlocking the Korean market. Cultivating a wide network of local contacts in Government, while gaining an understanding of local practices, will help lower your compliance risks and assist you in choosing the most appropriate business structure. There are multiple channels of entry open to foreign investors; the one you choose must fundamentally be supported by your company’s business objectives. Knowing what you’d like to achieve in Korea will help determine the entry vehicles that can help take you there. There are three primary ways to set up a business in Korea: set up an entity in the form of a subsidiary, as a joint stock company, or a limited liability company. If you are not wanting to set up an entity then you can always engage in other forms of selling your product in Korea. See Chapter 3 for further information on this. Business structures overview Subsidiary (JV) Branch Liaison Office Major governing law Foreign Investment Promotion Law Commercial Code Foreign Exchange Transaction Law Foreign Exchange Transaction Law Minimum capital KRW100 million • No requirement • No requirement requirements at • May induce operating • May induce operating establishment fund from head office fund from head office Sales activities Possible Possible Not possible Loan from overseas parent/head office Possible Not possible (except Korean branch of foreign financial institutions) Not possible Repatriation of profits Dividends distributed to shareholders are subject to tax withholding in Korea No tax withholding on profit repatriation; however, branch profits tax may apply) Taxable income Worldwide income Income attributable to the branch operation Head office common expenses Tax exemption or credit Not included in a subsidiary’s expenses Applicable depending on the type of business and type of investments May include in the branch’s expenses in a certain guidelines Not applicable Not applicable Not applicable Not applicable Not applicable Korean Joint Stock Company (Chusik Hoesa) or Limited Liability Company (Yuhan Joesa) Setting up a subsidiary is a popular choice for foreigners who want to invest or conduct business in Korea. A subsidiary may be set up as either a joint stock company (Chusik Hoesa) or a limited liability company (Yuhan Hoesa). For the purposes of business operation and Korean tax obligations, there is no material difference between them, except that limited liability companies cannot issue bonds. Joint stock and limited liability companies are covered by the Foreign Investment Promotion Act (FIPA) and are the common structures for establishing a joint venture (JV) between a foreign investor and a South Korean individual or entity. The minimum investment required to set up a Korean subsidiary is KRW 100 million (about $115,000). • A joint stock company is incorporated by one or more promoters, with each shareholder’s liability limited to the amount of contributed capital. This is the most common type of company in Korea. • A limited liability company is incorporated by one or more members, with each member’s liability limited to the amount of that member’s contribution to the corporation.
Page 1 and 2: REPUBLIC OF Korea COUNTRY STARTER P
Page 3 and 4: SURFACE AREA 99,400 square kmS GDP
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Country starter pack Engage with us
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© August 2015, Asialink Business.
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Korea

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