Company Registration in South Korea

Advantages of Registering a Company in South Korea

1. Possibility for non-residents to establish a company.
   Foreign citizens can establish a company in South Korea, as there are no residency requirements for shareholders or directors.
2. Strong economy.
   South Korea’s strong economic position places it among the world’s leading countries in terms of economic performance.
3. Convenient business location.
   According to the Doing Business 2020 report, South Korea ranks 5th globally for ease of doing business.
4. Free economic zones.
   The South Korean government has established free economic zones that offer tax and other incentives to non-residents who invest or start a business in the country.

What to Consider Before Registering a Company in South Korea

1. Investment.
   An essential part of starting a business in South Korea is depositing investment capital into a local bank account. When estimating the costs of establishing a company, this should be taken into account. There is no clearly defined minimum investment amount, leaving the decision up to the founders. While no strict capital requirement exists for a standard limited liability company, a Foreign-Invested Company typically requires an investment of 100 million KRW.
2. Licenses.
   Before proceeding with company registration, it is important to ensure that the goods or services to be offered can be legally imported or provided in South Korea, that all customs and import regulations are met, and that the necessary licenses and permits are obtained.
3. The director must be an individual.
   Although there are no residency requirements for directors, only natural persons can serve as directors of companies in South Korea.

Legal Forms of Companies in South Korea

There are several legal forms of companies in South Korea. The appropriate form should be chosen based on the specific business structure and objectives.

The most common legal forms of companies in South Korea are:

1. General Partnership (Hapmyeong Hoesa);
2. Limited Partnership (Hapja Hoesa);
3. Limited Liability Company (Yuhan Hoesa);
4. Joint Stock Company (Chusik Hoesa).

An FDI, as mentioned above, can be established in any of the forms listed. For details on the specifics of each form, please consult the experts at GFLO Consultancy.

Company Registration Procedure in South Korea

1. Preparation of information and documents for company registration in South Korea.
   In addition to identification documents for each participant of the future company, the following information must be provided:
   • the name of the future company;
   • details of the company structure (director, shareholder, and beneficial owner);
   • a detailed description of the company’s planned activities.

2. Verification and selection of an approved company name.
   Each proposed company name must undergo verification. Once the name is approved, the company is ready for registration.
3. Submission of company registration documents.
   Company registration in South Korea is carried out through the Judicial and Tax Services. The process usually takes about 8–10 business days, after which two key certificates are issued — the Business Registration Certificate and the Company Court Registration Certificate.
4. Issuance of the company’s statutory documents.
   In addition to the certificates, other corporate documents outlining the company’s structure and core characteristics are prepared.
5. Certification and apostille of documents.
   Since South Korea has ratified the Hague Apostille Convention, document apostilling is widely practiced in the country. Document certification generally takes 3–5 days, and apostilling takes about 5–7 days.

Company Taxation in South Korea

South Korea maintains relatively low tax rates. Below are the main types of taxes applicable in the country.

Corporate Income Tax

South Korea applies a global taxation principle, meaning resident companies are taxed on worldwide income (i.e., income earned both domestically and abroad).

Non-resident companies with a permanent establishment in South Korea are taxed only on income derived from Korean sources or earned within the country.

Non-resident companies without a permanent establishment in South Korea are generally subject to withholding tax. Such companies must pay withholding tax on each income received from Korean sources.

The standard corporate income tax rate in South Korea depends on the company’s taxable income and ranges from 10% to 25%.

VAT in South Korea

The standard VAT rate in South Korea is 10%. VAT applies to most goods and services supplied within the territory of South Korea.

Filing and Reporting in South Korea

Every company registered in South Korea is required to prepare and submit annual financial statements. Therefore, based on the reporting period (which, as a rule, is one calendar year), it is necessary to prepare financial statements that provide a detailed reflection of the company’s business activities in South Korea.

In certain cases, an audit is also required, so if you are planning to register a company in South Korea, please consult our specialists for all the details.

Conclusion

Registering a company in South Korea is an excellent choice for investors and entrepreneurs seeking a simple and convenient location to conduct and grow their business. It is possible to establish a company with 100% foreign ownership, enjoy attractive tax rates, and complete the company registration process in just 8 days.

How Can We Help?

• advise you on the most suitable company structure based on your goals;
• assist with document collection and provide consultations on operations, structure, and related matters;
• register your company in South Korea;
• handle communication with the registration authority on your behalf;
• prepare a full set of statutory documents for your registered company;
• assist with document notarization if needed;
• help open a corporate bank account;
• deliver the documents to your specified address.