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Joseph SY Zoh

CPA, California, a member of AICPA  |  Jz Associates/Tax Accounting Firm Hae-An

F:+82-31-273-5078  |  Skype: joezoh  |  Email: jz@taxjz.com

Web : www.taxjz.com  |  Blogs: www.koreantaxblog.com

Korean Tax Blog

since 1981-

Establishing an Entity

 

 The Korean government would like to welcome you to the country if you would like to become an investor/businessperson here. All you have to do is send over foreign currency valued at W100,000,000 or more to our country to start a company and Korea will be happy to provide you with a special “Investors' Visa.” It’s called the D-8, and it’s really cool because you can skip the lines at the immigration office with it. This is also known as “Foreign Direct Investment” or FDI. In order to get that D-8 visa, first you have to establish your company, and then you have to get it registered as an official FDI company. To get this FDI certification, you need to get this investment from abroad sent directly into your designated Korean bank. Sorry, if you’ve saved up that money while living in Korea, it doesn’t qualify. Until you send it out and back in again, anyway. How much will it cost to establish this FDI-certified company? It should run you less than 2 million KRW in expenses. That 2 million includes taxes (in case of 100 million KRW paid-in-capital). There may be a service fee added to your total (anywhere between 2 and 8 million KRW), meaning that to get that FDI-certified company, at a maximum you would be paying 10 million KRW. It depends on your choice, your biz partner, but I know that I don’t have to tell you that price does not always equal quality. After registering your company at a district commercial court, you need to begin your applications: apply for your business registration at a tax office, and apply for the FDI certificate at a bank. While you’re at the bank, don’t forget to open a bank account. That account will allow you to operate your company, as well as getting you the notorious digital certificates. You need 2 digital certificates: one for online banking and one for issuing tax invoices (세금계산서). Its compulsory to issue a tax invoice electronically if you’re setting up a corporation or a branch. For your business address, you need to provide the court and tax office with a fixed address. This means that, from the beginning, you’re going to need a lease contract with a fixed address since you need that address whenever dealing with a government organization. If you change your home or company address, you need to report it to the court and – for the company address – to the tax office, as well. If you already reside in Korea under some alternative visa and are not in need of a D-8, then you can establish a limited liability company with only W10, 000, 000 paid-in-capital. If you already have a company registered in your home company or another country, and would like to register to do business here, then you can create a branch. According to the government news briefs released, the FDI amount in the first half of the 2013 fiscal year was around 8 billion USD, up from 7.1 billion USD in the first half of 2011. Of this 8 billion USD, $2.5 billion was from the US and $2.4 billion was from the EU. When broken down by industry, $5.4 billion went into the service industry, and $2.5 billion into manufacturing.

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