The World Bank and International Finance Corporation in their Doing Business Report 2015, have compared 189 nations on nine specific measures related to establishing a business. Korea was ranked fifth out of 189 economies for overall ease of doing business – with Singapore number one and Australia ranked 10th.
They have particularly made starting a business easier by reducing costs, allowing online payment of registration taxes, setting time limits for value added tax registration and eliminating the minimum capital requirement and notarisation requirements.
You should develop a Korea strategy before deciding on how to launch your business there. In particular:
- Avoid going into Korea cold. Get a foot in the door first
- Take care over who helps you get started
- Be directly involved in the setting up process
- Allow plenty of time for bureaucracy – both filling in forms and waiting for approvals
- Choose a structure based on research specific to your industry and your product
Registering a business in Korea
To establish and register a business in Korea, the Foreign Investment Promotion Act (FIPA) requires the following procedures, which normally take between four to six weeks to complete:
- Foreign investment notification
- Investment capital remittance
- Incorporation registration
- Business registration
- Transfer of paid-in capital to corporate account
- Foreign invested company registration
Specific processes are required for registering particular types of business:
All foreign companies – except those operating in sectors where foreign investment is restricted – may set up a branch in Korea. The establishment of a branch is completed upon registration at a relevant tax office and the court registry. It usually takes two to three weeks to set up a branch office after receiving all the required documents from the head office.
Additional approval may be required from relevant ministries, depending on the industry involved. For example, the Financial Services Commission must authorise banks, securities companies and other types of financial institutions. Branch offices are subject to the Foreign Exchange Transactions Law, and may be established as either repatriating or non-repatriating entities.
Foreign companies are permitted to establish liaison (representative) offices in Korea. Compared to Joint Stock and limited liability companies, however, liaison offices have more restrictions on their activities and cannot conduct commercial business or generate revenue in Korea.
Allowed activities for liaison offices include non-revenue generating activities such as marketing or promotion, market research, review of business opportunities and research and development. Selling goods or services is strictly not permitted. Liaison offices are available for foreign companies engaged in all sectors of the Korean economy and are covered by the Foreign Exchange Transactions Act.