South Korea is a high-tech economy jurisdiction. Favorable business conditions attract the attention of foreign investors, who want to register a company in South Korea.
Benefits of this jurisdiction for your business:
- 100% foreign ownership;
- only one director (for an LLC);
- an income tax can be reduced from 25% to 20%;
- a process of setting up a company in South Korea is one of the easiest among Asian countries.
You can register a South Korean enterprise in such legal forms:
- a Joint Stock Company (JSC) is the most common in South Korea, especially for large businesses. Shareholders are only liable for the amount of their contribution to the authorized capital. Shares are freely transferable.
- a Limited Liability Company (LLC) is suitable for small/medium businesses. A liability of all participants is limited to the amount of their contribution to the company’s capital.
- a Private Limited Company (PLC) is similar to an LLC, but a PLC is a type of trade association.
Opening an account in South Korea
Having a Korean bank account will prove your ability to grow a business in Korea. Request for legal advice on opening a corporate account in South Korea from our lawyers.
Registering a trust in South Korea
Main laws, governing the activities of trust structures are:
- Trust Act;
- Trust Business Act;
- Secured Bond Trust Act;
- Public Trust Act;
Types of trusts in South Korea:
- a land trust;
- a disposal trust;
- a collateral trust (a trust management of collateral);
- a parceling-out management trust (used in construction).
The process of establishing a company in South Korea. A list of documents:
- Two copies of the notice of foreign investment.
- For legal entities: certified copies of registration and constituent documents.
- For individuals: identity documents and a citizenship.
- You should also obtain a license in South Korea.
An investment information must be transferred to KOTRA (Korea Business Center).
The state duty for registering a South Korean LLC is 100 million KRW, for JSC is about 1 620 000 KRW.
A company name and financial reports
Enterprises should have an abbreviation “LLP”, “Ltd”, “Co.”, “LLC” next to their name.
Financial statements must be submitted annually by both a JSC and an LLC.
A company structure:
JSCs, LLCs and PLCs must have at least one shareholder. There is no maximum limit on the number of shareholders.
A JSC can be registered with 100 KRW of a share capital. For other types, there is no minimum investment requirement.
Are there any restrictions on the transfer of shares to private companies?
- Shares are usually free to transfer in JSC. A Charter may limit the transfer of shares, requiring approval by the Board of Directors or by a law.
- A transfer of shares in PLC is usually limited by the Articles of Association.
- A transfer of all or a part of shares is not allowed without the consent of other participants in LLC.
Taxes in South Korea
If you plan to open a business in South Korea, request for personal legal advice on a corporate taxation in South Korea from IQD Consulting lawyers.
- Resident companies are required to pay a corporate tax.
- A filing of a tax return and a payment of a tax are carried out within 3 months after the end of the relevant financial year.
- The tax on income from the sale of real estate varies from 10% to 40%.
- Personal tax rates range from 6% to 38%.
- A VAT is 10%. A VAT is paid quarterly.
A company is a tax resident of South Korea, if its main office is located in South Korea, or if the management process is carried out from the territory of South Korea.
Non-residents with a permanent establishment in South Korea are subject to a corporate income tax.
How to set up a company in Korea?
Deciding to register a South Korean enterprise or open an account for a company in South Korea, ask for legal advice with competent lawyers of IQD Consulting. Our experts will provide the necessary information and legal support in opening a company in South Korea.