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What Is Required To Run A Foreign Business In Korea? (Part I In Series)



What Is Required To Run A Foreign Business In Korea?

1. From A Legal Aspect Foreign companies are required to have any one of following legal entities in Korea

A. Set-up Of Foreign Subsidiaries – Wholly Owned Or Joint Venture

(1) The subsidiaries shall be established pursuant to the provision of Foreign Investment Promotion Act and Commercial Code of Korea and the establishment be registered with the court based on separate document, Topic 1-1, and obtaining court registration certificate after registration)

(2) Application for Certificate of Foreign Invested Enterprise proving foreign investment with following documents attached.

a. Application for the Certificate

b. Court registration certificate of Korean subsidiary

c. Corporate nationality certificate of foreign investor

d. Certificate -Abbreviation of memorandum and articles of association of foreign investor

e. Procedures for establishment of foreign subsidiaries in Korea _ refer to Branch and liaison office

B. Branch And Liaison Office

Branch and liaison office shall be set up pursuant to the provision of Foreign Exchange Control Act and commercial code of Korea based on separate documents #1-2.

C. Permanent Establishment (PE)

In case the foreign company would have PE in Korea, the PE may either set up a branch or running business without set up a branch

D. Common Requirement Of The Above Item A, B, And C.

(1) Office lease agreement showing business place

(2) The business attendant upon disaster from air or water pollution, construction, etc., under Par. 1-A and 1-B requires obtaining ‘Business running permission’ by meeting some conditions provided for respective occasions.

2. Obtaining Tax License (ID) prerequisite document in running business in Korea in purchasing, selling, and tax reporting

A. The above respective legal entities under Par. 1 -A, B, C are required to apply for tax ID with following documents attached

(1) Court registration certificate (in case of PE the ‘Service contract” proving existence of PE can substitute court registration certificate

(2) Office lease agreement

(3) Business running permission _ only in case falling under Par. 1-D(2)

(4)Power of attorney authorizing CPA to apply for tax license

3. Bank Account Opening

A. Opening bank accounts in Koran won currency and foreign currency (US$, Euro)

B. Credit card issuance

C. Documents to be filed in opening bank accounts

(1) Court registration certificate

(2) Tax ID

(3) Photocopy of Passport of the representative of the above legal entities.

(4) Power of attorney authorizing CPA for bank account opening.

Conclusion: By meeting above paragraph 1, 2, and 3 the Korean subsidiary or branches shall be allowed to run business without any other restrictions.

Have a question about business in Korea? Contact Kook Hee.Lee

READ PART II IN THIS SERIES ON KOREA

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