Set Up Business in South Korea

South Korea Expansion Guide

Global Upside helps companies set up, hire, and operate in South Korea. Set up a legal entity quickly and easily with our solutions for branch, subsidiary, and rep office. Looking for an alternative to permanent establishment? Hire and pay employees in South Korea without a legal entity by using our PEO & employer of record services. Once your business is set up, our teams can support with recruitment and staffing, human resources, employee benefits, payroll, accounting, and tax.

Capital City

Seoul

Currency

South Korean Won (₩)

Language

Korean

Government

Democratic Republic

Country Overview

Located in East Asia, South Korea is a high-tech, service-based economy that is one of the fastest-growing developed nations in the world. Since the 1960s, South Korea has seen stable growth and alleviation in poverty.

  • South Korea is known for its remarkable rise from one of the poorest nations in the world to a high-income, developed country.
  • South Korea’s major exports consist of electrical equipment, vehicles, petroleum oils, parts, and accessories for vehicles.
  • The main import items are petroleum oils, electrical equipment, gas, hydrocarbons, and coal.

Options for setting up a legal entity in South Korea include:

Limited Liability Company (LLC) / Yuhan Hoesa

A limited liability company (LLC), or Yuhan Hoesa, is the most common form of legal establishment in South Korea. An LLC must appoint at least one investor and one director. The minimum share capital requirement is only $1.

General Partnership / Hapmyeong Hoesa

A general partnership, or Hapmyeong Hoesa, is formed by at least two partners who share unlimited liability. Each partner is jointly liable for all debts that are incurred by the establishment.

Limited Liability Partnership (LLP) / Hapja Hoesa

A limited liability partnership (LLP), or Hapja Hoesa, is a form of establishment that requires at least one partner to subject themselves to unlimited liability and at least one partner to maintain limited liability. The LLP is responsible for paying Korean corporate taxes and cannot be treated as a pass-through entity.

Joint Stock Company or Chushik Hoesa

A joint stock company, or Chushik Hoesa, is a standard corporate setup for foreign businesses that establish subsidiaries in South Korea. The liability is restricted to the capital investment by the shareholders.

It takes a minimum of 2 to 4 weeks to incorporate a legal establishment in South Korea.

The following information must be included in all employment agreements:

  • Remuneration
  • Working hours
  • Working conditions

The government mandates only one paid holiday:

  • May 1: Labor Day

Employers may offer others but are not required to do so.

Wages are usually paid by the 15th of each month in South Korea. Pay slips can be issued to employees electronically.

Accounting standards in South Korea, regulated by the Korean Accounting Standards Board (KASB), follow the International Financial Reporting Standards (IFRS), renamed Korean IFRSs (K-IFRSs). All companies doing business in the country must use either IFRS Standards, as adopted in Korea, or US GAAP.

Corporate Tax

The corporate tax rate in South Korea is 25%.

Value Added Tax (VAT)

The VAT rate for services and goods is 10%.

The Personal Information Protection Act (PIPA) was established to protect personal data and information. The collection and use of personal data and information by IT service providers is regulated under the Act on Promotion of Information and Communication Network Utilization and Information Protection (IT Network Act).

Anti-Bribery & Anti-Corruption Law

Articles 129 to 133 of the Criminal Act cover anti-bribery statutes and establish both bribery in any form as an illegal activity.

1. Bribery of Public Officials

For Individuals:

i) Ban from the profession for up to 10 years

ii) Imprisonment for up to 5 years

iii) A monetary fine

iv) Confiscation of all assets resulting from the illegal activity

2. Bribery of Private Employees

For Individuals:

i) Imprisonment for up to 5 years

ii) A monetary fine of a minimum of KRW 10 million

iii) Confiscation of all assets resulting from the illegal activity