How & When?
If you need to provide your goods
or services through a permanent establishment in Korea,
you have to register it with the court as a branch.
The registration will allow a foreign company to hold
its assets in the branch's name. This improves the
control the head office has over its assets and make
it much easier to replace employees and transfer assets,
compared with a liaison office.
A Korea branch of a foreign corporation
should be registered with the following three Korean
institutions, at a minimum.
exchange bank (or Ministry of Finance & Economy)
with the bank
A Korea branch of a foreign company
should be filed to foreign exchange bank along with
the following documents :
form for establishment of Korea branch
verifying identity of the foreign company concerned
(e.g., name, address, etc.)
In the following cases, however, registration
should be made to the Ministry of Finance and Economy.
related business other than banking (i.e, lending
of funds, arrangement of foreign finance, credit card
which is not permitted pursuant to laws and regulations
which would likely to harm public morals
with the court
Under the Commercial Code of Korea,
a Korea branch of a foreign corporation should be
registered with the jurisdictional court as a legal
entity. The documents required for registration are
copy of the articles of incorporation establishing
the Korea branch
of Corporate information in the designated form
of Corporate Resolutions approving the establishment
of the Korea branch and appointing the Korea branch
of Corporate nationality
All of the above documents must be issued
or certified by the competent public authorities where
the corporation is incorporated. If those procedures
are not available, the Korean Court may accept the
document certified by a notary public if either :
a) the notary
is a public authority or
b) the documents are authenticated by a certificate
from a public authority.
As a matter of practice, the court registration
officials also request that the document be confirmed
by a Korean Consul in the Country where the corporation
with Tax office
No later than twenty(20) days following
the registration with the court, the following documents
should be submitted to the appropriate tax office
to get the tax code number.
in designated form
of Court registration
Certificate of foreign company
balance sheet with details of accounts
of a Branch Office
A branch is subject to corporate income
tax on its Korean-source income. The corporate income
tax returns should be filed at the end of each relevant
fiscal year. Korean tax law requires a branch to keep
double-entry bookkeeping system for supporting taxable
Value Added Tax(VAT)
A Korea branch has to file VAT returns
quarterly. In general, Korea VAT system is similar
to that in effect in many European countries. When
the branch provides goods or services in Korea, it
is required to collect VAT from the purchaser at the
flat rate of ten percent of the goods and service
price ("output tax"). On the contrary, when
the branch buys goods or service , it has to pay 10%
of VAT to the supplier ("Input VAT").
The difference between output VAT and
input VAT should be paid to the appropriate tax office
quarterly. If input VAT exceeds output VAT, the difference
would be refunded on a semiannual basis.
However, exports of goods or services
are granted a zero tax rate. And there are 18 types
of VAT exempt transactions, including provision of
health care, education, books and magazines.
When a branch pays interest, dividend,
Class A wage and salary, severance income or other
income, it is required to withhold income tax thereon
at the time of such payment and pay it to the tax
office by the 10th of the following month. The withholding
tax rate will be different according to the nature
of paid income.