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Foreign Corporation's Advancement into South Korea
1. Local Corporation (Subsidiary)
- Foreign Investment Promotion Act
- Recognized as a foreign investment
- A foreigner shall invest not less than 100 million won for the local corporation in order to be recognized as foreign investment under the Foreign Investment Promotion Act.
- Business investment (D-8) visa, Trade(D-9) visa
2. Branch
- Foreign Exchange Transactions Act
- Categorized as a domestic branch of the foreign corporation
- Generates profits in Korea, and is not recognized as foreign direct investment.
3. Liaison Office
- Foreign Exchange Transactions Act
- Categorized as a domestic branch of the foreign corporation
- Does not carry out business that generates profits in Korea, but instead undertakes a non-sales function such as market research, and R&D
Comparison of a Foreign-Invested Company and a Domestic Branch of a Foreign Company
| Category | Foreign-Invested Company | Domestic Branch of a Foreign Company |
|---|---|---|
| Act | Foreign Investment Promotion Act | Foreign Exchange Transactions Act |
| Corporation Type | Domestic corporation | Foreign corporation |
| Identity | Foreign investors and foreign-invested companies are of separate entities (ondependent accounting & settlement) |
Headquarters and branches are of a single entity (the same accounting & settlemrnt) |
| Authorities in charge of accepting registration and granting permission | Invest KOREA(KOTRA) or headquarters of a foreign exchange bank | Headquarters of a foreign exchange bank for registration, and the Ministry of Strategy and Finance for permission of establishment of a financial business |
| Minimum/Maximum Investment | Minimum of KRW 100 million per investment (No upper limit) | No limit in investment amount |
| Scope of Tax Obligations | Tax oblifations for all domestic and overseas incom Corporate tax : 10% for KRW 200 million or less,20% for over KRW 200 million and 20 billion or less,22% for over KRW 20 billion |
Tax oblifations for incom from domestic sources only Corporate tax rate : 10% for KRW 200 million or less,20% for over KRW 200 million In some cases, branch tax shall be paid. |