Types of entities
When establishing a business in Korea, it is important to choose the most appropriate registration vehicle. The three most common types of corporate registration vehicle are:
1. Korean incorporated subsidiary company Established as a local company, a subsidiary company has a closer relationship with the local business community and the opportunity for incentives depending on the type of business based on the Special Tax Treatment Law. The minimum capital requirement at establishment to be allowed as a foreign invested company is KRW 100 million.
2. Registered foreign company (Branch office) A branch office is treated as a separate taxable entity and able to operate as a revenue generating entity. Sales and manufacturing activities are allowed. There is no minimum capital requirement at establishment. Tax incentives are not available to branch office. It may include operating funds from head office.
3. Representative company (Liaison office) A liaison office, which is not a legal entity and is deemed as non-income generating entity, can only conduct preliminary or auxiliary activities such as marketing and supporting for its head office. There is no minimum capital requirement at establishment.