Doing Business in North Korea

Doing business in North Korea presents unique challenges and opportunities. The country operates a state-controlled economy with limited foreign access. This guide provides an overview of the business environment, registration processes, and key considerations for foreign investors.

Foreign Investment Framework

Foreign investment in North Korea is governed by the Foreign Investment Law and related regulations. Key features include:

• Joint Ventures: Most common structure for foreign investment, requires DPRK partner
• Wholly Foreign-Owned Enterprises: Permitted in certain sectors and special economic zones
• Special Economic Zones: Rason, Kaesong, and others offer preferential treatment
• Approval Process: Foreign Investment Bureau approval required

Registration Procedure

Step 1: Investment Approval

Submit a feasibility study and investment proposal to the Foreign Investment Bureau.

Step 2: Business Registration

Register the enterprise with the relevant authorities. This includes obtaining a business license.

Step 3: Tax Registration

Register with the tax authorities for a tax identification number.

Step 4: Social Security Registration

Register with the state social security system.

Step 5: Bank Account

Open a corporate bank account with a DPRK bank (foreign currency accounts permitted).

Regulatory Environment

• Currency Controls: Strict controls on foreign currency; use of KPW for local transactions
• Labor Laws: State-controlled labor allocation; foreign hiring limited
• Sanctions: International sanctions significantly restrict business operations
• Intellectual Property: Limited protection framework

Costs and Timeline

• Registration Fees: Vary by enterprise type and capital
• Processing Time: Several months for full approval
• Minimum Capital: Varies by sector and location

Ongoing Compliance

• Annual Tax Returns: CIT return due within 3 months of year-end
• Financial Reports: Required quarterly and annually
• License Renewal: Annual business license renewal
• Sanctions Compliance: Ensure compliance with international sanctions regimes