South Korea Business Registration Guide

Corporate Registration — 상법 (Commercial Act)

• Types of companies: Under the Korean Commercial Act (상법), the most common corporate forms are: the stock company (주식회사 — "Chusik Hoesa") — the equivalent of a corporation with limited liability; the limited liability company (유한회사 — "Yuhan Hoesa"); the partnership company (합명회사); and the limited partnership company (합자회사). The stock company (주식회사) is the most popular for both the Korean and the foreign investors.
• Incorporation steps: (1) Prepare the articles of incorporation (정관) and have them notarised by a Korean notary public (공증인). (2) Deposit the capital (자본금) — at least KRW 100 (no minimum capital requirement since the Commercial Act amendment). (3) Register the incorporation with the district court (등기소) — file the articles, the capital deposit certificate, and the director's acceptance. (4) Pay the registration tax (등록면허세) of 0.4% of the capital plus the local education tax (0.16%).
• Foreign direct investment (FDI) registration: If the foreign investor owns 10% or more of the shares, the investment may be registered under the Foreign Investment Promotion Act (외국인투자촉진법) with the Korea Trade-Investment Promotion Agency (KOTRA) or the foreign exchange bank. The FDI registration provides the tax benefits (the corporate tax and the customs duty exemptions) and the visa support.
• Timeline: The standard incorporation takes approximately 2–4 weeks. The FDI registration may add 1–2 weeks.

For example: a foreign entrepreneur establishing a 주식회사 with a capital of KRW 100,000,000 pays registration tax of KRW 400,000 (0.4%) plus the local education tax of KRW 160,000 (0.16%).

Business License — 사업자등록

• When required: Every business that generates revenue in Korea must register for a business licence (사업자등록증) with the district tax office (세무서) within 20 days of the business commencement. The business licence is required for both the corporations and the sole proprietors (개인사업자).
• Required documents: The application form (사업자등록신청서), the corporate registration certificate (법인등기사항증명서) for the corporations, the lease agreement for the business premises, and the identification of the representative.
• Business registration number (사업자등록번호): The tax office issues a 10-digit business registration number — the first 3 digits represent the tax office code, the next 2 digits represent the type of business, and the last 5 digits are the serial number. This number is used for all tax filings (VAT, corporate tax, withholding tax) and the tax invoices (세금계산서).
• Online application: The application may be filed online through the Hometax system (홈택스 — www.hometax.go.kr) or through the Government 24 system (정부24 — www.gov.kr).

For example: a newly incorporated 주식회사 files the business registration application with the Samsung Tax Office (삼성세무서) in Seoul and receives the business registration number (e.g., 123-45-67890) within 3–5 business days.

VAT Registration

• Automatic registration: The VAT registration (부가가치세 등록) is integrated with the business licence (사업자등록) application. When a business registers for the business licence, the VAT registration is processed automatically. The tax office issues a single certificate (사업자등록증) that serves as both the business licence and the VAT registration certificate.
• VAT rate — 10%: The standard VAT rate in Korea is 10%. The zero-rated supplies (0%) apply to the exported goods and the international services. The VAT exemption applies to the unprocessed food, the medical services, the education, and the financial services.
• VAT filing: The VAT return must be filed semi-annually (every 6 months) — the first period (January to June) is due by 25 July; the second period (July to December) is due by 25 January of the following year. The simplified taxable persons (간이과세자) file once a year.
• Tax invoice (세금계산서): All the VAT-registered businesses must issue the tax invoices (세금계산서) for the taxable supplies. The electronic tax invoice (전자세금계산서) is mandatory for the supplies exceeding KRW 100,000,000 per year.

For example: a consulting company with annual revenue of KRW 200,000,000 charges 10% VAT (KRW 20,000,000) on its services. The company may claim input VAT on the office rent, the utilities, and the professional fees — reducing the net VAT payable.

Local Tax Registration

• Local taxes: The local government registration involves: the local income tax (지방소득세) — 10% of the corporate income tax; the local consumption tax (지방소비세) — included in the VAT; the property tax (재산세) — payable annually on the real estate holdings; and the acquisition tax (취득세) — payable upon the acquisition of the real estate.
• Registration with the local government: The corporation must register the business location with the local government (시/군/구) for the local tax purposes. The registration is usually processed automatically when the corporate registration is filed with the court, but the business may need to file a separate report for the local consumption tax (지방소비세 신고).
• Local income tax filing: The local income tax return (지방소득세 신고) must be filed together with the corporate tax return (법인세 신고) by 31 March of the following year for the corporations. The local income tax is 10% of the corporate income tax — e.g., if the corporate tax is KRW 10,000,000, the local income tax is KRW 1,000,000.

For example: a corporation with a corporate tax liability of KRW 50,000,000 must also pay the local income tax of KRW 5,000,000 (10% of the corporate tax) and file the local income tax return together with the corporate tax return.

FAQs

What is the minimum capital requirement for a Korean corporation?

There is NO minimum capital requirement since the amendment to the Commercial Act. The corporation may be established with a capital of KRW 100 (approximately USD 0.08). However, for the practical purposes (the office lease, the operating expenses, the visa requirements), a capital of at least KRW 100,000,000 is recommended for the foreign investors.

Can a foreigner register a business in Korea without a Korean partner?

Yes. A foreigner may establish a 100% foreign-owned company (주식회사) in Korea without a Korean partner. The foreign investment must be registered under the Foreign Investment Promotion Act if the investment exceeds KRW 100,000,000. For the smaller investments, the standard incorporation procedure applies.

What is the difference between the 'general taxpayer' (일반과세자) and the 'simplified taxpayer' (간이과세자)?

The general taxpayer (일반과세자) charges 10% VAT on all supplies and may claim the full input VAT credit. The simplified taxpayer (간이과세자) is available for the businesses with annual revenue below KRW 80,000,000 (2026 threshold). The simplified taxpayer pays VAT at a reduced rate (applied to the revenue, not the margin) and cannot issue the tax invoices (세금계산서). The simplified taxpayer status is automatic for the eligible businesses unless the business opts for the general taxpayer status.