Doing business in South Korea

South Korea is a civil law jurisdiction in which statutes are the main source of law and Supreme Court decisions carry strong persuasive weight. Foreign investment is governed mainly by the Foreign Investment Promotion Act, with branches and liaison offices regulated under the Foreign Exchange Transactions Act. Key bodies for an incoming business include KOTRA (Invest KOREA), the courts' registry for incorporation, the National Tax Service, the Korea Fair Trade Commission, the Personal Information Protection Commission and the Korean Intellectual Property Office.

Key facts

Corporate income tax

10% to 25% (progressive)

Local income tax

10% of corporate tax (top combined 27.5%)

VAT

10% standard

Foreign investment

Notification; KRW 100m and 10% of voting shares to qualify as FDI

Withholding tax

22% (incl. local tax) on dividends, interest, royalties

Minimum wage 2026

KRW 10,320 per hour

Data protection

Personal Information Protection Act; PIPC

New York Convention

Party since 1973 (reciprocity and commercial reservations)

Most foreign investment needs only a notification to KOTRA or a foreign exchange bank before funds are remitted, and qualifies as foreign direct investment at KRW 100 million and 10 percent of voting shares. A limited list of sectors is restricted. Investors can use a company, a registered branch or a non-trading liaison office.

Key facts

• To obtain foreign-invested company status, invest at least KRW 100 million for 10 percent or more of voting shares and file the notification before remitting funds.

• Check whether the business falls in a restricted sector such as defence, broadcasting, air transport or financial services.

• There is no general minimum capital, and a stock company with capital under KRW 1 billion may have one or two directors and no auditor.

• A branch must register with the court and is a taxable permanent establishment; a liaison office avoids registration but cannot carry out sales.

Who handles this in South KoreaCorporate & Entity ServicesGovernment & Regulatory Affairs

Corporate income tax is progressive from 10 to 25 percent, with local income tax adding a tenth. VAT is 10 percent. Outbound dividends, interest and royalties face 22 percent withholding including local tax unless a treaty applies, and Korea applies the Pillar Two Income Inclusion Rule from 2024.

Key facts

• Corporate tax bands are 10, 20, 22 and 25 percent for fiscal years from 1 January 2026, plus local income tax of 1 to 2.5 percent.

• Outbound dividends, interest and royalties carry 22 percent withholding including local tax, reducible under treaty.

• VAT is 10 percent, with zero rating for exports.

• Large groups are within Pillar Two from 2024, and transfer pricing documentation depends on group size.

Who handles this in South KoreaTax & International StructuringAccounting, Reporting & Statutory Compliance

Working time is capped at 52 hours a week including overtime. Dismissal needs just cause and 30 days' notice, and employees with a year's service are owed severance of at least 30 days' average wages per year. Four social insurances are mandatory and the 2026 minimum wage is KRW 10,320 an hour.

Key facts

• Plan rosters within 40 standard hours plus up to 12 hours of agreed overtime a week.

• Dismissal needs just cause, written reasons and 30 days' notice or pay in lieu.

• Accrue severance of at least 30 days' average wages per year of service for staff with one year or more.

• Enrol staff in the four social insurances and pay at least KRW 10,320 an hour from 1 January 2026.

Who handles this in South KoreaEmployment, Payroll & MobilityLegal & Contracting

Defence-industry share acquisitions need prior ministry approval, and business registration requires a real office address. Larger companies face statutory external audit. Sector licensing and investment incentives were not confirmed for this guide.

Key facts

• Defence-industry share acquisitions need prior approval from the trade and industry ministry.

• A virtual office is not enough for business registration, so secure premises before filing.

• Companies above the statutory thresholds must appoint an external auditor and file audited accounts.

Who handles this in South KoreaGovernment & Regulatory AffairsAudit & AssuranceAccounting, Reporting & Statutory Compliance

Investment funds flow through a temporary bank account opened after the foreign investment notification. Branches and liaison offices are regulated under the Foreign Exchange Transactions Act. General reporting and repatriation rules were not confirmed for this guide.

Key facts

• Open a temporary account after notification; for medium or large investments the first transfer is capped at KRW 100 million.

• Branches and liaison offices are set up under the Foreign Exchange Transactions Act rather than the Foreign Investment Promotion Act.

• File the foreign investment notification before remitting investment funds.

Who handles this in South KoreaBanking & Capital AccessPayments, Foreign Exchange & Settlement

Customs duties are levied under the Customs Act, and Korea has free trade agreements with major partners including the US, the EU, China and ASEAN. Exports are zero-rated for VAT. Export controls and import licensing were not researched for this guide.

Key facts

• Customs duties are levied mainly under the Customs Act.

• Check whether goods qualify for preferential duty under Korea's free trade agreements with the US, the EU, China, ASEAN and others.

• Exports and services supplied abroad are zero-rated for VAT.

Who handles this in South KoreaTrade, Customs & Supply Chain

The Personal Information Protection Act is enforced by the Personal Information Protection Commission. Overseas transfers need a lawful basis such as separate consent or standard contractual clauses. The AI Basic Act took effect in January 2026, and a further PIPA amendment on AI is expected in late 2026.

Key facts

• PIPA governs personal information processing and the PIPC enforces it, including on cross-border transfers.

• Before transferring personal data abroad, secure a lawful basis such as separate consent or standard contractual clauses.

• The AI Basic Act applies from January 2026, with at least a year's grace before fines are actively imposed.

• Watch for a PIPA amendment creating an AI special exemption, targeted for approval by the end of 2026.

Who handles this in South KoreaTechnology, Data & CyberLegal & Contracting

Trade marks, patents and designs are registered with the Korean Intellectual Property Office. Korea is in the Paris, PCT, Madrid and Hague systems. Patents last 20 years from filing and trade marks 10 years from registration, renewable.

Key facts

• Register trade marks with KIPO; protection lasts 10 years and can be renewed indefinitely.

• Patents last 20 years from filing and can be pursued through the PCT.

• International trade mark and design filings can designate Korea through the Madrid and Hague systems, with Paris Convention priority.

Who handles this in South KoreaIntellectual Property & Brand Protection

The Korea Fair Trade Commission reviews mergers where one party has KRW 300 billion and the other KRW 30 billion of assets or sales, with share thresholds of 20 or 15 percent. Review takes 30 days, extendable by up to 90. A transaction-value test catches acquisitions of innovative businesses, and control acquisitions can face national security review.

Key facts

• Notify the KFTC where size tests of KRW 300 billion and KRW 30 billion are met and the share acquisition crosses 20 percent (unlisted) or 15 percent (listed).

• Allow for a 30-day review that can be extended by up to 90 days.

• Acquisitions of innovative businesses with little revenue can be caught by the transaction-value test.

• Control acquisitions may face national security review, and defence-industry deals need prior approval.

Who handles this in South KoreaTransactions & DealsLegal & Contracting

This research could confirm only that Korea has no general public beneficial ownership register for private companies, though banks still collect beneficial ownership data for anti-money laundering checks. Anti-bribery, anti-money laundering and sanctions rules were not confirmed.

Key facts

• There is no public beneficial ownership register, but banks and regulated businesses will ask for beneficial ownership information.

Who handles this in South KoreaRisk, Compliance & Financial Integrity

Korea has applied the New York Convention since 1973, with reciprocity and commercial reservations. The ordinary courts have three tiers. Arbitration law, institutions and enforcement of foreign judgments were not confirmed for this guide.

Key facts

• Foreign arbitral awards from Convention states arising from commercial relationships can be enforced in Korea.

• Court litigation runs through a three-tier ordinary court system.

Who handles this in South KoreaDisputes & Resolution