Business Registration Requirements and Procedures in Korea
A. Procedure for Business Registration (Article 5 of the Value-added Tax Act)
1) All business establishments must be registered.
2) In case you register multiple businesses, each business requires to be registered individually.
3) Registration can be applied for in 20 days from the start date of your business, with the necessary papers, in the civil service area of the national tax service, with jurisdiction in the area of your business address. The process of business registration can start before the start of business, but you must apply personally.
4) In a joint business, the registration should be in the name of one of the joint operatives of that business.
B. Per-business Unit Taxpayer Scheme
1) If one individual operates two businesses and that an individual is registered as a per-business unit taxpayer with the National Tax Service in the authority where the principal place of business is done, the individual may report and pay the related taxes for each business together.
2) Setting up 2 or more businesses including the main office or the business hub and seeking taxation per business unit, one must register with the head of the National Tax Service with authority on the location of the head office or the business hub in not more than 20 days from the launch of your business. (the business registration form)
3) If the current businessperson seeks per business unit taxation, he/she must register 20 days before the start of the taxation period. (business unit taxpayer registration form)
Online Application: To apply online, connect to the National Tax Service website to apply.
The required documentation (on the webpage) is required in a scanned format.
Korean citizens living overseas will require the extra documents listed below:
i. A registration certificate as a Korean national living overseas, a copy of the registration report, or a copy of the Korean national’s passport photo page.
ii. In case the entrepreneur does not typically live in the business setup or has lived there for less than 6 months, he/she may appoint a tax manager and report it.
C. Basic Taxpayer vs. General Taxpayer
1) Basic taxpayer: Single business with anticipated yearly sales lower than KRW 48,000,000
General taxpayers are taxed at 10% and all the VAT on the purchase tax invoice it gets while purchasing goods.
Put differently, the tax amount of the purchase tax invoice (10% of the purchase amount) is taken away.
If your previous year’s annual sales have been KRW 48 million or more, you are a general taxpayer.
2) General taxpayer: Single taxpayer apart from a basic taxpayer
Businesses qualifying for various tax benefits when VAT is charged.
In single businesses, whose annual sales are not KRW 48 million, (VAT included), retail stores, restaurants, hair salons operating a business in non-urban regions or outside the capital area and the real estate sales, real estate brokerages, assessment businesses do not qualify for simplified taxing.
Although tax of 0.5-3% is applicable, only 5-30% of purchase tax amount may be charged and no tax invoice may be issued.
Tax amount calculation: sales × value-added rate per business × tax rate (10%)
Although the sales amount of the businesses in the center of the city does not equal KRW 48 million, producers and real estate sales do not qualify for basic taxation.
D. Paperwork while Registering your Business in Korea
1) Individuals
1. One copy of Korea Business Registration form
2. Copy of lease agreement (only for businesses that lease).
Given for sublease agreements, a copy of the sublease agreement was required (consent or authorization from the building owner shall be marked.)
3. Copy of the Permission (registration, report) Certificate, (corresponding businesses) – If registration has happened before the Permission (registration, report), the Copy of the Business Registration Application or such as Permission (registration, report) or the Prospectus
4. Partnership Agreement (for Cooperative Businesses)
5. Korean citizens living overseas, documents showing that they are foreigners: passport copy or copy of the alien registration card. For non-Korean residents: tax manager designation report.
2) For-profit Corporation
1. One copy of the Application for Korea Company Registration Incorporation and the Business Registration Form
2. One copy of the Korea Corporate Registration
If no consent is given to confirm the personnel in charge, the applicant should directly submit the document.
3. (Corporation Name) One copy of lease agreement (only for currently leasing businesses)
4. One copy of Shareholders or Investors List
5. One copy of the Business Approval, Registry, and Report stamped Certificate (only for the respective enterprises) – In case the registration (registration, report), before the permission registration: a copy of the permission (registration) application or business plan
6. One copy of List of in-kind Contributions (limited for in-kind contribution corporations)
3) Non-profit Koreans
1. A single copy of Application for Registration Incorporation and Business Registration form
2. A single copy of the Corporate Register
If there is no consent to the confirmation of the personnel, the applicant must personally submit the document.
3. (Corporation Name) A single copy of the lease agreement (solely for businesses currently leasing)
4. One copy of the Business Permission, Registration, and Report stamped Certificate (only for the corresponding corporations) – If the registration (registration, report), before the permission registration: a copy of the permission (registration) application or business plan.
5. A single copy of Incorporation Permission Certificate from the concerned authority.
4) Koreans
1. A single copy of the Application for Registration Incorporation and Business Registration form
2. A single copy of the Corporate Register
Refusal of consent to the confirmation of the personnel in charge requires the applicant to directly submit the document.
If the registering business is a non-registered corporate branch, the minutes from a board of directors’ meeting can confirm setting up of the branch. (Calling a board of directors’ meeting is tough because of issues like direct sales shop creation, a copy of the document with the CEO’s sanction.)
3. One copy of the lease agreement (only for business leasing at present)
Contact Us
Having any question? In doubt and need clarification. Feel free to contact us through the following and talk to our professionals:
Email: tannetinfo@gmail.com
Tel: +603-21418909
Wechat:13530066130