There are three ways by which foreigners (foreign corporations) can enter Korea for business purposes: establishing a local corporation, a local branch, or a liaison office.
The establishment of a local corporation in Korea by a foreigner (individual or corporation) is regulated by the Foreign Investment Promotion Act and the Commercial Act. For a local corporation to be recognized as a foreign-invested company under the Foreign Investment Promotion Act, a foreigner must invest not less than 100 million won in the local corporation and acquire not less than 10 percent of the company’s stocks with voting rights. A corporation established by a foreigner with an investment of not less than 100 million won is also recognized as a foreign investment under the Foreign Investment Promotion Act. (In the case of foreigners who have established a private business, issuance of the D-8 corporate investment visa is not permitted. However, a D-9 trade management visa can be issued for foreigners investing 300 million won or more.) 。
A domestic branch of a foreign company can be classified into a branch and a liaison office depending on whether the entity engages in sales activities. A branch that operates a business that generates profit in Korea is not considered foreign direct investment because it is a branch of a foreign company, not a domestic company. A liaison office does not carry out businesses that generate profit in Korea, but instead undertakes non-sales functions such as market research and R&D. Unlike a branch, a liaison office does not need to undergo registration, and is granted an identification number equivalent to the business registration number at a jurisdictional tax office in Korea.
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