Consideration for doing business in Korea as foreign-invested company from the USA
☞ The following statement is about consideration for doing business in Korea as foreign-invested company from the USA, and is not legally binding.
The US individual or corporation should consider the form of an entity for its purpose and KOR-US international taxation above all if you do business with setting up foreign-invested company in Korea.
1) Form of Entity
Category
|
Local Company
|
Branch Office
|
Liaison Office
|
Scope of Business
|
No restriction within permission
|
No restriction within permission
|
Restriction within non-sales activities such as liaison or research
|
Nature of Business
|
Local company
|
Foreign company
|
Foreign company
|
Accounting treatment
|
Separated from parent company
|
Consolidated with parent company
|
Consolidated with parent company
|
Minimum Capital requirement
|
KRW 100,000,000
|
No required
|
No required
|
Operating funds from parent to subsidiary
|
No allowed
|
Allowed (any time)
|
Allowed (any time)
|
Investing funds
|
Allowed as capital contribution
|
Allowed (any time)
|
Allowed (any time)
|
Employee’s VISA
|
Permitted
|
Permitted
|
Permitted
|
Expatriation of net profits
|
Distributed as dividend which is taxable after annual income tax return filing in Korea and bank documentation (annually)
|
Transfer-out which is non-taxable (any time)
|
No permitted
|
2) International Taxation
Type
|
Individual(US) in
|
Corporate as
| ||||
Local
|
Branch
|
Liaison
|
Local
|
Branch
|
Liaison
| |
Korea-US tax treaty
|
O
|
O
|
O
|
O
|
O
|
O
|
Korea income tax obligation
|
O
|
O
|
O
|
O
|
O
|
n/a
|
US income tax obligation
|
O
|
O
|
O
|
n/a
|
O
|
n/a
|
Transfer pricing(TP) rule
|
n/a
|
n/a
|
n/a
|
O
|
O
|
O
|
Thin capitalization rule
|
n/a
|
n/a
|
n/a
|
O
|
O
|
O
|
Controlled Foreign Corporation(CFC) regime rule
|
n/a
|
n/a
|
n/a
|
O
|
O
|
O
|
International withholding tax rule
|
O
|
O
|
O
|
O
|
O
|
O
|
Foreign tax credit rule
|
O
|
O
|
O
|
n/a
|
O
|
n/a
|
Mutual Agreement Procedures(MAP)
|
n/a
|
n/a
|
n/a
|
O
|
O
|
O
|
Mutual administrative assistance in tax matters and Report of foreign financial asset account(FBAR, FATCA)
|
O
|
O
|
O
|
O
|
O
|
O
|
Base Erosion and Profit Shifting(BEPS) project
|
n/a
|
n/a
|
n/a
|
O
|
O
|
O
|
Totalization agreement for social security
|
O
|
O
|
O
|
n/a
|
n/a
|
n/a
|
Source: U.S. Korea Connect
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