Setting up Running & Taxes (June 2012) (June,Christie Sun-young LEEUS CPA, Executive Consultant Hana Tax Management Corporation

foreign@hanatax.net sun-y-lee@hanmail.net 010-9044-6459

Contents

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Forms of business entity and setting up a company in Korea Value Added Tax Income Taxes (Corporation, Sole-Proprietor ship and employee) Q&A

1. Forms of business entity in Korea1. Type of Business entity in Korea (1)Type by Tax Law Type of Company Individual Individual Sole proprietorship Minimum Capital for registration Minimum Investment for FDI 100M KRW 100M KRW No limitation Corporation Corporation () Limited Co. () 10M KRW for Limited Co.

1. Forms of business entity in Korea1. Type of Business entity in Korea (2)Type by Tax Law Court registration Income tax rate Value Added Tax Individual N/A 6% ~ 38% Applicable Corporation Required 10% 20% 22% Applicable

1. Setting up a company in Korea1. Process of establishing a business entity

Research and Business plan

Consider related regulation

Funding & Registration g

Operation Set up and p Launching

2. Value Added Tax1. Definition A Value Added Tax is a form of consumption tax. From the perspective of the buyer, it is a t on the purchase F th ti f th b i tax th h price. From the perspective of the seller, it is a tax only on the value added to a product, material or service. In principle, VAT applies to all provisions of goods and services. However, there are some exceptions.

2. Value Added Tax2. Zero Tax Rate ( ) Zero Tax rate shall apply t the supply of goods and services as Z T t h ll l to th l f d d i follows : Exporting g p g goods, Service supply to overseas , pp y - International navigation services by ships and aircrafts; and others

2. Value Added Tax3. Tax Exemption ( ) Unprocessed f d stuffs (including agriculture, li U d food t ff (i l di i lt livestock, fi h t k fishery and forest products) Passenger transport services, Books, Medical and health g p , , services, Financing services. Manpower services which authors, composers, or other specialized persons as prescribed by Presidential Decree Decree.

2. Value Added Tax4. Value Added Tax filing due datesFirst quarter : (Jan1 to Mar31): April 25th is the due date to report Second quarter : (Apr1 to Jun30): July 25th is the due date to report q (Jul1 to Sep30): October 25th is the due date to report p ) p Third quarter : ( Forth quarter : (Oct1 toDec31): Next year January 25th is the due date to report 5. Sample of Korean Tax Invoice will be followed

Two column bullet points

Bullets go in here

And also in here

Contents

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How to establish a business entity in Korea Value Added Tax Income Taxes Other Tax Obligation Q&A

3. Income Tax

Tax Base KRW 200 M or less KRW 200 M ~ 20 B or less Over KRW 20 B Tax rates (Progressive Tax Rate) 10% 20% of the amount over KRW 200 M 22% of the amount over KRW 20 B

I di id l income tax rate f year 2012 >