Form of Business

There are two ways in which foreigners can advanceinto Korea for business purposes. They are establishing a local corporation anda local branch. The biggest difference between them is whether registeredcapital is invested. The investigation affects how dividends are paid. Profitsgenerated from a branch is aggregated to that of their headquarters. However,the profits from a corporation should be remitted to their headquarters onlyafter dividend decision is made. A foreign branch should bear the samecorporate tax and VAT liabilities as a foreign corporation. The type ofinvestment should be decided based on their type of business. When aninvestment is made, the capital and equity structure should be considered.