Ease of Doing Business Rank: 5
South Korea is an eastern Asian nation located on the southern tip of the Korean peninsula between the Sea of Japan and the Yellow Sea. The northern tip is the separate nation of North Korea.
China lies to the west, Japan to the east, and Taiwan and the Philippines to the south.
Korean is the official and national language of South Korea. English is also widely spoken due to government promotion as a second language and its usefulness in trade and business. Older South Korean residents may speak Japanese.
South Korea’s population as of 2019 is approximately 51.46 million. More than 80 percent of inhabitants live in urban areas. Seoul is South Korea’s capital, the largest city, and home to about half the country’s population.
The top industries in South Korea are shipbuilding, automobile, mining, construction, armaments, tourism, and technology.
NJ Med’s 2019 World Best Education Systems rankings list South Korea 3rd globally in the first quarter of this year.
The Times Higher Education World Rankings report South Korea has two universities in the top 100, and 11 in the top 500.
The most common business entities in South Korea are General Partnership, Limited Liability Partnership, Joint Stock Corporation, and Limited Liability Corporation.
The most commonly incorporated entity in South Korea is the limited liability company.
South Korea fosters foreign direct investment and offers many business-friendly incentives. These include tax credits on income paid to a foreign government which can be used against taxable income in Korea. These credits can be carried forward for five years.
Korea also offers special tax deductions of between 5 and 30 percent for SMEs engaged in a qualified business. The country also offers tax credits for investments in facilities that benefit the nation, improve safety standards or promote commercialization of new growth in core technologies such as drug manufacturing.
Companies that stimulate job creation in particular industries may also qualify for tax incentives. Additionally, companies that show substantial increases in their corporate payroll may also qualify for tax credits.
South Korea also offers incentives for research and development, technology transfers and patents, and mergers and acquisitions of innovative technological SMEs. They also offer incentives for environmental and energy initiatives.
The Korean government also provides substantial incentives and benefits for foreign companies that invest in certain qualified high-technology pursuits, including up to 100 percent exemption for tax for five years. Businesses that operate in foreign investment zones (FIZs), free economic zones (FEZs), free trade zones (FTZs), and strategic industrial complexes may also realize incentives.
Seoul has the largest business district, followed by Busan, Incheon, Daegu, Daejeon, Kwangju, and Suwon. Seoul is largest financial center in the country.
South Korea includes 12 UNESCO World Heritage Sites including the splendid Gyeongbokgung Palace. It was home to the royal family and the only palace with all four major gates intact. Visitors can watch the changing of the guard ceremony.
Another royal residence, Changdeokgung Palace, blends architecture with environment to create a magnificent blend of pavilions, ponds, and rock formations.
Bukchon Hanok Village showcases the traditional life of the relatives of the royals. The nearby scenic outlooks of the area offer breathtaking views. Insa-dong is a major thoroughfare selling traditional crafts, foods, and teas in the unique H-shaped “hanok” buildings. The vibrant hub of Hongdae includes several museums and the expansive Gyeongui Line Forest Park.
South Korea also features many outstanding contemporary architectural examples such as the Namsan Seoul Tower in the center of the city. Nearby Lotte World offers two large amusement parks, shopping, and the Lotte World Tower Seoul Sky.
Namiseom Island was created when the Cheongpyeong Dam flooded the area leaving a small hilltop island focused on nature and sustainability. The spectacular Garden of Morning Calm features Korea’s botanical wonders in various themed gardens.
Several competing kingdoms unified into a single dominion on the Korean Peninsula around 668 AD. The successive regimes maintained political and cultural independence for more than a thousand years.
Korea survived Japanese invasions in the 16th century and the attacks of the Manchus of East Asia in the early 17th. However, Korea broke contact with the outside world. This led to a 250-year period of peace, but Koreans remained isolated.
In the late 19th century, Britain, France and the United States tried to establish diplomatic and trade ties with Korea, with little success. At the start of the 20th century, this small peninsula gained strategic importance and Japan, China and Russia vied for control. Japan overtook the peninsula in 1905.
For the next 35 years Korea became an industrialized country under colonial rule, but the Japanese government also tried to cleanse the country of its culture and language.
After Japan’s defeat in 1945, the United States and the Soviet Union split the country into two zones. The Republic of Korea (South Korea) was strongly anti-communist and the U.S. established a military government in Incheon. The Soviets installed their first premier in the Democratic People’s Republic of Korea, or North Korea.
South Korea declared independence from North Korea in 1950. However, backed by China and the Soviet Union, North Korea tried to regain control of the entire peninsula and the Korean War raged for three years, with the U.S. and United Nations backing South Korea. When the war ended the Korean Peninsula was divided once again with a demilitarized zone (DMZ) along the border.
South Korea maintained close military, political, and economic ties with the United States, however the citizens had little political freedom. The country remained under a republic until a coup d’état in 1961.
The military leader Park Chung-hee began a series of economic policies to bring Korea into the developed world. South Korea experienced rapid economic growth and industrialization and became one of the fastest growing nations in the world through the 1970’s.
In 1979, Park was assassinated and the country was thrown into turmoil including riots between students and the armed forces. South Korea increasingly shifted its economy toward high-tech and computer industries in the 1980s and improved Soviet and Chinese relations.
The country continued to transition away from military rule towards democracy, and in 1993 the people elected the first civilian president in more than 30 years. He further liberalized the political system and tackled corruption within the government.
Today, South Korea remains stanchly democratic. The nation is one of East Asia’s most affluent countries, with an economy ranking just behind Japan and China.
The country has many religious affiliations including Christianity, Buddhism, Confucianism, and Islam, and Korean native religions such Won Buddhism and Cheondogyo. The majority of people are Protestant, followed by Buddhist, and Catholic.
South Korea is a relatively homogeneous society with approximately 96% of the total population of Korean decent. The remainder is Chinese, Vietnamese, North American, Filipino, and other nationalities.
According to Forbes’ 2019 Best Countries for Business South Korea ranks 16th overall globally for conducting business. South Korea ranks number one in technology.
The 2019 Index of Economic Freedom rates South Korea 29th globally and states, “The rule of law is fairly well institutionalized, supporting such other pillars of economic freedom as regulatory efficiency and market openness.”
Blueback Global provides a one-stop integrated solution to managing all aspects of your global operations. We can take the burden off you or your company’s internal resources by managing Entity Setup, Local Payroll, Accounting, Tax Reporting, HR Admin and Regulatory Compliance matters associated with operating in a foreign country. Our services are designed to be flexible and customized, so whether you are starting from entity registration, or have already registered but need support in setting payroll or hire employees, we can help at every point of the process.
The common scenarios that may give rise to the need for Blueback Global’s services include the following:
With our integrated approach, you can expect the following experience:
We have an initial complimentary meeting to discuss the scope, objectives and plans for your expansion plan into South Korea. After this meeting, you can expect a follow-up proposal from Blueback Global within 1 to 3 business days, that outlines that the approach, scope of work and expected deliverables and outcome. Thereafter, our implementation team will then work closely with your team to register the local entity, set up payroll, accounting process, employee social security and benefits. We will then develop a mutually agreed timeline and approach for ongoing payroll, accounting, tax reporting and HR support. Blueback Global will set up a compliance calendar so that you know exactly what and when compliance items such as tax reporting and payroll returns are due. We will of course facilitate all of these, so you do not have to keep track of the compliance dates.
Our goal is to make the process as smooth, simple and successful as possible, and remove the anxiety of operating in a foreign location, to deliver a great customer experience.