Company Formations and Tax (Accountants) in South Korea
11th fl., Samhwa Building, 407 Bongeunsa-ro Ganagnam-gu Seoul, Korea, 06097
Samhwa Accounting was organized in March 1997 with its key members who had been practicing diverse fields of their professions at BIG 4. The Firm comprises over 120 CPAs and similar number of supporting staffs now and its raking is No. 10 in Korea excluding BIG 4. Samhwa has been a member of Moore Global since 2000, which has 110 member countries worldwide.
Samhwa Accounting provides accounting, auditing, national and international taxation, management and consulting, M/A, and legal service for company formation of international companies in Korea. Particularly outsourcing service, company formation and liquidation, as well consulting on international taxation for foreign companies are outstanding.
All of our clients are always satisfied with our competent and faithful services.
In outsourcing service we (KH Lee and International tax team) accomplished over 70-75% in winning new clients, much higher than average winning rate of 25-30% in this practice. BY How? In the initial contact with CFO or CEO of the potential clients it is crucial importance that we let them have complete confidence in our service for the benefits of their companies
For that purpose we have made it a customary practice to try to (1) have correct understanding of the business purposes to be carried on in Korea and business activities to attain the purposes by inquiring the counter parties in numerous ways and (2) to suggest desirable solutions in accounting systems and tax strategies suitable to their business activities. These procedures demonstrating our expertise and capabilities and showing our interests in the new company and passions to help them contribute greatly to their positive valuation of us, leading them to ask our services in the end. After winning the new clients we are providing competent service for them as demonstrated. Such performance encourages them willing to recommend us to the third parties.
In outsourcing accounting and taxation, we are focusing on (1) fair presentation of operating result and financial positon of those foreign companies in monthly and annual financial reporting and (2) preliminary prevention of tax disputes on any specific accounting transactions, (3) presetting defaults or problems in accounting and taxation, if any, on financial reporting for mutual review and improvements. As a result there was no tax disputes or tax examination among our numerous foreign clients for over 30 years except for one case.
That is, a Korean subsidiary of a Denmark pharmaceutical company was taken TP tax audit. But the audit was finished satisfactorily within 12 days far shorter than planned audit period for one month) without a penny of tax. The fair accounting practice and appropriate tax strategies designed by KH Lee have brought forth such successful result.
In payroll service it is out of question that we have to calculate income tax and social security insurances correctly on payroll income of employees. In addition we are advising on typical issues in employment unique to Korea or different from overseas such as severance pay system and legal working environment in Korea.
In payment service we are handling bank accounts of the clients depending on their requests.
All payment requests are reviewed by us, and examined in some occasion, in terms of validity of the payments, focusing on supporting documents for the payments and appropriate approval of the payments based on internal control system.
Our assisting staffs providing regular accounting and tax services are always encouraged to improve their knowledges and skills adaptable to ever-changing business environment under e-commerce industries
Particularly Partner KH Lee himself participates in the major issues of the clients for (1) having compete knowledge of the issues, (2) encouraging free communications with assisting staffs, and (3) providing correct, effective, and consistent advices for respective clients
1. Legal bases for forming companies of foreigners
In Korea the foreign companies are formed pursuant to following provisions:
Subsidiary : Commercial Code and Foreign Investment Promotion Act
Branch and liaison office : Commercial Code and Foreign Exchange Control Act
Permanent Establishment (PE) : Corporate Income Tax Law and tax treaties
After forming the companies the application for tax license (Tax ID) and opening operating bank accounts are followed.
In some specific industries (such as construction and engineering) the company is required to obtain permission for running such business.
We are providing all of the above legal services
2. Tax incentives for foreign capital invested companies
Foreign capital invested companies can enjoy tax incentives as follows based on Foreign
Investment Promotion Act and Restriction of Special Taxation Act
1. Following foreign investments shall be eligible for a reduction of, or exemption from, corporate tax, income tax, acquisition tax, and property tax subject to examination and resolution by any of the competent committees
A. Foreign investments operating a business that requires technologies belonging to (1) the new growth engine industry essential for upgrading domestic industrial structures and (2) strengthening international competitiveness including new growth, original technologies, and materials, production process, etc. (decided by the Decree of Planning and Finance Ministry)
Such foreign invested companies are required (1) to manufacture at a factory in Korea and (2) invested capital should be US$2,000,000 or more.
B. "foreign-capital-invested company"), which (1) occupies a foreign investment zone, or (2) carries on a business at other economic zones in Saemanguem and Jejoo Island subject to examination and resolution by respective regional committees
2. In following occasions the customs duty, individual consumption tax, and value-added tax will be exempt :
A. Capital goods imported with any means of equity investment from a foreign investor;
B. Capital goods imported for carrying on objects of foreign investment
While, in order to secure benefits of the company in terms of taxation or at least avoiding tax disputes, it is most important to maintain consistency of business purpose and business activities, in documenting Articles of Incorporation of the company (Memorandum and Article of Association in western term), Application for foreign investment to be filed to Korean Government.
Besides, the above laws are changed very often. Accordingly the professionals are asked to be well informed of such changes timely. We have been used to free contacting with Government sides for that purpose for long. Thanks to such practice we often could win competitions with leading law firms in supporting the same foreign companies.
Our wining in establishment of Korean subsidiaries of Reynolds Tobacco Company as the first case of distributing foreign tobacco in Korean market, and Seagate Technology planning to hire 4,000 people and given tax holidays for five years in competition with leading international law firms was attributed to timely tracing of updating of Government policies and keeping consistency in legal documentation.
As you may be aware Korea-South has performed economy miracle in 1970s and even now some products and technologies of Korean companies are leading the world market. Taking examples, (1) Semiconductors, mobile phones, 5G, TV, (2) ship-buildings, (3) automobiles, (4) steel and irons, (5) nuclear Power plants, (6) chemical industries, (7) construction and plant engineering by (1) Samsung Electronics, SK Highnics, and LG, (2) Hyundai / Samsung / Daewoo heavy industries, (3) Hyundai and Kia automobiles , (4) POSCO and Hyundai Steel Iron (5) KEPCO and Dusan Heavy industry, (6) SK, LG and Lotte Chemicals, and (7) Hyundai/ Samsung, Daerim / Ssangyong constructions,
These large business groups and middle sized companies as well as academic world are enthusiastic in adapting to the technical requirements under DIGITAL Economy through learning and developing IT, 3D Printing, Big data, AI, 5G, IoT, Claud, and Robert, etc. We often wonder at the development and advancing in such technologies and new products being realized presently in Korea.
It is said IQ of Koreans is ranking No.2 in the world. It is our conviction that Korean economy will surely cope with current economic crisis under COVIC 19 and advanced continuously. We, Professionals, are also required to advance our knowledge and expertise in parallel with technical and economic development of diverse industries in Korea and in the world .
There was nothing that was not solved beneficially to the clients among the tasks entrusted to us. For over 30 years. Particularly partner KH Lee is always keen to the world and domestic politics, economy, science and technologies. It has been our professional philosophy that we can, and must, solve any tasks entrusted to us favorably for the benefits of our clients as far as they are legitimate and such philosophy will be lasting continuously during our professional carrier.Show more +
Senior partner Kook Hee Lee (KH Lee)
Leading International tax team
KH Lee has been practicing CPA for over 30 years and specialized in (1) outsourcing accounting, tax, payroll, and payments for foreign companies in Korea as well as consulting on various issues in these fields confronted by the companies, and (2) company formation of diverse types of foreign companies in Korea. In addition, KH Lee had remarkable working experience for Korea Electric Power Corporation and a joint-venture refinery company with CALTEX before practicing CPA.Show more +