Kent is a senior foreign attorney and partner at APEX LLC, a leading law firm in Korea. Kent is a member of the banking & finance team and heads the International Practice Group. Kent represents major Korean financial institutions investing overseas as well as foreign clients with business interests in Korea. His areas of specialty include corporate finance, project finance, M&A, joint ventures, foreign investment, cross-border transactions and international arbitration. Prior to joining APEX LLC, he practised in top law firms in the US, Korea, New Zealand and Cambodia. Kent has published numerous journal articles and given lectures on foreign investment, REITs, project financing and international tax regimes. Kent has been on the Board of Directors of The Kiwi Chamber (New Zealand Chamber of Commerce in Korea) since 2009.
I was curious about what a professional like yourself thinks about the Korea-US free trade agreement. Obama is expected to sign the bill by tomorrow and send it our way for Korean litigation. I hear the democratic wing is opposed to this deal while the republican wing is for it. The Democrats are the minority party, so my question is, Can legislation be passed with a simple majority rule in Korea? And if this law passes, how will it influence international trade in Korea?
I'm keeping an eye on Korean news to watch for any blue house civil wars. I'm already seeing a few NO FTA (no free trade agreement) protests on the news.
I realize Korean opinion toward the KORUS FTA is somewhat divided, by sector.
I believe that for the long term the FTA will, if ratified, increase economic growth, foreign investment and competition in Korea. Given that the EU-Korea FTA came into effect in July this year, it has created more pressure for the KORUS FTA. FTAs knock down tariff and non-tariff barriers, which is great for bilateral trade.
The legal market will open up (in staggered steps), as US and European law firms look to have a presence in Korea. Korean domestic law firms have been preparing (and bracing themselves) for the reality of this for some time.
Daniel - Interesting that you ask about whether the legislation can be passed with a simple majority rule. I think the answer to that is "yes", but those opposed to a unilateral passage of the bill in the legislature are threatening as much extra-ballot resistance as possible. In the past, both parties have engaged in various shenanigans, including blocking access to meeting venues or the podium in the legislature, as well as scheduling unannounced meetings behind closed doors which the other party doesn't find out about in time. One way or the other, it seems the ruling party is determined to get this passed no matter what the political costs, such as the embarrassment of physical altercations that end up on the front pages of the newspaper.
As for those opposed to the FTA, those are mainly the same folks who were in favor of it until certain provisions got renegotiated late last year. They are now calling for re-renegotiation. In principle, most of the Korean political spectrum appears to be in favor of a free trade agreement; those opposed just want better conditions for Korea.
For more information, I encourage you to check out this page on KBC with links to various FTA-related content both on our site and elsewhere: http://www.koreabusinesscentral.com/page/free-trade-agreements
BTW, here is recent posting by Kent on the Korea Expert Witness blog run by Don Southerton:
This forum is not the right venue to discuss policy reasons for tax.
First, are you sure it was an actual tax and not some type of registration fee (which everyone pays in order to increase share capital)?
Secondly, if it was a tax, which authority did you have to make payment?
FInally, do you have the Korean description of said tax?
Were you taxed at 10%? It seems too high to be a registration fee.
Please help me to help you by answering my initial questions.
I have two questions for you regarding foreign online businesses.
(1) Firstly, do you think it is possible to work around the 50,000,000won foreign investment (now 300,000,000 I think) requirement, by somehow setting up the legal status of my business activities as a "branch" of my online business which is registered in the US? We have less than 5 employees and we're all foreigners.
(2) Do you think it would be legally OK to cooperate with another Korean business, to handle online transactions? I could keep my online business as a US LLC, but payments would go through a Korean friend's business merchant account. And we would pay him a commission for acting as the go-between and essentially "leading consumers" to purchases on my site. He would receive full payment from the customer, and then would remit to us most of the cash. Might there be any legal problems with this?
Thanks for your time,
I would suggest that you make an investment to do it right; you don't need W50 million to set up a sole proprietorship, but you will need the big bucks for a corporation and visas. If there's five if you, you're not going to be able to do it on the cheap in Korea.
To avoid the paperwork in Korea, you could set up a corporation overseas, live overseas and receive payment through PayPal, but as soon as you start taking payments in Korea, you're going to face a lot of issues.
(1) I regularly advise foreign SMEs who want to build their local presence in Korea to start out small. They can do this by setting up a branch and then, when things begin to take off, establishing a local subsidiary. So, to answer your question, it is possible. However, you should note that you will:
(a) need to file a report of such branch establishment with a designated foreign exchange bank in Korea;
(b) also need to register the branch with a court registry office in Korea; and
(c) need to obtain a business tax ID number from the competent tax office in Korea.
If you want a visa and plan to rep the office in Korea, you will still be subject to D-7 work permit requirements and relevant immigration laws.
(2) On the basis of what you have explained to me, you shouldn't have any problems with this kind of arrangement, provided that you and the Korean business partner follow the relevant foreign exchange control regulations (i.e. rules that regulate the inward flow of capital and outward flow of earnings) in Korea and have paid any applicable taxes. Though, if you intend to set up a branch office as in (1), you (or the Korean partner) will need to remit any profits you've made through the same foreign exchange bank in Korea (where you filed the report), with the appropriate branch documents (audit report, tax payment certificate, balance sheet etc.).
Going through PayPal poses a separate set of potential problems. From my own personal experience, I will never touch PayPal again, given its arbitrary "case resolution" and random locking or freezing of funds, fees, scams, fraud etc (e.g., see some of the horror stories at www.PayPalSucks.com).
I hope this helps. Feel free to contact me if you should have any further questions.