Experts Corner: Ask Young-Jin Ham about Small-Business Accounting in Korea

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Young-Jin Ham
Hanmi Accounting Corporation
Managing Partner (Seoul, Korea)

Young-Jin Ham is a founding partner of Hanmi Accounting Corporation. Before joining Hanmi, he worked as Partner and Senior Financial Officer of Doran Capital Partners, which manages a US$1 billion real estate fund for European investment banks, such as Aviva Group, Fortis, SEB and others. He managed the accounting and tax compliance of twenty-one subsidiaries in Korea, Japan, Hong Kong, Belgium, Luxembourg, London, Australia, Guam and the US, and the financial reporting of European banks.

Before that he lived in the US, and worked as Executive Corporate Vice President and Chief Financial Officer at Liquidmetal Technologies Inc. which is a NASDAQ-listed company which manufactures metal parts for various industries. He managed US SEC compliance of the company and local tax and accounting compliance of subsidiaries in Italy, Korea, and China.

Previously, Young-Jin  Ham worked at PriceWaterhouseCoopers in Seoul for six years. His clients included Masterbuilders, Spieshecker, Aventis, Hoechst (Germany), GE Capital (US), Iscar (Israel), Panwell (Irland), Answer International, Goyo (Japan), and other Korean conglomerates, such as Hyundai, Samsung, LG and the Korean National Oil Corporation.

As a partner in Hanmi, he has been involved mainly with foreign clients such as Newcity (Japan), Landmark Investment, Openwave, Monitor Consulting Group (US), Assa Abloy (Sweden), and others. 

He is a CPA both in Korea and US, having graduated from Seoul National University and completed MBA courses there.

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Permalink Reply by Eun-Shil Park on June 10, 2011 at 4:54pm

As we KB Europe are preparing a Flash Meeting over here in Amsterdam we do need definitely mr Ham to join us for the bigger event in Autumn (location: ~London). His (impressive)resume is a bit scary to me :) way too good! (take this as a compliment mr Young-Jin).

 

Lets start the discussion with a question in general, not specifically to mention Hanmi Accounting. Alot of start-up entrepreneurs from abroad are wondering how much legal accounting and tax advice should cost per hour in Korea. From a junior to senior advisor the costs will be of course different. Lets say an all-in service the first year including tax report at the end of the fiscal year for a SME. I have seen a lot of differation in costs in billing the foreign client in Korea. Also mr Ham, can you give us a short checklist for finding the right registered accountant in Korea? 

 

Permalink Reply by Young Ham on June 13, 2011 at 10:16am

Eun-Shil, thank you for kind words. Let me briefly answer your question here.

1. checklist for finding the right registered accountant.

In Korea, book-keeping and tax compliance service is usually provided by two different kind of professionals.

a. CPA (certified public accountant) - you can check www.kicpa.or.kr to find right registered

b. CPTA (certified public tax accountant) - you can check www.kacpta.or.kr to find right registered

(fyi, all CPAs have CPTA license but not vice versa)

Sizewise, from big to small,

a. Big 4 accounting firms

b. Local accounting firms

c. Local tax accounting firms

d. sole proprietor CPA office or CPTA office.

 

2. Budgetwise

It depends on what kind of service provider you choose as you can see above.

If you're small corporation, entry level maintenance cost will be from

a. book-keeping service KRW 200K per month (VAT return usually included)

b. payroll service KRW 100K per month up to 5 employee (Four basic insurance process covered)

c. Annual tax return service KRW 1 mil.

 

Hope this might answer your question.

 

 

 

 

Permalink Reply by Steven S. Bammel on July 4, 2011 at 8:07am

Young - I have a question about getting tax statements (세금계산서).

What is a reasonable length of time to wait for a company to send me the tax statement after I've paid them by online transfer with an amount which includes VAT? And if they ignore my repeated requests for the tax statement, what recourse do I have? Can I report them to the Korean tax authorities?

I only set up my company in Korea a couple months ago and I'm really surprised how difficult it is to get cooperation after payment. I have paid for three items after which, the recipients aren't responding at all when I ask for that tax statement!

Permalink Reply by Young Ham on July 4, 2011 at 10:53pm
Steven - I think it's usually better to get tax statement before you pay. Tell them to send tax statement with wire instruction. If you require tax statement before you pay, they will either give you that or say like pay another 10% to get tax statement. I would recommend deal with companies willing to issue tax statement before getting the payment.
Permalink Reply by Steven S. Bammel on July 5, 2011 at 8:00am

Thanks. It seems a little counter-intuitive to ask for the receipt before sending the money, but if that's the way it's done, I guess I'd better get used to it.

 

Is there a channel for me to directly report payments that the recipient refuses to report? I mean, I paid the VAT. One of the recipients is the venue for our recent KBC event and the amount of money is not small.

Permalink Reply by Young Ham on July 5, 2011 at 9:22am

세금계산서 is not just a recept but also 'tax invoice' so it's not unusual to ask for it before payment.

If you still think it's not comfortable, just ask for their certificate of business registration when you get wire instruction. You can include your VAT payment in your next VAT return with their business registration number there if they still don't give you 'tax invoice' For the last, you can get their business registration number if they have website or ask NTS with the name of compay and the president, address.

Permalink Reply by Steven S. Bammel on July 6, 2011 at 10:52am

Thanks, Young. That helps a lot to think of it as an invoice. I was hung up on it being a receipt.

 

Thanks also for the alternative approach of paying the VAT myself using their business number.

Permalink Reply by Young Ham on July 6, 2011 at 5:53pm
To clarify, Steven, I mean you can deduct your payment against your VAT return using their business registration number.
Permalink Reply by Steven S. Bammel on July 7, 2011 at 9:21am
Oh, OK. Thanks.
Permalink Reply by Steven S. Bammel on July 4, 2011 at 9:37am

I've got one more question...

Do you know if there a good layman's resource in Korean about taxes for foreigners?

The National Tax Service produces the Easy Guide for Foreigners' Year-End Tax Settlement, but it's not perfect English, making some points a bit tricky to understand, and it is also not the best way for my wife or my Korean tax guy to get this information. I've called the National Tax Service about this and they tell me the Easy Guide does not exist in Korean (though they have a plan to produce it in Korean by the end of the year).

Anyway, in the meantime, I've tried at the bookstore too and they couldn't find anything in Korean about taxes for foreigners either.

Permalink Reply by Young Ham on July 4, 2011 at 10:55pm

Steven. If NTS doesn't have that, there's nothing like that unfortunately.

Permalink Reply by Steven S. Bammel on July 7, 2011 at 9:20am
It's surprising that the only materials about Korean taxation for foreigners (other than the original laws themselves) is a short Konglish booklet published by NTS. It definitely represents an area that needs to be remedied... Thank you for helping to fill some gaps for us here, Young!

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