A mature, industrialized economy, South Korea is the world’s 12th largest economy. It has the second highest spending on R&D to GDP ratio and key industries to watch out for include bio health, smart cities and smart homes and AI. While the economy has performed well, a key risk is the impact of US-China trade tensions.Download PDF
Seoul presents an optimal business environment, ranking first in the 2021 Bloomberg Innovation Index. It is the world’s best digital city and is at the center of the R&D industry. There are many attractive industrial clusters and business areas available which make Seoul attractive to business. Additionally, the government provides incentives such as cash grants, subsidies and tax exemptions to boost economic growth.
Entity Registration and Incorporation Requirements
Setting up a new business or expanding an existing one in South Korea is straightforward. Choose how your company operates from a range of entity types that suit your individual circumstance.
Banking Hours: 9:30 am to 4:30 pm from Monday to Friday
The standard working week is from Monday to Friday from 9:00 am - 5:00 pm
Relevant laws pertaining to wages, working hours, leave and more are prescribed by the Labor Standards Act which applies to all businesses or workplaces that employ five workers or more.
Textile, steel, car manufacturing, shipbuilding, and electronics.
Dates & Numbers
Official State Name
The Republic of Korea
South Korean Won
International Dialing Code
The government conducts regular inspections and provides guidance on labor management to assist companies in rolling out the new minimum wage.
It is mandatory to provide employees with payslips
Payroll reports must be kept for five years
Employees receive paid annual leave of 11 days for the first year of employment
Employees are not entitled to any statutory sick leave
Employees are entitled to 90 days paid maternity leave.
Maternity & Paternity Leave
Between 1 - 3 months notice is required to terminate employment
There are no provisions mandated by law regarding the 13th month salary
13th month salary
9,160 KRW per hour
Employees are entitled to overtime pay calculated at 150% of their regular rate which increases to 200% for work performed at night (after 10 pm)
Employees who are paid monthly are entitled to one month’s pay for each year of employment
Taxes include personal income tax, local income tax and alternative minimum tax. The Retirement Pension System requires employers to set aside an amount equivalent to retirement benefits at a financial institution outside the company and pay their employee pensions in the form of an annuity or lump sum at retirement.
A taxpayer pays income tax on their income. A resident is subject to income tax on all worldwide income. Foreign workers who have stayed in Korea for five years or less are taxed on Korea-sourced income only and their foreign-source income is reportable only where it is paid by a Korean entity or transferred to Korea.
Corporate Income Tax
Personal Income Tax
The Employee Welfare Fund System requires employers to contribute a portion of the company’s operating profits to create a fund for employee welfare.
Social Security Rate
Social Security Rate for Employers
Social Security Rate for Employees
In order to protect working conditions and improve employment practices, the government offers the EAP (Employee Assistance Program), livelihood security loans and credit guarantee support.
Key terms of employment must be provided to employees in writing such as wages and work hours. While terms can be implied, employers are advised to provide written employment agreements.
The government, through labor management specialists, provides support for the voluntary improvement of working conditions to micro and small sized businesses with poor working conditions.
Employees are only entitled to the minimum statutory annual leave if they maintain 80% attendance in the previous year of employment. Generally, employees are not legally entitled to time off for non-work related illness or injury but it is common for employers to allow this.
Employers are prohibited from dismissing an employee without just cause and a high threshold must be met in order to justify redundancies.
Minimum notice period for terminating an employee
Total number of public holidays
Working hours per week
Total number of days for Compassionate & Bereavement Leave
There are multiple visas available whether for short term visits, medical treatment, study, investment, professionals, trade and more. Working professionals are able to enter the country using visas for short-term employees, job seekers, business startups, research and more. Applications can be processed through e-Visas or at the diplomatic missions abroad.
A foreign worker who plans to enter Korea must possess a valid passport and valid visa which matches their entry purpose. Entry without a visa is permitted in the event that they are exempted from their re-entry permit, there is a visa exemption agreement between the person’s country and Korea, they are specially approved to enter by Presidential Decree or have been issued a refugee travel document. Single-entry, double-entry and multiple-entry visas are available. Foreigners who plan to stay for over 90 days from their date of entry must register with their jurisdictional immigration offices within 90 days from date of entry.
Work Permit Validity
A copy of their employment contract
Educational and professional certificates
Criminal record (if applicable)
Original passport and copies
Colored passport-size photo.
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