Usually 25% withholding tax is applied to profits that are wired overseas. However, the Republic of Korea has established tax agreements with the majority of countries except for Hong Kong and Taiwan. According to the individual agreements the withholding tax rate for the corresponding country is set at 5% – 15%.

According to the Customs Act, the employment of the worker has to be ransferred and M&A alone is not a justifiable reason enough to undertake a restructuring.However, if restructuring is unavoidable, and meets the necessary requirements for under-taking a justified restructuring procedure, the two parties can merge after the restructuring or do the restructuring procedure after the merger.

Labor union membership for people who are not workers of the company is prohibited, and a worker dismissed from a company has thus, in principle, lost the right to membership of the labor union.However, if the worker was dismissed on grounds of his activities in the labor union, the worker can apply for relief at the Labor Relations Commission. In that case, the worker remains a member of the union until a decision is made by the Central Labor Relations Commission.

The wage system in Korea is based on an average wage and ordinary wage. The average wage is the basis for calculating severance pay and remuneration for accidents, whereas the ordinary wage is used for calculating additional allowances such as overtime payments.
In order to simplify the wage system, the dual system of average wage and ordinary wage should be changed to a simplified system of a standard wage.
The elements to be included in a standard wage would be of much interest for both the labor and management, so that much time will be needed to gather opinions from both parties, as well as academic circles, before reaching any final conclusions.

People falling into the following categories cannot possess more than 49% of total issued shares of the key communications companies:

– Foreign nationals or foreign governments;
– A company of which a foreign national or government is in possession of more than
15% of the total issued stocks and is the major stockholder.
A foreign national cannot become the majority shareholder of Korea Telecom.
– However, it is only possible when possessing less than 5% of shares.

A Korean national with permanent residence of a foreign country is not a foreigner pursuant to the Foreigner’s Land Acquisition Act. Therefore, the process according to the land acquisition notification is not necessary, but the inflow and outflow of capital need to be notified pursuant to the Foreign Exchange Transactions Act, because according to that Act, the overseas Korean national is a non-resident.Required documents for transferring ownership

1. Social registration card (if still existent);
2. If the social registration card is cancelled, then the following documents are needed:

– Proof of address or proof of residence (issued by an overseas public institution, or
notarized by a foreign notary office);
– Real estate registration number issued by the registry division of the Seoul District
Court (Tel. 82-2-530-1892).

When applying for the registration number, the following documents need to be submitted:

– Certificate of registration of overseas Korean (issued by a Korean embassy or
consulate overseas);
– Family register;
– Power of attorney (if proxy files application);
– Application through mailing service is available.

Services regarding visa matters for foreigners include qualification for sojourn, approval for the change of conditions for sojourn, approval for extension of the visa, approval for activities not included in the present visa status, addition and change of workplace, and approval for re-entry.
Invest KOREA deals with the approvals for the change of conditions for sojourn, for extension of the visa, and for re-entry of foreign investors eligible for the D-8 visa and their families

According to relevant regulations, a foreign investor in the skin or footcare and sports massage sector who wants to operate a massage center on his own or act as a massager is not allowed a certificate for recognition of visa issuance.Furthermore, employment of foot massagers, skincare and spa specialists is not permitted.

A liaison office cannot conduct profit-making activities, and thus cannot operate the club directly. If the club is operated through a branch, the amount of corporate tax for operating profits as well as the acquisition tax and registration tax for real estate acquisition is the same as for an incorporated company. However, at the time of business registration, the registration tax is 0.4% for a company, whereas for a branch the registration tax is a fixed amount of KRW 23,000.Especially in large cities, the registration tax and acquisition tax when establishing a business and acquiring relevant real estate may be as large as triple the amount than in smaller cities.

An example of a statutory merger is the acquisition of a weak company B by a strong company A.If both companies go through a restructuring before the merger:

– In case of company A, it would be difficult to find a justifiable reason, since
restructuring would take place only on the assumption that a merger will take place in
the future. Therefore, compromise with the workers would be difficult and layoff of
personnel unacceptable;
– As a result, company B would have to dismiss workers due to deteriorating business
conditions and pursue an M&A after the layoff of workers.

If restructuring is implemented after the merger:

– After the merger, all workers are legally employees of company A and not company B,
so it is impossible to discriminate between the workers.
– Therefore, the criteria to layoff workers must also include workers of company A and in
this case, the workers of company A will anticipate the situation and be against the
merger in the first place.

In reality, it takes several months from the negotiations until the merger is completed and during that time, the plans for dealing with the worker problem will be subject to discussion.

– The plans about restructuring and layoff will be led by company A and discussed
between the management and labor union of company B and the labor union of
company A.
– Before the merger, both companies A and B will commence preparations concerning
restructuring. However, after the merger, company A will complete the process on a
legal basis.