Now That You Have an Entity in Korea: What About Opening a Bank Account?

?? Launching Our New Series on Compliance After Entity Setup in Korea

We’re excited to introduce our new series focused on key compliance areas like bank account opening, Value Added Tax (VAT), Corporate Income Tax, and Payroll & HR—all critical after establishing your entity in Korea. If you’ve already set up your business, the next step is opening a local bank account. This is not just essential for managing payments but also for complying with Korean tax laws and social security obligations.

Missed Our Previous Series on Entity Setup?

Catch up on our previous newsletters by clicking the titles below:

• Liaison Office – Gateway to the Korean Market
• Korea Branch – A Strategic Pathway for Foreign Businesses
• Joint Stock Company (Jusik Hoesa) – A Powerful Entity for Growth
• Limited Company (Yuhan Hoesa) – Simplified Structure, Global Appeal
• Limited Liability Company (Yuhan Chaekim Hoesa) - The Future of Flexible Business

?? Why You Need a Local Bank Account

Opening a local bank account after setting up your entity is more than a formality—it’s crucial for smooth business operations in Korea. Here’s why:

• Tax & Social Security Payments: All corporate taxes, VAT, and social security contributions must be paid in Korean Won, which generally requires a local bank account.
• Refunds: Tax and social security refunds are credited to your Korean bank account.
• Local Transactions: Efficiently pay vendors and employees, avoiding delays and extra fees from cross-border transactions.

?? Choosing the Right Bank for Your Business

When selecting a bank in Korea, you have three main options:

1. Local Banks: Major Korean banks such as Hana Bank, Woori Bank, KB Bank, and Shinhan Bank offer fast onboarding and seamless local transactions. They are fully integrated with Korea’s tax and social security systems.
2. Global Banks: Banks like JP Morgan and Bank of America provide robust international oversight, but they may lack the ability to handle local tax payments or refunds, requiring you to open a separate local account.
3. Hybrid Banks: Citi Bank and Standard Chartered combine global financial tools with local functionality, making them ideal if you need both international oversight and local tax capabilities, but they still are global banks so may not be fully localized as locals banks.

?? Summary: The Right Bank for Your Business

For foreign-invested companies, opening a local bank account is crucial for compliance and operational efficiency. Local banks like Hana, with expertise in foreign exchange transaction can provide fast, reliable solutions for managing tax payments, payroll, and local transactions. If you require both international oversight and local functionality, you may consider Citi Bank or Standard Chartered.

At KEA, we specialize in streamlining the bank account opening process, ensuring it’s aligned with your entity’s establishment. We manage everything from start to finish, making sure you stay compliant and efficient.

For more detailed insights on the bank account opening process, visit our homepage newsletter.

Important Note: Synchronizing FDI Reporting with Bank Account Setup

In Korea, Foreign Direct Investment (FDI) must be reported to a designated foreign exchange (FX) bank when setting up an entity. By synchronizing your entity establishment with the bank account setup, you can ensure all compliance requirements are met efficiently. At KEA, we offer a one-stop service to manage these critical steps for you.

Need Help with Compliance?

If you need assistance with opening a bank account or navigating Korea’s compliance requirements, contact us directly for personalized support.

Stay Informed!

If you found this newsletter useful, follow me (or KEA) on LinkedIn for more insights on doing business in Korea. Our upcoming content will cover essential compliance obligations, and everything you need to succeed in the Korean market.

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