Closing a Foreign Company Branch in Korea: FX Regulation, Commercial Act, VAT

Overview

When a foreign company closes a Korean branch for which an establishment report was filed, Article 9-37 of the Foreign Exchange Transactions Regulation requires it to submit Form 9-11 (foreign company domestic branch closure report) to the party that received the establishment report. To remit the proceeds of disposing of its Korean assets abroad after the closure report, it must give the designated foreign exchange bank a tax clearance issued by the head of the competent tax office. The Commercial Act and the VAT Act also have provisions tied to closure, so the foreign exchange, commercial law and tax tracks must be read together.

This article covers branch closure by statutory provision. Article 9-37 covers branches and offices alike (together the domestic branch or office), but procedure and documents for closing a liaison office are in a separate article, so the focus here is on what applies to a branch carrying out business: remittance of settled net profit, closure orders and liquidation under the Commercial Act, and the VAT business-closure report. Processing times and costs are not stated because none were confirmed. Confirm your case with the receiving institution and the competent tax office.

At a Glance

Scope of Activity

• Regulation Articles 9-37 (closure of domestic branch) and 9-35 (remittance of settled net profit), Commercial Act Articles 619 and 620(3), and VAT Act Article 8(8) and (9) with Enforcement Decree Article 13
• How the foreign exchange report, liquidation and tax filings connect in the statutory flow when a branch closes
• Out of scope: processing time, fees and service prices, and filings whose provisions were not checked here, such as corporate or income tax, social insurance and workplace reports for foreign employees

Who Qualifies

• Head-office staff of a foreign company winding down its Korean branch and preparing the closure report
• Finance staff who want to know how to remit proceeds of Korean asset disposals or profits to the head office after closure
• Legal staff checking the difference between a court closure order under the Commercial Act and closing voluntarily
• Branch managers who want to know how the VAT business-closure report works when a branch closes

Required Documents

• Foreign company domestic branch closure report: Form 9-11 under Regulation Art. 9-37(1), submitted to the party that received the establishment report (the designated foreign exchange bank or the Minister of Finance and Economy)
• Tax clearance: issued by the head of the tax office and given to the designated foreign exchange bank to remit disposal proceeds abroad after the closure report (Art. 9-37(2))
• Net profit remittance papers: under Art. 9-35, Form 9-10, balance sheet, income statement, tax clearance and others (check the Regulation text and the receiving institution for the full set)
• VAT business-closure report: under Enforcement Decree Art. 13, submitted with the business registration certificate; filing the final return with the closure date, reason and business registration certificate counts as the report
• Liquidation check: because Commercial Act Art. 620(3) applies liquidation rules even to a voluntary closure, confirm the method and procedure with the court or a specialist

Application Process

1. Check eligibility — confirm your current status, career, degree and contract type match the requirements.
2. Prepare documents — foreign public documents need a translator's certification plus an apostille (or consular confirmation for non-member states).
3. Book a visit — reserve a slot at your Immigration Office via HiKorea (www.hikorea.go.kr), or file online where e-Application is available.
4. File and pay — submit the Integrated Application Form (Form No. 34) and pay the screening fee.
5. Review — respond to any request for supplementary documents within the deadline.
6. Result — on approval, the period of stay and status are granted; reissue your ARC if required.

Key Points

• Closure report first, remittance with tax clearance: Article 9-37 of the Regulation separates the closure report (paragraph 1) from the tax clearance required to remit disposal proceeds abroad after it (paragraph 2). Before rushing a remittance, check that the closure report was accepted and the tax clearance issued.
• Liquidation rules apply even to voluntary closure: Article 620(3) of the Commercial Act applies the liquidation rules of paragraphs 1 and 2 even when the foreign company closes the office itself. Those rules connect to provisions such as the court appointing a liquidator, so do not treat it as a simple report.
• Closure orders: Article 619 of the Commercial Act lets a court order closure on petition of an interested party or a prosecutor on grounds such as an unlawful purpose for setting up the office, or, after registration, failing without justifiable reason to start business within one year or suspending it for one year or more. Do not leave a dormant branch as it is; consider whether to wind it up.
• VAT: Article 8(8) of the VAT Act requires a business that closes to report promptly to the head of the competent tax office, and paragraph 9 provides for cancelling the registration. Enforcement Decree Article 13 has the closure report filed with the business registration certificate, and filing the final return with the closure date, reason and business registration certificate counts as the report. Corporate or income tax and social insurance are not covered because their provisions were not checked here.
• Documents issued in Korea must normally be dated within 3 months unless another validity period applies.
• Documents already on file in your alien registration record need not be resubmitted.
• Health certificates, drug test results and pre-employment medical reports must be submitted sealed by the issuing hospital (do not open).
• You must be in Korea when applying; leaving the country after filing may result in refusal.
• Screening fees are non-refundable once the application is accepted.
• The head of the Immigration Office may add or waive documents where necessary for review.

Frequently Asked Questions

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