South Korea Tax Haven Laws - How to Take Advantage of Them?

Is South Korea Tax Haven?

In the past, many have considered South Korea a tax haven. However, this is not completely true. The country's current tax policy has changed in such a way that it is no longer considered to be a complete tax haven.

A tax haven is an area where no taxes apply to foreign individuals or companies. Many of these countries have very low taxes and deductions, meaning that individuals and companies do not pay much for their income.

South Korea has been a tax haven for many years because of its low taxes and deductions. However, this has changed recently with the new tax policy that came into effect in the past few years.

But, this does not mean you can't get any tax benefits while residing in South Korea. There are still some tax benefits that you can enjoy. So, let's get to know more about them.

What Are South Korea Tax Haven Laws? And How to Take Advantage?

There are a few tax benefits laws or tax haven laws that you can enjoy while doing business outside of South Korea. But, the most beneficial ones are here:

Offshore Accounts Law

The Offshore Accounts Law has been active in South Korea for the past few years and has been a major factor in the country's recent economic growth. This law allows companies to establish offshore accounts for tax purposes and provides great flexibility concerning how such accounts should be structured.

The Offshore Accounts Law is extremely beneficial to companies investing in South Korea, allowing them to take advantage of the country's low corporate tax rate and favorable business environment. It also makes it easier for foreign businesses operating within South Korea to comply with their tax obligations.

However, this law does not apply solely to foreign corporations; domestic companies can also benefit from its provisions. The Offshore Accounts Law provides much-needed help for all businesses looking to expand or relocate within South Korea. However, it can be especially helpful for those planning to establish an offshore company or investment vehicle as part of their business strategy.

Trust Accounts Law

Trust accounts are a popular way to save money in South Korea. They are also called "trust funds."

You can create a trust account with a bank or other financial institution and deposit your savings into the account. After that, you can use the money from the account as you wish, like to pay bills, buy groceries, or whatever else. The main benefit of having a trust account is that it's not subject to inheritance taxes. Your tax bracket does not matter regarding how much you save in your trust account, only how much profit you make on that savings.

If you want to take advantage of South Korea's trust account laws, you need an account at a local bank or credit union. Then, just keep earning interest on the money in there.

Insurance Accounts Law

Another popular tax haven law in South Korea is the Insurance Accounts Law. This law allows you to open an insurance account with a local insurance company and then use those funds as a means of tax evasion.

All you have to do is open up an account with a local insurance company, deposit funds into it, and use them for your own personal gain. You can then claim that you are using these funds for personal reasons, like buying a house or starting a business.

Please note that this sounds a lot easier than it actually is. We highly recommend that you set up a free one hour consultation with one of our tax professionals before making such a major financial decision. Tax haven laws can get complex very quickly.

Offshore Shell Companies Law

An offshore company is registered with the Korean Tax Administration (KTA) as an offshore company. It can have any number of shareholders or shareholders-directors who are not residents of South Korea, including foreigners.

An investment made to these offshore companies will be free from all types of taxes, while only the profits that came into your account in South Korea are taxed. By creating an offshore company in South Korea, you can save yourself from taxes and save money.

Do I need a Corporate Entity to set up an Offshore Company in South Korea?

Yes, you will need a corporate entity to set up an offshore company in South Korea. The corporate entity is required because it acts as the offshore company's legal owner and must be registered with the Korean government.

How Much it will Cost to use South Korea as a Tax Haven?

As with most countries, setting up a company in South Korea is not necessarily expensive. However, it does require some fees from your end.

If you are planning on doing it yourself, you will have to pay around $3500 for the first year of setting up the company in South Korea. In the next 2 years, you will have to pay around $1000 per year, and after that, you will be charged according to the company's profits.

All things considered, don’t fall into the trap of thinking this is easy to do! Having a tax professional at your side is paramount to avoiding hidden fees, and accidentally breaking international tax law. Set up a free one hour consultation with our seasoned Yoke Tax pros today.

How Long it will take to Register a company in South Korea?

According to the South Korean government, it takes approximately 2 weeks to register a new company in South Korea.

The process of registering a new company is simple and straightforward. Your first step is to fill out an Application Form for Establishing a Company. This form can be found on the Ministry of Strategy and Finance website.

You will need to submit a copy of your business plan and other documents that may be required by the Government.

Final Thoughts on South Korea Tax Havens

Millions of people all around the world are looking to take advantage of tax haven laws in South Korea, and South Korea isn't a great choice for this. But, plenty of laws can help you get tax benefits while residing in the country.

Alternative tax havens to South Korea include the Bahamas and Ireland.

We hope this article will help you understand the tax benefits of the above-mentioned laws. Understanding them will be very helpful for you to save money through South Korea. As always, it’s a safe move to connect with a tax pro before making such a major decision. Set up a free one hour consultation today.