Expanding a Canadian business into South Korea

Canadian companies come to Korea along several roads. An Alberta beef or Manitoba pork exporter wants its own distribution as the CKFTA tariffs fall away; a Saskatchewan lithium or potash producer follows Korean battery and fertiliser buyers; a British Columbia seafood company sells lobster, crab and salmon into the most seafood-hungry market in Asia; a Toronto software or robotics firm finds Korean manufacturers ready to pay for automation; a Montreal game studio meets the most competitive gaming audience in the world. Each faces the same question: how much presence in Korea, and in what legal form.

This guide sets out the options, the Korean statutes behind each, the Canadian documents a Korean registry and bank will ask for, the trade agreement, the tax treaty, Canadian tax on Korean profits, visas and staff. Canadian terms appear in italics; Korean terms in Hangul with romanisation.

The Canada–Korea framework

Trade runs on the Canada–Korea Free Trade Agreement (한-캐나다 자유무역협정, han-kaenada jayu muyeok hyeopjeong), known in Ottawa as CKFTA, which entered into force on 1 January 2015. Global Affairs Canada reports that 99% of Canadian exports are now eligible for duty-free access and that 99.75% of tariffs on bilateral trade will be gone by 2032. Machinery has been duty-free since 2017, lobster since 2017, and oilseeds, forest products and alcoholic beverages — ice wine included — since 1 January 2024. The agricultural headliners take longer: Korean tariffs and safeguard duties on pork cuts end by 2028 and on beef cuts by 2030.

Tax relations are governed by the Convention between Canada and the Republic of Korea for the avoidance of double taxation, signed in Ottawa on 5 September 2006 and in force since 18 December 2006, replacing a 1978 treaty. Its rates are the competitive modern set: 5% on dividends to a controlling corporate shareholder, 10% on interest and royalties. The two governments launched a comprehensive strategic partnership in 2022 and added a security and defence partnership in 2025; critical minerals, batteries, energy and aerospace sit at the centre of it. On documents, the important date is recent: Canada joined the Hague Apostille Convention with effect from 11 January 2024, ending the old two-step authentication and Korean consular legalisation.

Four ways in

1. A Korean importer or distributor

The usual first step for food, seafood and consumer goods, and the only one that needs no Korean entity. The importer holds the import licence, the food registrations and the customer relationship. An agent in Korea who habitually concludes contracts for the Canadian company can create a permanent establishment (국내사업장, gungnae saeopjang) under Article 94 of the Corporate Tax Act and Article 5 of the treaty, so keep distribution contracts as buy-and-resell rather than agency. Register your trademark in Korea before signing; see trademark registration in Korea.

2. A liaison office

A liaison office (연락사무소, yeollak samuso) lets the Canadian corporation place staff in Korea for research, promotion and support, reported to a foreign exchange bank under the Foreign Exchange Transactions Act, with no Korean income. Resource and technology companies scouting Korean buyers often start here. See liaison offices.

3. A branch

A branch is the Canadian corporation itself registered in Korea under Article 614 of the Commercial Act. It trades and employs; the corporation is liable for everything; and every change in the Canadian corporate records must be mirrored in Seoul. The tax result is less tidy than a subsidiary’s. Canada taxes a Canadian corporation’s foreign branch profits as they are earned, with a foreign tax credit for Korean tax. Korea, for its part, can charge a branch profits tax on top of corporate tax where the treaty allows it — and the Canada–Korea treaty does, capped at 5% by Article 10(6). See branch or subsidiary.

4. A Korean subsidiary

Most Canadian businesses that intend to stay form a Jusik Hoesa (주식회사, jusik hoesa), the Korean share company, with one shareholder and one director enough. With capital of at least KRW 100 million the company is registered as a foreign investment under the Foreign Investment Promotion Act, which opens the D-8 visa for the investor-director. No minimum capital is required otherwise; see do you need KRW 100 million?.

Company documents from Canada

Canada has fourteen corporate registries — Corporations Canada for federal corporations under the Canada Business Corporations Act (CBCA), and one for each province and territory. The documents have different names in each, but a Korean registry and bank want the same things:

Typical documents for a Canadian corporate shareholder.

Two Canadian features deserve a moment. First, a unanimous shareholder agreement can take powers away from the directors — sometimes including the power to invest abroad. If one exists, the resolution approving the Korean investment may need the shareholders’ signatures as well. Second, Canadian corporations have not needed a corporate seal for decades, and documents are signed by the officers the by-laws or a resolution authorise. The power of attorney should recite that authority, so the Korean agent’s mandate traces back to people the corporate records name.

Ask for a power of attorney in English — or in French for a Quebec corporation, with a Korean translation made in Seoul — that lists each Korean act: the foreign investment notification, subscription for shares, court and tax registration, bank accounts and registration of the company seal. Korean bodies generally expect certificates of status to be no more than three months old at filing. Federal corporations also file a Canadian register of individuals with significant control; it is the simplest way to answer the Korean bank’s beneficial-owner questions.

Personal documents from Canada

Typical personal documents for a shareholder-director moving to Korea.

Korean directors file a seal certificate (인감증명서, ingam jeungmyeongseo); a Canadian director instead signs before a notary, and the notarised signature, once apostilled, serves the same purpose. In most provinces lawyers are also notaries; in Quebec the role belongs to the notaire. For the visa, Korean immigration expects a national record check, which in Canada means the RCMP’s certified check based on fingerprints rather than a local police certificate.

The apostille in Canada

Since 11 January 2024 Canadian documents for Korea need a single apostille instead of authentication by Global Affairs Canada followed by Korean consular legalisation. Who issues it depends on where the document was issued or notarised. Alberta, British Columbia, Ontario and Saskatchewan apostille documents from their own territory through provincial ministries, and Quebec has its own arrangements. Global Affairs Canada apostilles federal documents — a CBCA certificate of compliance or an RCMP check — and documents notarised in the remaining provinces and territories.

The rule that saves time is the same as everywhere: company resolutions and powers of attorney go to a notary first, and the apostille certifies the notary. A corporation incorporated federally but run from Vancouver may therefore need two authorities — Global Affairs Canada for the federal certificate, British Columbia for the notarised resolution. Documents arrive in Korea in English or French; Korean authorities need Korean translations, which we arrange in Seoul. Our guide to apostilles for Korea covers the general rules.

Federal paper to Ottawa, provincial paper to the province, everything private to a notary first. One apostille each, and no more embassy queue.

Voixa Korea

Setting up the Korean company

On the Korean side the process is the one every foreign investor follows. The investment is notified to a Korean foreign exchange bank under Article 5 of the Foreign Investment Promotion Act; the capital is wired from the Canadian corporation’s own account in Canadian or US dollars and the bank certifies receipt. Canada needs no approval for outbound investment — the Investment Canada Act looks only at money coming in — and the Canadian bank reports transfers of C$10,000 or more to FINTRAC as a matter of course. The Korean company is then registered with the court and obtains its business registration number (사업자등록번호, saeopja deungnok beonho) from the tax office. With documents ready, the Korean part takes two to four weeks.

Korean directors serve terms of up to three years under Article 383 of the Commercial Act and must be re-registered on renewal, and the company registers a corporate seal (법인인감, beobin ingam). Korean law has no residency rule for directors, though in practice the D-8 holder will be the representative director in Seoul. Our guide to annual compliance sets out the recurring obligations.

Trading under CKFTA

Canadian goods qualify for preferential duty in Korea if they meet CKFTA’s product-specific rules of origin. The agreement works on exporter certification: the Canadian exporter or producer completes the origin certification, and the Korean importer claims the preferential rate under the FTA Customs Act. Korean customs verifies origin after the event, sometimes years later, so keep the bill of materials and supplier declarations for at least five years.

Meat and seafood carry the most value and the most rules. Beef and pork are still on their CKFTA tariff schedules, with safeguard duties that can rise in a year of high imports until the schedule ends. Foreign food plants must be registered with the Ministry of Food and Drug Safety under the Special Act on Imported Food Safety Control, meat must meet Korean import health requirements, labels must be in Korean, and alcohol is imported under a liquor import licence. See importing into Korea and customs duties. Critical minerals and battery materials move freely on tariffs but attract export-control and supply-chain diligence on both sides; see export controls.

Korean tax and the 2006 treaty

The Korean subsidiary pays corporate tax at 10% to 25% plus local income tax of one-tenth under Article 55 of the Corporate Tax Act — 11% on the first KRW 200 million — and charges 10% VAT. Payments to Canada bear Korean withholding, reduced by the treaty:

Domestic rates include Korean local income tax. Sources: PwC Worldwide Tax Summaries, Korea, 2026; Department of Finance Canada, text of the 2006 convention.

Note the test: the 5% rate needs 25% of the voting power, not of the capital, and the Canadian company must control the Korean one. A Canadian parent holding non-voting preferred shares, or sharing control in a joint venture below 25% of the votes, falls to 15%. To claim either rate, the Canadian recipient files a limited tax rate application (제한세율 적용신청서, jehan seyul jeogyong sincheongseo) with the Korean payer before payment under Article 98-6 of the Corporate Tax Act, supported by a CRA certificate of residency. Without it, 22% is withheld and a refund claim follows. Our guide to dividend withholding covers the procedure.

Canadian tax on Korean profits

A Korean subsidiary in which the Canadian corporation holds at least 1%, and with related parties at least 10%, is a foreign affiliate. Because Korea is a treaty country, the affiliate’s active business income earned in Korea goes into its exempt surplus, and dividends paid out of exempt surplus are fully deductible under paragraph 113(1)(a) of the Income Tax Act. In plain terms: active Korean profits come home to a Canadian corporation free of Canadian tax. The price is the same as in other exemption systems — because no Canadian tax is due, the Korean withholding cannot be credited, so the 5% is a final cost. Missing the treaty forms turns it into 22%.

Passive income is different. Interest, rent, royalties and certain income from services or sales to Canada earned by the Korean company can be foreign accrual property income (FAPI) if the company is a controlled foreign affiliate, taxed in Canada each year whether or not it is paid out, with relief for Korean tax. A trading or service subsidiary with its own staff in Seoul normally earns active income; a Korean company that mainly licenses Canadian intellectual property back to Korean customers should be checked.

Paperwork follows the shareholding. A Canadian corporation — or individual — with a foreign affiliate files form T1134 with the CRA each year, and penalties for late filing are real. Canadian individuals who own Korean shares or accounts costing more than C$100,000 in total report them on T1135.

Transactions between the Canadian corporation and the Korean company — management fees, licences, goods sold to the Korean distributor — must be at arm’s length in both countries: under section 247 of the Income Tax Act in Canada, and under Article 8 of the Adjustment of International Taxes Act in Korea. A short intercompany agreement and a benchmark on file avoid most arguments.

Staff and visas

Canadians can visit Korea visa-free for up to six months for tourism and meetings, subject to Korea’s electronic travel authorisation rules at the time of travel; doing business that earns money in Korea needs a visa under the Immigration Act. A Canadian shareholder-director investing at least KRW 100 million and managing the company applies for the D-8 corporate investment visa (기업투자 비자, gieop tuja bija) with the RCMP check and family certificates; see D-8 requirements. Employees seconded from Canada usually come on a D-7 or E-7 visa. Under the youth mobility arrangement renewed in 2023, Canadians aged 18 to 35 can work in Korea on working holiday, internship or young professional permits for up to 24 months, twice — a route Canadian businesses also use to place junior staff.

Canada and Korea have had a social security agreement since 1 May 1999. It covers pensions: an employee seconded from Canada for less than five years can stay in the Canada Pension Plan with a certificate of coverage from the CRA and be exempt from the Korean National Pension. Korean health and employment insurance still apply. Local staff are employed under the Labour Standards Act, with written terms, the national minimum wage, four social insurances and severance after one year. See hiring in Korea.

Canadian support for the move

• The Trade Commissioner Service runs the Canadian Embassy’s trade section in Seoul, market briefings and Team Canada trade missions.
• Export Development Canada provides credit insurance, financing and guarantees for exporters and their foreign subsidiaries.
• CanExport co-funds market-development projects in new export markets for small and medium-sized businesses.
• The Canadian Chamber of Commerce in Korea connects Canadian businesses with each other and with Korean partners.

Protect the brand

Korea is a first-to-file (선출원주의, seonchurwonjuui) trademark system under Article 35 of the Trademark Act. A Canadian brand that exhibits at a Seoul fair or appoints a distributor before filing sometimes finds its name registered by someone else. Extend your Canadian mark through the Madrid system via the Canadian Intellectual Property Office or file directly with KIPO, and consider a Hangul version of the name. See trademark registration in Korea.

A worked example

Lakeshore Robotics Inc., an Ontario corporation that builds warehouse automation, has two Korean logistics customers. It forms a Seoul Jusik Hoesa with KRW 200 million of capital, notified as a foreign investment, holding all the voting shares. Its certificate of status and corporate profile report are apostilled by Ontario; the directors’ resolution and power of attorney are signed by the officers named in its by-laws, notarised in Toronto and apostilled by Ontario as well. Its brand is filed with KIPO in Latin letters and Hangul. A co-founder moves to Seoul on a D-8 visa as representative director; a field engineer follows on secondment, staying in the Canada Pension Plan.

The Korean company installs and services the systems and buys hardware from Lakeshore at benchmarked prices. In year three it makes KRW 300 million of profit, pays KRW 44 million of Korean corporate tax including local tax, and pays a KRW 200 million dividend with 5% treaty withholding — KRW 10 million. In Toronto the dividend comes out of exempt surplus and is deducted under s 113(1)(a). Lakeshore files its T1134 and keeps the transfer-pricing file current.

Mistakes we see

1. Ignoring the unanimous shareholder agreement — a resolution signed by directors who no longer have the power.
2. Sending documents to the wrong apostille authority — a federal certificate to the province, or a provincially notarised resolution to Ottawa.
3. A local police certificate instead of the RCMP fingerprint check for the D-8.
4. Non-voting shares in the parent’s hands, losing the 5% rate.
5. No CRA certificate of residency before the first dividend or royalty — 22% instead of 5%.
6. Forgetting the T1134 in the first year of the Korean company.
7. Announcing Korea before filing the trademark.

Korean terms you will meet

Canadian terms you will meet

Questions readers ask

About the author

Alexander Baranov

Founder of the BCA Group · cross-border corporate and tax adviser since 2008

Alexander advises foreign founders and groups on company formation, tax structuring and corporate law in more than 40 jurisdictions across Europe, the Gulf, Asia and Latin America. He is the author of nine books on international business and tax and writes regularly for professional finance and tax journals. He works in English, German, Spanish and Russian.

This guide is based on the Korean statutes cited in the text and on our own filings. It is reviewed when the law or official rates change.

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