Work permits and visas
Under the Korean Exit and Entry Control Act, a foreigner who wishes to reside in Korea must enter Korea using an entry visa which allows for an appropriate period of stay (theoretically not less than 91 days but normally six months or longer). If a visa is granted for a period of 90 days or less, it cannot normally be extended beyond such period while the foreigner is in Korea. As a result, such a visa holder cannot become a resident of Korea. In this regard, under the Immigration Regulations, if a visa having a period of stay of 90 days or less is granted by a Korean Consulate outside Korea, the Consulate normally notifies the visa applicant that ‘no extension will be allowed after entering Korea’.
In some cases, a foreigner who is a citizen of a country with which Korea has entered into a visa abolishment agreement (e.g. Britain) may enter Korea without a visa by obtaining a visa abolishment stamp at the Korean port of entry. However, if a foreigner has entered Korea by using a visa abolishment stamp, such a foreigner, in principle, cannot:
- obtain any visa status
- obtain any extension of the period of stay in Korea, or
- become a resident of Korea.
The appropriate visa status is determined on the basis of the activities to be engaged in by the foreigner.
The first alternative is a Technology Inducement Contract (TIC), which has been reported to the relevant ministry under the Foreign Investment Promotion Law (FIPL). Under this arrangement, employees of the foreign licensor would enter Korea for work under the TIC. Second, the expatriates may be dispatched to Korea for work at a foreign entity’s branch office in Korea. Third, expatriates may be hired by the Korean company (foreign invested company or joint venture under the FIPL). Certain types of visa status appear to be most suitable for the expatriates who enter Korea (i.e. the E-4 [Technician], D-7 [Commerce], D-8 [Investment], and F-3 [dependant of an expatriate]).
Korean visas should be obtained from a Korean consulate or embassy in any foreign country with which the Republic of Korea has diplomatic relations. The required documents vary depending upon the applicable visa status. The Korean Consulate concerned may also require additional documents and these documents may be different at each Korean Consulate.
Foreign exchange issues
Foreign exchange control in Korea originated with the enactment of the Foreign Exchange Control Law in 1961. The purpose of this law was to control the outflow of foreign exchange properly, use incoming foreign exchange in the process of economic development, and to cope with a chronic foreign exchange shortage effectively.
Foreign exchange control, through this law, mainly consists of fulfilment of transactions based on official exchange rates, obligation of concentration of foreign exchange, restriction on foreign payment and restriction on capital transactions.
Generally, residents of Korea are allowed to possess foreign exchange except for the cases set forth in the law.
The name of this law has been changed to the Foreign Exchange Transaction Act, and it has been revised several times. Even now it controls transactions with foreign countries and foreign payment/receipt, with the objectives of international balance equilibrium, stabilisation of currency and the effective operation of foreign currency funds.
In the past, restrictions on foreign payment were emphasised, and foreign receipt, in principle, was freely allowed. However, the method of foreign exchange control has been changed in a way to emphasise equilibrium of international balance and to prevent increase in domestic currency as a result of incoming foreign exchange.
As the government has been stepping up its efforts to clamp down on offshore tax evasion, rules of the Foreign Exchange Transaction Act have been amended to address such efforts. A change to the foreign exchange transaction regulations allows the Customs Service and the Financial Supervisory Service (FSS) to request each other access to the respective party’s probing into foreign exchange transactions unless there is a justifiable reason to decline such a request. Effective from September 2013, the amended rules provide a legal framework to allow the Customs Service and the FSS to team up for the joint inspection of hybrid transactions. Previously, depending on the transaction type, the examination authority of foreign exchange transactions was divided between the Customs Service (commodity exports/imports) and the FSS (service and capital transaction).