“We sign everything at head office” no longer keeps you safe
The office does not sell anything, and every contract is signed abroad by the parent. Korea may still tax you. What matters is not where the signature happened but who did the negotiating.
"We do not sell anything here. Every contract is signed by head office in the United States. So what do you mean we might owe Korean corporate tax?" A manager at an overseas institution preparing to open a liaison office in Korea put this question to us recently.
The short answer: registering as a liaison office does not by itself settle whether Korea taxes you. The tax law looks past the label to what the office actually does here. And where the contract was signed matters less than you might think.
The filing you make with the bank is not the assessment the tax law makes
To open a liaison office you file with a foreign exchange bank, stating that the office will not carry on business activities, and the filing is accepted. That is a foreign exchange procedure. The tax law does not simply adopt what that filing says; it assesses separately what is actually being done in Korea. This is how a company clears the banking process without incident and then, years later, is told it had a domestic place of business all along.
The room the tax law leaves for a liaison office is narrower than it looks
The Corporate Income Tax Act excludes from the definition of a domestic place of business any fixed place used solely for advertising, publicity, collecting and supplying information, market research, and similar activities. The word carrying the weight is "solely." If the office does market research but also negotiates terms with local counterparties on the parent's behalf, it is no longer a place used only for activities of a preparatory or auxiliary character.
A place used only to purchase assets, or only to store or keep assets not held for sale, falls under the same exclusion. Either way, that has to be all it does.
Signing abroad does not stop a domestic place of business from arising
The line we hear most often is "head office signs the contracts, so we are fine." That is not how the provision reads today. Even without authority to conclude contracts, a person who repeatedly plays a principal role in the process of concluding contracts for the foreign corporation in Korea creates a domestic place of business at their location, provided the parent then concludes those contracts without changing their material terms.
If a Korean staff member finds the counterparty and works out the terms while head office merely signs what comes back, that structure sits squarely within this provision. The question is not where the signature was applied but who did the substantive negotiating.
Splitting the activities up does not help either
Dividing activities among related companies is also blocked. If a specially related corporation carries on business at the same place or at another place in Korea and the two sets of activities are complementary, the exclusion is unavailable even where each activity, taken on its own, would look preparatory. The assessment is made on the combined activity as a whole.
Where a tax treaty applies, read it alongside
If there is a tax treaty with the relevant country, its permanent establishment article applies as well, and a treaty definition narrower than domestic law prevails. Definitions and exceptions differ from treaty to treaty, though, so the existence of a treaty is not in itself reassurance. It is safer to read the permanent establishment article of that particular treaty.
Once the office is treated as a domestic place of business, an obligation arises to file and pay corporate income tax on the Korean-source income attributable to it. A company that assumed liaison-office status and filed nothing will have to go back and clean up prior business years.
Before you open a liaison office, try writing down in a sentence what the office will do in Korea. Does it end at gathering information and sending it to head office, or does it extend to meeting counterparties and working out terms? That one sentence decides whether corporate tax is owed. If it reads like a borderline case, have it reviewed before you set the office up.
Legal basis
Corporate Income Tax Act art. 94(1) and (2): a fixed place in Korea where all or part of the business is carried on constitutes a domestic place of business, including a branch, office, or business office
Corporate Income Tax Act art. 94(3)2: a person who, without authority to conclude contracts, repeatedly plays a principal role in the process of concluding contracts for the foreign corporation constitutes a domestic place of business (limited to cases where the foreign corporation concludes the contracts without modifying their material terms)
Corporate Income Tax Act art. 94(4)3: a fixed place used solely for advertising, publicity, collecting and supplying information, market research, and similar activities is excluded from being a domestic place of business
Corporate Income Tax Act art. 94(5): the exclusion above does not apply where the activities are complementary to those of a specially related party and the combined activity is no longer preparatory or auxiliary in character
Enforcement Decree of the Corporate Income Tax Act art. 133: scope of agents and similar persons constituting a domestic place of business
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By JH Kim, Korean CPA (KICPA) · July 2026
This article is for general information only and is not tax or legal advice on any specific matter. Tax outcomes depend on the particular facts of each case. Accounting Corporation YOON accepts no liability for any action taken in reliance on this article. Always obtain individual professional review before acting. Based on Korean law in force as of July 2026; subsequent amendments may affect its accuracy.