Doing Business 2018 Korea, Rep. Economy Pro le of Korea Doing Business 2018 Indicators (in order of appearance in the document) Starting a business Procedures, time, cost and paid-in minimum capital to start a limited liability company Dealing with construction Procedures, time and cost to complete all formalities to build a warehouse and the quality control and permits safety mechanisms in the construction permitting system Getting electricity Procedures, time and cost to get connected to the electrical grid, the reliability of the electricity supply and the transparency of tariffs Registering property Procedures, time and cost to transfer a property and the quality of the land administration system Getting credit Movable collateral laws and credit information systems Protecting minority investors Minority shareholders’ rights in related-party transactions and in corporate governance Paying taxes Payments, time and total tax rate for a firm to comply with all tax regulations as well as post-filing processes Trading across borders Time and cost to export the product of comparative advantage and import auto parts Enforcing contracts Time and cost to resolve a commercial dispute and the quality of judicial processes Resolving insolvency Time, cost, outcome and recovery rate for a commercial insolvency and the strength of the legal framework for insolvency Labor market regulation Flexibility in employment regulation and aspects of job quality About Doing Business The Doing Business project provides objective measures of business regulations and their enforcement across 190 economies and selected cities at the subnational and regional level. The Doing Business project, launched in 2002, looks at domestic small and medium-size companies and measures the regulations applying to them through their life cycle. Doing Business captures several important dimensions of the regulatory environment as it applies to local rms. It provides quantitative indicators on regulation for starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Doing Business also measures features of labor market regulation. Although Doing Business does not present rankings of economies on the labor market regulation indicators or include the topic in the aggregate distance to frontier score or ranking on the ease of doing business, it does present the data for these indicators. By gathering and analyzing comprehensive quantitative data to compare business regulation environments across economies and over time, Doing Business encourages economies to compete towards more e cient regulation; o ers measurable benchmarks for reform; and serves as a resource for academics, journalists, private sector researchers and others interested in the business climate of each economy. In addition, Doing Business o ers detailed subnational reports, which exhaustively cover business regulation and reform in di erent cities and regions within a nation. These reports provide data on the ease of doing business, rank each location, and recommend reforms to improve performance in each of the indicator areas. Selected cities can compare their business regulations with other cities in the economy or region and with the 190 economies that Doing Business has ranked. The rst Doing Business report, published in 2003, covered 5 indicator sets and 133 economies. This year’s report covers 11 indicator sets and 190 economies. Most indicator sets refer to a case scenario in the largest business city of each economy, except for 11 economies that have a population of more than 100 million as of 2013 (Bangladesh, Brazil, China, India, Indonesia, Japan, Mexico, Nigeria, Pakistan, the Russian Federation and the United States) where Doing Business, also collected data for the second largest business city. The data for these 11 economies are a population-weighted average for the 2 largest business cities. The project has bene ted from feedback from governments, academics, practitioners and reviewers. The initial goal remains: to provide an objective basis for understanding and improving the regulatory environment for business around the world. Page 2   for insolvency Doing Business Labor market 2018 regulation Korea, Rep. in employment regulation and aspects of job quality Flexibility About Doing Business The Doing Business project provides objective measures of business regulations and their enforcement across 190 economies and selected cities at the subnational and regional level. The Doing Business project, launched in 2002, looks at domestic small and medium-size companies and measures the regulations applying to them through their life cycle. Doing Business captures several important dimensions of the regulatory environment as it applies to local rms. It provides quantitative indicators on regulation for starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Doing Business also measures features of labor market regulation. Although Doing Business does not present rankings of economies on the labor market regulation indicators or include the topic in the aggregate distance to frontier score or ranking on the ease of doing business, it does present the data for these indicators. By gathering and analyzing comprehensive quantitative data to compare business regulation environments across economies and over time, Doing Business encourages economies to compete towards more e cient regulation; o ers measurable benchmarks for reform; and serves as a resource for academics, journalists, private sector researchers and others interested in the business climate of each economy. In addition, Doing Business o ers detailed subnational reports, which exhaustively cover business regulation and reform in di erent cities and regions within a nation. These reports provide data on the ease of doing business, rank each location, and recommend reforms to improve performance in each of the indicator areas. Selected cities can compare their business regulations with other cities in the economy or region and with the 190 economies that Doing Business has ranked. The rst Doing Business report, published in 2003, covered 5 indicator sets and 133 economies. This year’s report covers 11 indicator sets and 190 economies. Most indicator sets refer to a case scenario in the largest business city of each economy, except for 11 economies that have a population of more than 100 million as of 2013 (Bangladesh, Brazil, China, India, Indonesia, Japan, Mexico, Nigeria, Pakistan, the Russian Federation and the United States) where Doing Business, also collected data for the second largest business city. The data for these 11 economies are a population-weighted average for the 2 largest business cities. The project has bene ted from feedback from governments, academics, practitioners and reviewers. The initial goal remains: to provide an objective basis for understanding and improving the regulatory environment for business around the world. The distance to frontier (DTF) measure shows the distance of each economy to the “frontier,” which represents the best performance observed on each of the indicators across all economies in the Doing Business sample since 2005. An economy’s distance to frontier is re ected on a scale from 0 to 100, where 0 represents the lowest performance and 100 represents the frontier. The ease of doing business ranking ranges from 1 to 190. The ranking of 190 economies is determined by sorting the aggregate distance to frontier scores, rounded to two decimals. More about Doing Business (PDF, 5MB) Ease of Doing Business in Region OECD high income DB 2018 Rank 190 1 Korea, Rep. Income Category High income 4 Population 51,245,707 DB 2018 Distance to Frontier (DTF) GNI Per Capita (US$) 27,600 0 100 83.92 City Covered Seoul DB 2018 Distance to Frontier (DTF) 0 100 83.92: Korea, Rep. (Rank: 4) 80.14: Australia (Rank: 14) 77.46: Regional Average (OECD high income) 65.29: China (Rank: 78) 60.76: India (Rank: 100) Page 3   56.45: Brazil (Rank: 125) aggregate distance to frontier scores, rounded to two decimals. More Doingabout 2018 (PDF, Doing Business Business 5MB) Korea, Rep. Ease of Doing Business in Region OECD high income DB 2018 Rank 190 1 Korea, Rep. Income Category High income 4 Population 51,245,707 DB 2018 Distance to Frontier (DTF) GNI Per Capita (US$) 27,600 0 100 83.92 City Covered Seoul DB 2018 Distance to Frontier (DTF) 0 100 83.92: Korea, Rep. (Rank: 4) 80.14: Australia (Rank: 14) 77.46: Regional Average (OECD high income) 65.29: China (Rank: 78) 60.76: India (Rank: 100) 56.45: Brazil (Rank: 125) Note: The distance to frontier (DTF) measure shows the distance of each economy to the “frontier,” which represents the best performance observed on each of the indicators across all economies in the Doing Business sample since 2005. An economy’s distance to frontier is re ected on a scale from 0 to 100, where 0 represents the lowest performance and 100 represents the frontier. The ease of doing business ranking ranges from 1 to 190. Rankings on Doing Business topics - Korea 2 1 5 1 9 20 24 28 28 33 39 55 55 82 Rank 109 136 163 190 Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving a with Electricity Property Credit Minority Taxes across Contracts Insolvency Business Construction Investors Borders Permits Distance to Frontier (DTF) on Doing Business topics - Korea 99.89 100 95.83 92.52 89.33 86.69 84.15 77.74 76.34 80 71.67 65.00 60 DTF 40 20 0 Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving a with Electricity Property Credit Minority Taxes across Contracts Insolvency Business Construction Change:+0.01 Change:0.00 Change:0.00 Investors Change:+0.02 Borders Change:0.00 Change:+0.11 Change:0.00 Permits Change:0.00 Change:0.00 Change:-0.13 Starting a Business Page 4   This topic measures the paid-in minimum capital requirement, number of procedures, time and cost for a small- to medium-sized a with Electricity Property Credit Minority Taxes across Contracts Insolvency Business Construction Change:+0.01 Change:0.00 Change:0.00 Investors Change:+0.02 Borders Change:0.00 Change:+0.11 Change:0.00 Permits Change:0.00 Change:0.00 Doing Business 2018 Korea, Rep. Change:-0.13 Starting a Business This topic measures the paid-in minimum capital requirement, number of procedures, time and cost for a small- to medium-sized limited liability company to start up and formally operate in economy’s largest business city. To make the data comparable across 190 economies, Doing Business uses a standardized business that is 100% domestically owned, has start-up capital equivalent to 10 times income per capita, engages in general industrial or commercial activities and employs between 10 and 50 people one month after the commencement of operations, all of whom are domestic nationals. Starting a Business considers two types of local limited liability companies that are identical in all aspects, except that one company is owned by 5 married women and the other by 5 married men. The distance to frontier score for each indicator is the average of the scores obtained for each of the component indicators. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally start and operate a To make the data comparable across economies, several assumptions company (number) about the business and the procedures are used. It is assumed that any required information is readily available and that the entrepreneur will pay Pre-registration (for example, name verification no bribes. or reservation, notarization) Registration in economy’s largest business city The business: - Is a limited liability company (or its legal equivalent). If there is more than Post-registration (for example, social security one type of limited liability company in the economy, the most common registration, company seal) among domestic rms is chosen. Information on the most common form is Obtaining approval from spouse to start business obtained from incorporation lawyers or the statistical o ce. or leave home to register company - Operates in the economy’s largest business city and the entire o ce Obtaining any gender-specific permission that space is approximately 929 square meters (10,000 square feet). For 11 can impact company registration, company economies the data are also collected for the second largest business city. operations and process of getting national - Is 100% domestically owned and has ve owners, none of whom is a legal identity card entity; and has a start-up capital of 10 times income per capita and has a Time required to complete each procedure turnover of at least 100 times income per capita. (calendar days) - Performs general industrial or commercial activities, such as the production or sale of goods or services to the public. The business does Does not include time spent gathering not perform foreign trade activities and does not handle products subject information to a special tax regime, for example, liquor or tobacco. It does not use Each procedure starts on a separate day (2 heavily polluting production processes. procedures cannot start on the same day) - Leases the commercial plant or o ces and is not a proprietor of real Procedures fully completed online are recorded estate and the amount of the annual lease for the o ce space is equivalent as ½ day to 1 times income per capita. Procedure is considered completed once final - Does not qualify for investment incentives or any special bene ts. document is received - Has at least 10 and up to 50 employees one month after the commencement of operations, all of whom are domestic nationals. No prior contact with officials - Has a company deed 10 pages long. Cost required to complete each procedure (% of The owners: income per capita) - Have reached the legal age of majority. If there is no legal age of majority, Official costs only, no bribes they are assumed to be 30 years old. No professional fees unless services required by - Are sane, competent, in good health and have no criminal record. law or commonly used in practice - Are married and the marriage is monogamous and registered with the authorities. Paid-in minimum capital (% of income per capita) - Where the answer di ers according to the legal system applicable to the Funds deposited in a bank or with third party woman or man in question (as may be the case in economies where there before registration or up to 3 months after is legal plurality), the answer used will be the one that applies to the incorporation majority of the population. Standardized Company Page 5   before registration or up to 3 months after is legal plurality), the answer used will be the one that applies to the incorporation majority of the population. Doing Business 2018 Korea, Rep. Standardized Company Legal form Jusik Hoesa Paid-in minimum capital requirement KRW 0 City Covered Seoul OECD high OECD high Indicator Korea, Rep. income income Overall Best Performer Procedure – Men (number) 2 4.9 4.9 1.00 (New Zealand) Time – Men (days) 4 8.5 8.5 0.50 (New Zealand) Cost – Men (% of income per capita) 14.6 3.1 3.1 0.00 (United Kingdom) Procedure – Women (number) 2 4.9 4.9 1.00 (New Zealand) Time – Women (days) 4 8.5 8.5 0.50 (New Zealand) Cost – Women (% of income per capita) 14.6 3.1 3.1 0.00 (United Kingdom) Paid-in min. capital (% of income per capita) 0.0 8.7 8.7 0.00 (113 Economies) Figure – Starting a Business in Korea and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 96.47: Australia (Rank: 7) 95.83: Korea, Rep. (Rank: 9) 91.35: Regional Average (OECD high income) 85.47: China (Rank: 93) 75.40: India (Rank: 156) 65.05: Brazil (Rank: 176) Note: The ranking of economies on the ease of starting a business is determined by sorting their distance to frontier scores for starting a business. These scores are the simple average of the distance to frontier scores for each of the component indicators. Figure – Starting a Business in Korea, Rep. – Procedure, Time and Cost Time Cost 4 16 3.5 14 ost (% of income per capita) 3 12 2.5 10 Time (days) 2 8 1.5 6 Page 6   1 4 starting a business. These scores are the simple average of the distance to frontier scores for each of the component indicators. Doing Business 2018 Korea, Rep. Figure – Starting a Business in Korea, Rep. – Procedure, Time and Cost Time Cost 4 16 3.5 14 Cost (% of income per capita) 3 12 2.5 10 Time (days) 2 8 1.5 6 1 4 0.5 2 0 0 1 2 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a di erent procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://www.doingbusiness.org/methodology). For details on the procedures re ected here, see the summary below. Details – Starting a Business in Korea, Rep. – Procedure, Time and Cost No. Procedure Time to Complete Associated Costs 1 Make company seal 1 day KRW 30,000 Agency : Seal maker Business founders can make a company seal at the Sealmaker for approximately KRW 30,000. 2 Register the company with Start-Biz and pay incorporation fees 3 days KRW 2,000 fee of e- Agency : Small and Medium Business Administration (SMBA) registration+ 1.2% capital registration Start Biz Online (www.startbiz.go.kr), has combined the Internet Register tax + education tax O ce, the Local Tax Payment System, the Electronic Notarization System, (20% of the the National Tax Information System, the Financial Common Network, and registration tax) + the Social Insurance Information System which are independently run, for KRW 20,000 (e- the purpose of incorporation. Start Biz Online allows its users to process the entire incorporation process online, including checking the availability of registration form) trade name and obtain a certi cate of name availability, opening a bank statement from a bank, ling the application package for incorporation and obtaining a corporate registration tax bill, register the company and obtaining a certi cate of seal impression of corporation, registering and getting a tax identi cation number (TIN), submitting the rules of employment, and registering electronically for the Public Health Insurance Program, the National Pension Fund, Employment Insurance, and Industrial Accident Compensation Insurance. After checking the company name, uploading incorporation documents as well as lling company information, applicants can process to the payments for the corporate registration tax bill as well as the registration fee. Since Page 7   applicant has already lled in the company information, there is no need to (http://www.doingbusiness.org/methodology). For details on the procedures re ected here, see the summary below. Doing Business 2018 Korea, Rep. Details – Starting a Business in Korea, Rep. – Procedure, Time and Cost No. Procedure Time to Complete Associated Costs 1 Make company seal 1 day KRW 30,000 Agency : Seal maker Business founders can make a company seal at the Sealmaker for approximately KRW 30,000. 2 Register the company with Start-Biz and pay incorporation fees 3 days KRW 2,000 fee of e- Agency : Small and Medium Business Administration (SMBA) registration+ 1.2% capital registration Start Biz Online (www.startbiz.go.kr), has combined the Internet Register tax + education tax O ce, the Local Tax Payment System, the Electronic Notarization System, (20% of the the National Tax Information System, the Financial Common Network, and registration tax) + the Social Insurance Information System which are independently run, for KRW 20,000 (e- the purpose of incorporation. Start Biz Online allows its users to process the entire incorporation process online, including checking the availability of registration form) trade name and obtain a certi cate of name availability, opening a bank statement from a bank, ling the application package for incorporation and obtaining a corporate registration tax bill, register the company and obtaining a certi cate of seal impression of corporation, registering and getting a tax identi cation number (TIN), submitting the rules of employment, and registering electronically for the Public Health Insurance Program, the National Pension Fund, Employment Insurance, and Industrial Accident Compensation Insurance. After checking the company name, uploading incorporation documents as well as lling company information, applicants can process to the payments for the corporate registration tax bill as well as the registration fee. Since applicant has already lled in the company information, there is no need to ll in separate forms for the payments. They will be automatically directed to the payment pages where they can make all payments, and re-directed to the Start-biz system once the payments are completed. In most of the cases, it takes 3 days to obtain the certi cate of incorporation from the Start-Biz system. During this period, the court registry o ce reviews the documents and information provided by the applicants, and due diligence of company address is conducted by the tax o ce. Applies to women only. Takes place simultaneously with previous procedure. Dealing with Construction Permits This topic tracks the procedures, time and cost to build a warehouse—including obtaining necessary the licenses and permits, submitting all required noti cations, requesting and receiving all necessary inspections and obtaining utility connections. In addition, the Dealing with Construction Permits indicator measures the building quality control index, evaluating the quality of building regulations, the strength of quality control and safety mechanisms, liability and insurance regimes, and professional certi cation requirements. The most recent round of data collection was completed in June 2017. See the methodology for more information What the indicators measure Case study assumptions Procedures to legally build a warehouse (number) Page 8   To make the data comparable across economies, several assumptions Applies to women only. Takes place simultaneously with previous procedure. Doing Business 2018 Korea, Rep. Dealing with Construction Permits This topic tracks the procedures, time and cost to build a warehouse—including obtaining necessary the licenses and permits, submitting all required noti cations, requesting and receiving all necessary inspections and obtaining utility connections. In addition, the Dealing with Construction Permits indicator measures the building quality control index, evaluating the quality of building regulations, the strength of quality control and safety mechanisms, liability and insurance regimes, and professional certi cation requirements. The most recent round of data collection was completed in June 2017. See the methodology for more information What the indicators measure Case study assumptions Procedures to legally build a warehouse (number) To make the data comparable across economies, several assumptions about the construction company, the warehouse project and the utility Submitting all relevant documents and obtaining connections are used. all necessary clearances, licenses, permits and certificates The construction company (BuildCo): Submitting all required notifications and - Is a limited liability company (or its legal equivalent) and operates in the receiving all necessary inspections economy’s largest business city. For 11 economies the data are also collected for the second largest business city. Obtaining utility connections for water and - Is 100% domestically and privately owned; has ve owners, none of whom sewerage is a legal entity. Has a licensed architect and a licensed engineer, both Registering and selling the warehouse after its registered with the local association of architects or engineers. BuildCo is completion not assumed to have any other employees who are technical or licensed Time required to complete each procedure experts, such as geological or topographical experts. (calendar days) - Owns the land on which the warehouse will be built and will sell the warehouse upon its completion. Does not include time spent gathering information The warehouse: Each procedure starts on a separate day— - Will be used for general storage activities, such as storage of books or though procedures that can be fully completed stationery. online are an exception to this rule - Will have two stories, both above ground, with a total constructed area of Procedure is considered completed once final approximately 1,300.6 square meters (14,000 square feet). Each oor will document is received be 3 meters (9 feet, 10 inches) high and will be located on a land plot of No prior contact with officials approximately 929 square meters (10,000 square feet) that is 100% owned by BuildCo, and the warehouse is valued at 50 times income per capita. Cost required to complete each procedure (% of - Will have complete architectural and technical plans prepared by a warehouse value) licensed architect. If preparation of the plans requires such steps as Official costs only, no bribes obtaining further documentation or getting prior approvals from external Building quality control index (0-15) agencies, these are counted as procedures. - Will take 30 weeks to construct (excluding all delays due to administrative Sum of the scores of six component indices: and regulatory requirements). Quality of building regulations (0-2) The water and sewerage connections: Quality control before construction (0-1) - Will be 150 meters (492 feet) from the existing water source and sewer Quality control during construction (0-3) tap. If there is no water delivery infrastructure in the economy, a borehole Quality control after construction (0-3) will be dug. If there is no sewerage infrastructure, a septic tank in the smallest size available will be installed or built. Liability and insurance regimes (0-2) - Will have an average water use of 662 liters (175 gallons) a day and an Professional certifications (0-4) average wastewater ow of 568 liters (150 gallons) a day. Will have a peak water use of 1,325 liters (350 gallons) a day and a peak wastewater ow of 1,136 liters (300 gallons) a day. - Will have a constant level of water demand and wastewater ow throughout the year; will be 1 inch in diameter for the water connection and 4 inches in diameter for the sewerage connection. Standardized Warehouse Page 9   and 4 inches in diameter for the sewerage connection. Doing Business 2018 Korea, Rep. Standardized Warehouse Estimated value of warehouse KRW 1,599,202,398.60 City Covered Seoul OECD high OECD high Indicator Korea, Rep. income income Overall Best Performer Procedures (number) 10 12.5 12.5 7.00 (Denmark) Time (days) 27.5 154.6 154.6 27.5 (Korea, Rep.) Cost (% of warehouse value) 4.4 1.6 1.6 0.10 (5 Economies) Building quality control index (0-15) 8.0 11.4 11.4 15.00 (3 Economies) Figure – Dealing with Construction Permits in Korea and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 84.39: Australia (Rank: 6) 77.74: Korea, Rep. (Rank: 28) 75.14: Regional Average (OECD high income) 49.83: Brazil (Rank: 170) 47.28: China (Rank: 172) 38.80: India (Rank: 181) Note: The ranking of economies on the ease of dealing with construction permits is determined by sorting their distance to frontier scores for dealing with construction permits. These scores are the simple average of the distance to frontier scores for each of the component indicators. Figure – Dealing with Construction Permits in Korea, Rep. – Procedure, Time and Cost Time Cost 3 25 2.5 Cost (% of warehouse value) 20 2 Time (days) 15 1.5 10 1 5 0.5 0 0 1 2 3 4 *5 *6 7 *8 9 * 10 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Page 10   component indicators. Doing Business 2018 Korea, Rep. Figure – Dealing with Construction Permits in Korea, Rep. – Procedure, Time and Cost Time Cost 3 25 2.5 Cost (% of warehouse value) 20 2 Time (days) 15 1.5 10 1 5 0.5 0 0 1 2 3 4 *5 *6 7 *8 9 * 10 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a di erent procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://www.doingbusiness.org/methodology). For details on the procedures re ected here, see the summary below. Figure – Dealing with Construction Permits in Korea, Rep. and comparator economies – Measure of Quality 16 14.0 14 12 11.5 11.4 9.6 Index score 10 9.0 8.0 8 6 4 2 0 Korea, Rep. Australia Brazil China India OECD high income Details – Dealing with Construction Permits in Korea, Rep. – Procedure, Time and Cost No. Procedure Time to Complete Associated Costs 1 Request and obtain proof of ownership of land 1 day KRW 1,000 Agency : Property Register BuildCo must obtain proof of ownership from the Property Register to show that BuildCo has the right to construct a warehouse on the land. The issuance date stated in the Land Registry should be within 3 months prior to the date of submitting the application for a building permit. Once the application for a building permit and the relevant documents are led with the licensing authority, the authority will forward the design drawing to the relevant regulatory agencies, the re department and the sewage department. It is possible to obtain proof of ownership (from the Court Registry) immediately after applying over the Internet. The fee for issuing Page 11   certi cate of registered items is KRW 1,000 for issuance via internet. Korea, Rep. Australia Brazil China India OECD high income Doing Business 2018 Korea, Rep. Details – Dealing with Construction Permits in Korea, Rep. – Procedure, Time and Cost No. Procedure Time to Complete Associated Costs 1 Request and obtain proof of ownership of land 1 day KRW 1,000 Agency : Property Register BuildCo must obtain proof of ownership from the Property Register to show that BuildCo has the right to construct a warehouse on the land. The issuance date stated in the Land Registry should be within 3 months prior to the date of submitting the application for a building permit. Once the application for a building permit and the relevant documents are led with the licensing authority, the authority will forward the design drawing to the relevant regulatory agencies, the re department and the sewage department. It is possible to obtain proof of ownership (from the Court Registry) immediately after applying over the Internet. The fee for issuing certi cate of registered items is KRW 1,000 for issuance via internet. 2 Purchase National Housing Bonds (NHB) 0.5 days KRW 169,078 Agency : Commercial bank To qualify for a building permit, BuildCo must purchase National Housing Bonds (NHBs) at any commercial bank. The NHB is calculated at a rate ranging from KRW 600.00 to KRW 1,300.00 per sq. m., depending upon the structure of the warehouse. If the warehouse is constructed in steel frame, the rate of KRW 1,300.00 per sq. m. is applied. BuildCo can either receive the money paid for the NHBs upon maturity or sell them at a discount (the discount is 10%). Upon purchase, the bank issues a receipt, which must then be presented to the Building Authorities. The cost is calculated as follows: KRW 1,300.00 x 1300.6 sq. m. = KRW 1,690,780.00. However, many sell the NHBs immediately at a discount of 10%, which brings the actual cost incurred by the company to KRW 169,078.00. 3 Request and obtain building permit 9 days KRW 121,500 Agency : County (Ku) O ce of Construction BuildCo must submit an application for a building permit to the County (Ku) O ce of Construction. The application must include: • The size of construction lot; • Documentation showing BuildCo's ownership or the right to use the construction lot; and • Basic design drawings, which must specify the approximate location of the water pipes, sewage, septic tank, electrical facilities, and telephone lines. Once the application for the building permit with the relevant documents is led with the licensing authority, this authority forwards the design drawings to the relevant regulatory agencies (such as the sewerage department and the re department). Thus, it is not necessary for the company to obtain separate project clearances from these departments. Under the Article 10 of the new Building Code, anyone who intends to construct a building may opt for a fast-track procedure and apply for an "advance decision regarding building permit" before applying for a building permit. If an advance decision is obtained for the construction, the builder must separately apply for and obtain a building permit for the construction. However, when the advance decision is obtained, the relevant approval for the development or re-characterization of land (such approval is needed in Page 12   certain zoning areas under several relevant laws) is deemed to be obtained. However, many sell the NHBs immediately at a discount of 10%, which brings Doing the actual cost Business incurred 2018 by the Korea, company to KRW 169,078.00. Rep. 3 Request and obtain building permit 9 days KRW 121,500 Agency : County (Ku) O ce of Construction BuildCo must submit an application for a building permit to the County (Ku) O ce of Construction. The application must include: • The size of construction lot; • Documentation showing BuildCo's ownership or the right to use the construction lot; and • Basic design drawings, which must specify the approximate location of the water pipes, sewage, septic tank, electrical facilities, and telephone lines. Once the application for the building permit with the relevant documents is led with the licensing authority, this authority forwards the design drawings to the relevant regulatory agencies (such as the sewerage department and the re department). Thus, it is not necessary for the company to obtain separate project clearances from these departments. Under the Article 10 of the new Building Code, anyone who intends to construct a building may opt for a fast-track procedure and apply for an "advance decision regarding building permit" before applying for a building permit. If an advance decision is obtained for the construction, the builder must separately apply for and obtain a building permit for the construction. However, when the advance decision is obtained, the relevant approval for the development or re-characterization of land (such approval is needed in certain zoning areas under several relevant laws) is deemed to be obtained. This e ect of the advance decision is valid for 2 years from the date of issuance, before the builder applies for the building permit itself. In addition, it is possible to submit simultaneous applications for an advance decision and for the tra c and environment impact assessment procedures, and the like, if those procedures are necessary. Accordingly, if the builder obtains an advance decision before applying for the building permit, the time before the construction may be reduced more or less. However, this has not worked well in practice and many companies follow the traditional way. According to the Standard for Civil Petitions Treatment published by the Korean Government on December 30, 2005, the duration for obtaining a building permit for a two-story, 1,300-square-meter building is estimated to be 3 -- 14 days, subject to certain circumstances, including whether the work is performed by an agent (a certi ed architect). The duration can take a few days longer, as the case may be. Before construction work begins, the company informs the authority thereof. BuildCo must present a noti cation application, including: • A copy of all relevant contract(s) between the relevant parties (owner, construction company, architect, building inspector, etc.) • The design drawings, which must specify the location of the water pipes, sewage, septic tank, electrical facilities, and telephone lines. 4 Hire a certi ed inspector 1 day KRW 20,629,711 Agency : Private Company A certi ed inspector conducts inspections throughout the period of construction. If the company does not hire a certi ed inspector during construction, there is a penalty of up to 2 years’ imprisonment or a ne of up to KRW 10 million. The inspector is independent of the company. The frequency of inspections varies depending on the size and cost of Page 13   construction. Generally, an inspection takes place if the inspector and the • The design drawings, which must specify the location of the water pipes, Doing sewage, septic Business 2018tank, electrical facilities, and telephone lines. Korea, Rep. 4 Hire a certi ed inspector 1 day KRW 20,629,711 Agency : Private Company A certi ed inspector conducts inspections throughout the period of construction. If the company does not hire a certi ed inspector during construction, there is a penalty of up to 2 years’ imprisonment or a ne of up to KRW 10 million. The inspector is independent of the company. The frequency of inspections varies depending on the size and cost of construction. Generally, an inspection takes place if the inspector and the company deem it necessary. However, in some instances, the contract between the company and the inspector contains a clause specifying the frequency of inspection. There must be at least two inspections throughout the construction, during which the construction work does not stop. The fees for hiring a certi ed inspector is calculated by multiplying the value of the project by the relevant rate of 1.29%, in accordance with the Regulation for Scope of Architect Services and Fee Standard. 5 Request water and sewage and occupancy permit inspections certi cate 1 day KRW 40,000 Agency : Public Sewer Management Agency When installing drainage facilities in a building, the type, size, and other features of the drainage facilities must be reported pursuant to the Sewage Act to the Public Sewer Management Agency. According to the Act’s enforcement provision, the time to complete the inspection should be 14 days, and the cost is KRW 40,000.00. There is no penalty for the authorities if the time line is missed, but they generally meet the deadline. 6 Request and obtain re inspection certi cate 1 day no charge Agency : Fire Department When BuildCo applies for an occupancy permit, the approval authority will ask the Fire Department to inspect the building. The Fire Department will issue an inspection certi cate after inspection of the premises. The average waiting time is one week. 7 Obtain occupancy permit certi cate 7 days no charge Agency : County (Ku) O ce of Construction BuildCo must apply for an occupancy permit within 7 days of the completion of construction. The occupancy permit is issued after the re inspection mentioned in the previous procedure. 8 Receive nal inspection from local government 1 day no charge Agency : Local Government 9 Obtain connection to water and sewage services 7 days KRW 4,443,000 Agency : Korea Water Company Register the building with the Court Registry 4 days KRW 44,792,667 10 Agency : Court Registry An acquisition and stamp tax must be paid within 30 days of receiving the occupancy permit. The acquisition tax is 2.8% of the value of the property without surcharge (3.16% with surcharge) and the stamp tax is KRW 15,000.00 per land parcel. Once the tax is paid, BuildCo must register the warehouse within 60 days from the inspection completion date. Page 14   9 Obtain connection to water and sewage services 7 days KRW 4,443,000 Agency : Korea Water Company Doing Business 2018 Korea, Rep. Register the building with the Court Registry 4 days KRW 44,792,667 10 Agency : Court Registry An acquisition and stamp tax must be paid within 30 days of receiving the occupancy permit. The acquisition tax is 2.8% of the value of the property without surcharge (3.16% with surcharge) and the stamp tax is KRW 15,000.00 per land parcel. Once the tax is paid, BuildCo must register the warehouse within 60 days from the inspection completion date. Takes place simultaneously with previous procedure. Details – Dealing with Construction Permits in Korea, Rep. – Measure of Quality Answer Score Building quality control index (0-15) 8.0 Quality of building regulations index (0-2) 2.0 How accessible are building laws and regulations in your economy? (0-1) Available online; 1.0 Free of charge. Which requirements for obtaining a building permit are clearly speci ed in the building List of required 1.0 regulations or on any accessible website, brochure or pamphlet? (0-1) documents; Fees to be paid; Required preapprovals. Quality control before construction index (0-1) 0.0 Which third-party entities are required by law to verify that the building plans are in By law, there is 0.0 compliance with existing building regulations? (0-1) no need to verify plans compliance; Civil servant reviews plans. Quality control during construction index (0-3) 2.0 What types of inspections (if any) are required by law to be carried out during Inspections by 1.0 construction? (0-2) in-house engineer; Inspections by external engineer or rm; Inspections at various phases. Do legally mandated inspections occur in practice during construction? (0-1) Mandatory 1.0 inspections are always done in practice. Quality control after construction index (0-3) 3.0 Is there a nal inspection required by law to verify that the building was built in Yes, nal 2.0 Page 15   accordance with the approved plans and regulations? (0-2) inspection is Takes place simultaneously with previous procedure. Doing Business 2018 Korea, Rep. Details – Dealing with Construction Permits in Korea, Rep. – Measure of Quality Answer Score Building quality control index (0-15) 8.0 Quality of building regulations index (0-2) 2.0 How accessible are building laws and regulations in your economy? (0-1) Available online; 1.0 Free of charge. Which requirements for obtaining a building permit are clearly speci ed in the building List of required 1.0 regulations or on any accessible website, brochure or pamphlet? (0-1) documents; Fees to be paid; Required preapprovals. Quality control before construction index (0-1) 0.0 Which third-party entities are required by law to verify that the building plans are in By law, there is 0.0 compliance with existing building regulations? (0-1) no need to verify plans compliance; Civil servant reviews plans. Quality control during construction index (0-3) 2.0 What types of inspections (if any) are required by law to be carried out during Inspections by 1.0 construction? (0-2) in-house engineer; Inspections by external engineer or rm; Inspections at various phases. Do legally mandated inspections occur in practice during construction? (0-1) Mandatory 1.0 inspections are always done in practice. Quality control after construction index (0-3) 3.0 Is there a nal inspection required by law to verify that the building was built in Yes, nal 2.0 accordance with the approved plans and regulations? (0-2) inspection is done by government agency; Yes, in- house engineer submits report for nal inspection; Yes, external engineer submits report for nal inspection. Page 16   Do legally mandated nal inspections occur in practice? (0-1) Final inspection 1.0 control after QualityBusiness Doing 2018construction index (0-3) Korea, Rep. 3.0 Is there a nal inspection required by law to verify that the building was built in Yes, nal 2.0 accordance with the approved plans and regulations? (0-2) inspection is done by government agency; Yes, in- house engineer submits report for nal inspection; Yes, external engineer submits report for nal inspection. Do legally mandated nal inspections occur in practice? (0-1) Final inspection 1.0 always occurs in practice. Liability and insurance regimes index (0-2) 1.0 Which parties (if any) are held liable by law for structural aws or problems in the Architect or 1.0 building once it is in use (Latent Defect Liability or Decennial Liability)? (0-1) engineer; Professional in charge of the supervision; Construction company; Owner or investor. Which parties (if any) are required by law to obtain an insurance policy to cover No party is 0.0 possible structural aws or problems in the building once it is in use (Latent Defect required by law Liability Insurance or Decennial Insurance)? (0-1) to obtain insurance . Professional certi cations index (0-4) 0.0 What are the quali cation requirements for the professional responsible for verifying Being a 0.0 that the architectural plans or drawings are in compliance with existing building registered regulations? (0-2) architect or engineer; Passing a certi cation exam. What are the quali cation requirements for the professional who supervises the Being a 0.0 construction on the ground? (0-2) registered architect or engineer; Passing a certi cation exam. Getting Electricity This topic measures the procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse. Additionally, the reliability of supply and transparency of tari s index measures reliability of supply, Page 17   transparency of tari s and the price of electricity. The most recent round of data collection for the project was completed in June certi cation exam. Doing Business 2018 Korea, Rep. Getting Electricity This topic measures the procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse. Additionally, the reliability of supply and transparency of tari s index measures reliability of supply, transparency of tari s and the price of electricity. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Procedures to obtain an electricity connection To make the data comparable across economies, several assumptions are (number) used. Submitting all relevant documents and obtaining The warehouse: all necessary clearances and permits - Is owned by a local entrepreneur and is used for storage of goods. Completing all required notifications and - Is located in the economy’s largest business city. For 11 economies the receiving all necessary inspections data are also collected for the second largest business city. Obtaining external installation works and possibly - Is located in an area where similar warehouses are typically located and is purchasing material for these works in an area with no physical constraints. For example, the property is not Concluding any necessary supply contract and near a railway. obtaining final supply - Is a new construction and is being connected to electricity for the rst time. Time required to complete each procedure - Has two stories with a total surface area of approximately 1,300.6 square (calendar days) meters (14,000 square feet). The plot of land on which it is built is 929 Is at least 1 calendar day square meters (10,000 square feet). Each procedure starts on a separate day Does not include time spent gathering The electricity connection: information - Is a permanent one with a three-phase, four-wire Y connection with a subscribed capacity of 140-kilo-volt-ampere (kVA) with a power factor of 1, Reflects the time spent in practice, with little when 1 kVA = 1 kilowatt (kW). follow-up and no prior contact with officials - Has a length of 150 meters. The connection is to either the low- or Cost required to complete each procedure (% of medium-voltage distribution network and is either overhead or income per capita) underground, whichever is more common in the area where the warehouse is located and requires works that involve the crossing of a 10- Official costs only, no bribes meter road (such as by excavation or overhead lines) but are all carried out Value added tax excluded on public land. There is no crossing of other owners’ private property The reliability of supply and transparency of because the warehouse has access to a road. tari s index (0-8) - Does not require work to install the internal wiring of the warehouse. This has already been completed up to and including the customer’s service Duration and frequency of power outages (0–3) panel or switchboard and the meter base. Tools to monitor power outages (0–1) Tools to restore power supply (0–1) The monthly consumption: Regulatory monitoring of utilities’ performance - It is assumed that the warehouse operates 30 days a month from 9:00 (0–1) a.m. to 5:00 p.m. (8 hours a day), with equipment utilized at 80% of capacity Financial deterrents limiting outages (0–1) on average and that there are no electricity cuts (assumed for simplicity reasons) and the monthly energy consumption is 26,880 kilowatt-hours Transparency and accessibility of tariffs (0–1) (kWh); hourly consumption is 112 kWh. Price of electricity (cents per kilowatt-hour)* - If multiple electricity suppliers exist, the warehouse is served by the Price based on monthly bill for commercial cheapest supplier. warehouse in case study - Tari s e ective in March of the current year are used for calculation of the price of electricity for the warehouse. Although March has 31 days, for * N o t e : Doing Business m e a s u r e s t h e p r i c e o f calculation purposes only 30 days are used. electricity, but it is not included in the distance to frontier score nor the ranking on the ease of getting electricity. Page 18   Standardized Connection frontier score nor the ranking on the ease of getting electricity. Doing Business 2018 Korea, Rep. Standardized Connection Price of electricity (US cents per kWh) 8.7 Name of utility Korea Electric Power Corp (KEPCO) City Covered Seoul OECD high OECD high Indicator Korea, Rep. income income Overall Best Performer Procedures (number) 3 4.7 4.7 2 (United Arab Emirates) Time (days) 13 79.1 79.1 10 (United Arab Emirates) Cost (% of income per capita) 37 63.0 63.0 0.00 (Japan) Reliability of supply and transparency of tariff 8 7.4 7.4 8.00 (28 Economies) index (0-8) Figure – Getting Electricity in Korea and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 99.89: Korea, Rep. (Rank: 2) 85.21: India (Rank: 29) 84.44: Regional Average (OECD high income) 82.46: Brazil (Rank: 45) 82.31: Australia (Rank: 47) 68.83: China (Rank: 98) Note: The ranking of economies on the ease of getting electricity is determined by sorting their distance to frontier scores for getting electricity. These scores are the simple average of the distance to frontier scores for each of the component indicators. Figure – Getting Electricity in Korea, Rep. – Procedure, Time and Cost Time Cost 40 12 35 Cost (% of income per capita) 10 30 8 25 Time (days) 20 6 15 4 10 2 Page 19   5 getting electricity. These scores are the simple average of the distance to frontier scores for each of the component indicators. Doing Business 2018 Korea, Rep. Figure – Getting Electricity in Korea, Rep. – Procedure, Time and Cost Time Cost 40 12 35 Cost (% of income per capita) 10 30 8 25 Time (days) 20 6 15 4 10 2 5 0 0 1 2 *3 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a di erent procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://www.doingbusiness.org/methodology). For details on the procedures re ected here, see the summary below. Figure – Getting Electricity in Korea, Rep. and comparator economies – Measure of Quality 9 8 8 7.4 7 7 7 6 6 5.4 Index score 5 4 3 2 1 0 Korea, Rep. Australia Brazil China India OECD high income Details – Getting Electricity in Korea, Rep. – Procedure, Time and Cost No. Procedure Time to Complete Associated Costs 1 Submit application to KEPCO and sign contract 1 calendar day KRW 11,697,780.59 Agency : Korea Electric Power Corporation (KEPCO) As soon as KEPCO receives the electricity application, it charges the customer for a standard connection fee, and the customer signs a contract with KEPCO. 2 Receive external works, meter installation and electricity ow 12 calendar days KRW 0 Agency : Korea Electric Power Corporation (KEPCO) On signing the contract with the customer, KEPCO begins designing the external wiring works, securing materials, and making a contract with the electricity contractors. These activities are not related to the customer, but Page 20   Korea, Rep. Australia Brazil China India OECD high income Doing Business 2018 Korea, Rep. Details – Getting Electricity in Korea, Rep. – Procedure, Time and Cost No. Procedure Time to Complete Associated Costs 1 Submit application to KEPCO and sign contract 1 calendar day KRW 11,697,780.59 Agency : Korea Electric Power Corporation (KEPCO) As soon as KEPCO receives the electricity application, it charges the customer for a standard connection fee, and the customer signs a contract with KEPCO. 2 Receive external works, meter installation and electricity ow 12 calendar days KRW 0 Agency : Korea Electric Power Corporation (KEPCO) On signing the contract with the customer, KEPCO begins designing the external wiring works, securing materials, and making a contract with the electricity contractors. These activities are not related to the customer, but KEPCO's internal procedures. Generally, warehouses are connected with overhead distribution lines in Seoul (90% of network is overhead). 3 Request and receive internal wiring inspection 5 calendar days KRW 148,740 Agency : Korea Electrical Safety Corporation (KESCO) The customer has to hire a licensed electrician or an electrical contractor to design and install the internal facilities. The customer should submit the application with the license number and the certi cation stamp of the hired electrician attached for the internal inspection to KESCO (Korea Electrical Safety Corporation). According to The Electricity Enterprises Act #62, #63 and The Enforcement Regulations of Electricity Enterprises Act #31, facilities over 75kVA shall be inspected by KESCO. Takes place simultaneously with previous procedure. Details – Getting Electricity in Korea, Rep. – Measure of Quality Answer Reliability of supply and transparency of tari index (0-8) 8 Total duration and frequency of outages per customer a year (0-3) 3 System average interruption duration index (SAIDI) 0.1 System average interruption frequency index (SAIFI) 0.1 What is the minimum outage time (in minutes) that the utility considers for the calculation of SAIDI/SAIFI 5.0 Mechanisms for monitoring outages (0-1) 1 Does the distribution utility use automated tools to monitor outages? Yes Mechanisms for restoring service (0-1) 1 Does the distribution utility use automated tools to restore service? Yes Regulatory monitoring (0-1) 1 Page 21   Does a regulator—that is, an entity separate from the utility—monitor the utility’s performance on Yes Takes place simultaneously with previous procedure. Doing Business 2018 Korea, Rep. Details – Getting Electricity in Korea, Rep. – Measure of Quality Answer Reliability of supply and transparency of tari index (0-8) 8 Total duration and frequency of outages per customer a year (0-3) 3 System average interruption duration index (SAIDI) 0.1 System average interruption frequency index (SAIFI) 0.1 What is the minimum outage time (in minutes) that the utility considers for the calculation of SAIDI/SAIFI 5.0 Mechanisms for monitoring outages (0-1) 1 Does the distribution utility use automated tools to monitor outages? Yes Mechanisms for restoring service (0-1) 1 Does the distribution utility use automated tools to restore service? Yes Regulatory monitoring (0-1) 1 Does a regulator—that is, an entity separate from the utility—monitor the utility’s performance on Yes reliability of supply? Financial deterrents aimed at limiting outages (0-1) 1 Does the utility either pay compensation to customers or face nes by the regulator (or both) if outages Yes exceed a certain cap? Communication of tari s and tari changes (0-1) 1 Are e ective tari s available online? Yes Link to the website, if available online http://home.kepco.c o.kr/kepco/EN/F/htm lView/ENFBHP003.do ?menuCd=EN060203 Are customers noti ed of a change in tari ahead of the billing cycle? Yes Note: If the duration and frequency of outages is 100 or less, the economy is eligible to score on the Reliability of supply and transparency of tari index. If the duration and frequency of outages is not available, or is over 100, the economy is not eligible to score on the index. If the minimum outage time considered for SAIDI/SAIFI is over 5 minutes, the economy is not eligible to score on the index. Registering Property This topic examines the steps, time and cost involved in registering property, assuming a standardized case of an entrepreneur who wants to purchase land and a building that is already registered and free of title dispute. In addition, the topic also measures the quality of the land administration system in each economy. The quality of land administration index has ve dimensions: reliability of infrastructure, transparency of information, geographic coverage, land dispute resolution, and equal access to property rights. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. Page 22   If the minimum outage time considered for SAIDI/SAIFI is over 5 minutes, the economy is not eligible to score on the index. Doing Business 2018 Korea, Rep. Registering Property This topic examines the steps, time and cost involved in registering property, assuming a standardized case of an entrepreneur who wants to purchase land and a building that is already registered and free of title dispute. In addition, the topic also measures the quality of the land administration system in each economy. The quality of land administration index has ve dimensions: reliability of infrastructure, transparency of information, geographic coverage, land dispute resolution, and equal access to property rights. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally transfer title on immovable To make the data comparable across economies, several assumptions property (number) about the parties to the transaction, the property and the procedures are used. Preregistration procedures (for example, checking for liens, notarizing sales agreement, The parties (buyer and seller): paying property transfer taxes) - Are limited liability companies (or the legal equivalent). Registration procedures in the economy's largest - Are located in the periurban area of the economy’s largest business city. business citya. For 11 economies the data are also collected for the second largest Postregistration procedures (for example, filling business city. title with municipality) - Are 100% domestically and privately owned. Time required to complete each procedure - Have 50 employees each, all of whom are nationals. (calendar days) - Perform general commercial activities. Does not include time spent gathering information The property (fully owned by the seller): - Has a value of 50 times income per capita, which equals the sale price. Each procedure starts on a separate day - though - Is fully owned by the seller. procedures that can be fully completed online - Has no mortgages attached and has been under the same ownership for are an exception to this rule the past 10 years. Procedure is considered completed once final - Is registered in the land registry or cadastre, or both, and is free of title document is received disputes. No prior contact with officials - Is located in a periurban commercial zone, and no rezoning is required. Cost required to complete each procedure (% of - Consists of land and a building. The land area is 557.4 square meters property value) (6,000 square feet). A two-story warehouse of 929 square meters (10,000 square feet) is located on the land. The warehouse is 10 years old, is in Official costs only (such as administrative fees, good condition, has no heating system and complies with all safety duties and taxes). standards, building codes and legal requirements. The property, Value Added Tax, Capital Gains Tax and illicit consisting of land and building, will be transferred in its entirety. payments are excluded - Will not be subject to renovations or additional construction following the Quality of land administration index (0-30) purchase. - Has no trees, natural water sources, natural reserves or historical Reliability of infrastructure index (0-8) monuments of any kind. Transparency of information index (0–6) - Will not be used for special purposes, and no special permits, such as for Geographic coverage index (0–8) residential use, industrial plants, waste storage or certain types of agricultural activities, are required. Land dispute resolution index (0–8) - Has no occupants, and no other party holds a legal interest in it. Equal access to property rights index (-2–0) Standard Property Transfer Property value KRW 1,599,202,398.60 City Covered Seoul Page 23   OECD high OECD high Doing Business 2018 Korea, Rep. Standard Property Transfer Property value KRW 1,599,202,398.60 City Covered Seoul OECD high OECD high Indicator Korea, Rep. income income Overall Best Performer Procedures (number) 7 4.6 4.6 1.00 (4 Economies) Time (days) 5.5 22.3 22.3 1.00 (3 Economies) Cost (% of property value) 5.1 4.2 4.2 0.00 (5 Economies) Quality of the land administration index (0-30) 27.5 22.7 22.7 29.00 (Singapore) Figure – Registering Property in Korea and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 76.81: Regional Average (OECD high income) 76.34: Korea, Rep. (Rank: 39) 76.15: China (Rank: 41) 74.17: Australia (Rank: 51) 52.60: Brazil (Rank: 131) 47.08: India (Rank: 154) Note: The ranking of economies on the ease of registering property is determined by sorting their distance to frontier scores for registering property. These scores are the simple average of the distance to frontier scores for each of the component indicators. Figure – Registering Property in Korea, Rep. – Procedure, Time and Cost Time Cost 5 5 4 Cost (% of property value) 4 Time (days) 3 3 2 2 1 1 0 0 1 2 3 4 5 6 7 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Page 24   Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a di erent procedure list for registering property. These scores are the simple average of the distance to frontier scores for each of the component indicators. Doing Business 2018 Korea, Rep. Figure – Registering Property in Korea, Rep. – Procedure, Time and Cost Time Cost 5 5 4 Cost (% of property value) 4 Time (days) 3 3 2 2 1 1 0 0 1 2 3 4 5 6 7 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a di erent procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://www.doingbusiness.org/methodology). For details on the procedures re ected here, see the summary below. Figure – Registering Property in Korea, Rep. and comparator economies – Measure of Quality 30 27.5 25 22.7 20.0 20 18.3 Index score 15 13.8 10 8.2 5 0 Korea, Rep. Australia Brazil China India OECD high income Details – Registering Property in Korea, Rep. – Procedure, Time and Cost No. Procedure Time to Complete Associated Costs 1 Obtain certi ed copies of the corporate registration and the registered Less than a day KRW 1,000 for corporate seal, and the registry extract of the concerned land and (online procedure) corporate registry building from the District Court Registration O ce extracts of the Party Agency : District Court Registration O ce (online) + KRW 1,000 for I. Obtain commercial registry extracts and registry extracts of the concerned registered corporate land and building seal of the Party (unattended The parties, as legal entities, must prepare corporate registry extracts, machine) corporate seal card and registry extracts of the concerned land and building. + KRW 1,000 for registry extract of Page 25   There are three methods to obtain the purchasing corporation's registration the concerned land Korea, Rep. Australia Brazil China India OECD high income Doing Business 2018 Korea, Rep. Details – Registering Property in Korea, Rep. – Procedure, Time and Cost No. Procedure Time to Complete Associated Costs 1 Obtain certi ed copies of the corporate registration and the registered Less than a day KRW 1,000 for corporate seal, and the registry extract of the concerned land and (online procedure) corporate registry building from the District Court Registration O ce extracts of the Party Agency : District Court Registration O ce (online) + KRW 1,000 for I. Obtain commercial registry extracts and registry extracts of the concerned registered corporate land and building seal of the Party (unattended The parties, as legal entities, must prepare corporate registry extracts, machine) corporate seal card and registry extracts of the concerned land and building. + KRW 1,000 for registry extract of There are three methods to obtain the purchasing corporation's registration the concerned land certi cates on the land and the building to collect the real estate information: + KRW 1,000 for registry extract of the concerned (i) by visiting the District Court Registration O ce in person and obtaining building such documents from a registration o cer (charge: KRW 1,200 each). The District Registration O cer issues copies of the corporate registration, real property registration, etc.; (ii) by using an unattended machine (charge: KRW 1,000 each); and (iii) by obtaining on line via website(www.iros.go.kr) (charge: KRW 1,000 each) II. Obtaining the certi cate of the registered corporate seal card can be done through: (i) visiting the District Court Registration O ce in person and obtaining the document from an o cer (charge: KRW 1,200); and (ii) using an unattended machine (charge: KRW 1,000 each) All registry extracts and the certi cate should be issued within three months before the registration of the titles will happen. 2 Obtain copies of the Land Cadastre Certi cate and the Building Less than a day One copy of the Management Certi cate (online procedure) Land Cadastre Agency : The jurisdictional district o ce (e.g. City Hall, Gu-O ce, Gun-O ce) Certificate & the Building Management Those copies are issued by governmental o ces of various levels {(e.g. the Certificate: no cost City Hall, Gu-O ce(similar to "borough o ce") or Gun-O ce(similar to (online) "district o ce")} and there are 3 ways to obtain each copy of certi cates above It it also possible to (i) visiting the City Hall, Gu-O ce or Gun-O ce and obtaining through an obtain an integrated o cer (charge: KRW 500 each); Land Cadastre & the (ii) using an unattended machine placed in a governmental district (charge: Building KRW 300 each); and Management aPage 26   the before the registration of the titles will happen. Doing Business 2018 Korea, Rep. 2 Obtain copies of the Land Cadastre Certi cate and the Building Less than a day One copy of the Management Certi cate (online procedure) Land Cadastre Agency : The jurisdictional district o ce (e.g. City Hall, Gu-O ce, Gun-O ce) Certificate & the Building Management Those copies are issued by governmental o ces of various levels {(e.g. the Certificate: no cost City Hall, Gu-O ce(similar to "borough o ce") or Gun-O ce(similar to (online) "district o ce")} and there are 3 ways to obtain each copy of certi cates above It it also possible to (i) visiting the City Hall, Gu-O ce or Gun-O ce and obtaining through an obtain an integrated o cer (charge: KRW 500 each); Land Cadastre & the (ii) using an unattended machine placed in a governmental district (charge: Building KRW 300 each); and Management a the (iii) obtaining via website (www.minwon.go.kr) of Korean government (free of cost of KRW 1000 charge). and KRW 1500 obtained from (Building ledger: http://www.minwon.go.kr/main? jurisdictional district a=AA020InfoCappViewApp&HighCtgCD=A02002003&CappBizCD=15000000098, office. Land cadastre: http://www.minwon.go.kr/main? a=AA020InfoCappViewApp&HighCtgCD=A02009006&CappBizCD=13100000026) From January 18, 2014, the Integrated From January 18, 2014, the Integrated Certi cate of Real Estate that includes Certificate of Real both certi cates for the Land Cadastre and the Building Management is also Estate that includes available. The Integrated Certi cate can be issued at www.onnara.go.kr both certificates for (charge: KWR 1000) or the District Registration O ce (charge: KRW 1500). the Land Cadastre and the Building Management is also available. The Integrated Certificate can be issued at www.onnara.go.kr (charge: KWR 1000) or the District Registration Office (charge: KRW 1500). 3 Prepare the sale agreement and a x the stamp duty 1 day "National Revenue Agency : District government o ce, Stamp (for stamp duty) + Real estate Korea Financial Telecommunications and Clearings Institute, agent fee (the parties and the post o ces and commercial banks agent usually agree for same or less Preparing sale agreement than 0.9% of the sale Although it is not mandatory to use real estate agent, most people use price) agents. Occasionally, some also go through lawyers. Commission fee to real estate agent are paid by both parties that commissioned the brokerage, * Note: Stamp duty provided that the amount is to be decided by mutual agreement between the (in this case, KRW brokerage client and the licensed real estate agent within 9/1000 portion of 350,000) the transaction price. Commission fee for lawyers are generally charged hourly. Property value (KRW million) NRS (KRW) Over 10, less than or A xing Stamp duty equal to 30 20,000 Page 27   Over 30, less than or Registration Office Doing Business 2018 Korea, Rep. (charge: KRW 1500). 3 Prepare the sale agreement and a x the stamp duty 1 day "National Revenue Agency : District government o ce, Stamp (for stamp duty) + Real estate Korea Financial Telecommunications and Clearings Institute, agent fee (the parties and the post o ces and commercial banks agent usually agree for same or less Preparing sale agreement than 0.9% of the sale Although it is not mandatory to use real estate agent, most people use price) agents. Occasionally, some also go through lawyers. Commission fee to real estate agent are paid by both parties that commissioned the brokerage, * Note: Stamp duty provided that the amount is to be decided by mutual agreement between the (in this case, KRW brokerage client and the licensed real estate agent within 9/1000 portion of 350,000) the transaction price. Commission fee for lawyers are generally charged hourly. Property value (KRW million) NRS (KRW) Over 10, less than or A xing Stamp duty equal to 30 20,000 Over 30, less than or The purchasing corporation should purchase National Revenue Stamp. Due equal to 50 40,000 to the amendment of the Stamp Tax Act enforced as of January 1, 2015, only Over 50, less than or the electric form of NRS is permissible. Parties can purchase the electric form equal to 100 70,000 of NRS via website(www.e-revenuestamp.or.kr) or from banks, post o ces, Over 100, less than and registered governmental o ces(Shi, Gun, Gu-O ces), paying the same or equal to 1,000 amount of price as aforementioned." 150,000 Over 1,000 350,000 4 Report the real transaction price Less than a day no cost Agency : District government o ce (online procedure) There is a system of reporting 'real transaction price' in Korea. The parties that are going to enter into an agreement for sale of real property should report real transaction price to the Tax Department of jurisdictional district o ce (usually to Gu-O ce, in case of there's no Gu: to City Hall, etc.) within 60 days after signing the sale agreement. This procedure is required to prevent tax evasion. Both seller and buyer are in duty of reporting the sale price, which can be performed via the website (http://rtms.molit.go.kr/) of the Ministry of land, infrastructure and transport. After the price of the sale has been reported, the O ce of the Tax Department issues "the real transaction price report". "The real transaction report" includes: (i) the identi cation of both parties; (ii) signing date, intermediate payment date, and remainder payment date; (iii) the location, parcel number and land category of an agreed real estate; (iv) the type of real estate and the area of an agreed real estate; and (v) the real price of a transaction. With this report, the District Tax O ce will calculate taxes to be paid as below ('real transaction price' of the report can also be the 'purchase price'). 5 Buyer pays taxes online Less than a day (1) Acquisition Tax: Agency : Tax department of jurisdictional district o ce (online procedure) 4% of the purchase price (in the case, Page 28   The buyer pays all required taxes (speci ed below) online at For Seoul: approximately KRW With this report, the District Tax O ce will calculate taxes to be paid as below Doing('real 2018price' transaction Business report can also be the 'purchase price'). of the Rep. Korea, 5 Buyer pays taxes online Less than a day (1) Acquisition Tax: Agency : Tax department of jurisdictional district o ce (online procedure) 4% of the purchase price (in the case, The buyer pays all required taxes (speci ed below) online at For Seoul: approximately KRW etax.seoul.co.kr. Other than Seoul: wetax.go.kr. 57 million) (2) Education Tax: 0.4% of the purchase The tax amount due in case of the property with value of about KRW 1.25 billion located in Seoul is as follow: price (in the case, approximately KRW 5.7 million) (1) Acquisition Tax: 4% of the purchase price (3) Agricultural and Fisheries Tax: 0.2% of (2) Education Tax: 0.4% of the purchase price the purchase price (in the case, (3) Agricultural and Fisheries Tax: 0.2% of the purchase price approximately KRW 2.8 million) 6 The buyer buys Housing Bonds Less than a day (i) In case that the Agency : Commercial banks (online procedure) warehouse is located in Seoul, The buyer should buy 'national housing bonds ("Bonds") at commercial banks Inchon, Daejeon, in Korea, write the number of the Bonds at the application form for the Gwangju, Busan, registration, and submit the form to the District Courts Registration O ce Ulsan or Daegu: 5% when applying for the registration of the title. There are 6 commercial banks of the standard that handle national housing bonds, which are: Shinhan Bank, Woori Bank, Kookmin Bank, Hana Bank, Industrial Bank of Korea, and Nonghyup. market price of of the Land + 2% of the standard market Value of Bonds that need to be purchased by the buyer, in case of real price of the building. property located in Seoul, based on the "standard market price" (ii) In case that the - Land: warehouse is located in other than 2.5% (from KRW 5M ~ less than KRW 50M) above seven (7) cities: 4.5% of the 4% (from KRW 50M ~ less than KRW 100M) standard market price of of the Land + 5% (from KRW 100M) 1.8% of the standard market price of the - Real property other than Land and house: building. 1% (from KRW 10M ~ less than KRW 130M) Both are not 1.6% (from KRW 130M ~ less than KRW 250M) included in calculation of total 2% (from KRW 250M) cost. The Bonds have a maturity of 5 years, after which they are redeemed with interest. The buyer, however, can sell the Bonds shortly after purchasing them at a 1.6227% discounting rate as of March 10, 2016. In practice, however, buyer buys the Bonds at bank and resells the Bonds Page 29   immediately at a loss of above discount rate. The bank will issue the receipt 2.8 million) Doing Business 2018 Korea, Rep. 6 The buyer buys Housing Bonds Less than a day (i) In case that the Agency : Commercial banks (online procedure) warehouse is located in Seoul, The buyer should buy 'national housing bonds ("Bonds") at commercial banks Inchon, Daejeon, in Korea, write the number of the Bonds at the application form for the Gwangju, Busan, registration, and submit the form to the District Courts Registration O ce Ulsan or Daegu: 5% when applying for the registration of the title. There are 6 commercial banks of the standard that handle national housing bonds, which are: Shinhan Bank, Woori Bank, Kookmin Bank, Hana Bank, Industrial Bank of Korea, and Nonghyup. market price of of the Land + 2% of the standard market Value of Bonds that need to be purchased by the buyer, in case of real price of the building. property located in Seoul, based on the "standard market price" (ii) In case that the - Land: warehouse is located in other than 2.5% (from KRW 5M ~ less than KRW 50M) above seven (7) cities: 4.5% of the 4% (from KRW 50M ~ less than KRW 100M) standard market price of of the Land + 5% (from KRW 100M) 1.8% of the standard market price of the - Real property other than Land and house: building. 1% (from KRW 10M ~ less than KRW 130M) Both are not 1.6% (from KRW 130M ~ less than KRW 250M) included in calculation of total 2% (from KRW 250M) cost. The Bonds have a maturity of 5 years, after which they are redeemed with interest. The buyer, however, can sell the Bonds shortly after purchasing them at a 1.6227% discounting rate as of March 10, 2016. In practice, however, buyer buys the Bonds at bank and resells the Bonds immediately at a loss of above discount rate. The bank will issue the receipt with the Bonds number to buyer after receiving the discount fees. The receipt with the Bonds number is needed for applying for the registration of the titles. (Cost of Procedure 6 is not included in the calculation of the total cost). 7 Buyer applies for the registration of the titles 2 days Cost per real Agency : District Court Registration O ce property (land + building) for court Parties le the application form for registration of the title at the District Court registry stamp: In Registration O ce within the jurisdiction. The District Court Registration person: KW 15,000, O ce is in charge of registering the title under the name of the new owner. Electronic standard Fee for the application is KRW 15,000 per each lot in case of submitting the form application: KW application form (written by hands) with other necessary documents to the registration o cer. In case of submitting the application 'e-form' ( lled out 13,000, Electronic online and printed) with other necessary documents to the registration application: KW o cer, the fee is KRW 13,000. If the Parties apply online (www.iros.go.kr), fee is 10,000 Page 30   KRW 10,000 but the authentication certi cate for internet banking is (Cost of Procedure 6 is not included in the calculation of the total cost). Doing Business 2018 Korea, Rep. 7 Buyer applies for the registration of the titles 2 days Cost per real Agency : District Court Registration O ce property (land + building) for court Parties le the application form for registration of the title at the District Court registry stamp: In Registration O ce within the jurisdiction. The District Court Registration person: KW 15,000, O ce is in charge of registering the title under the name of the new owner. Electronic standard Fee for the application is KRW 15,000 per each lot in case of submitting the form application: KW application form (written by hands) with other necessary documents to the registration o cer. In case of submitting the application 'e-form' ( lled out 13,000, Electronic online and printed) with other necessary documents to the registration application: KW o cer, the fee is KRW 13,000. If the Parties apply online (www.iros.go.kr), fee is 10,000 KRW 10,000 but the authentication certi cate for internet banking is necessary for using the online application. Documents to be submitted for the registration of the title transfer include: (i) In general, certi cate copies of the corporate registration and the authentication certi cate of a seal of a vender corporation’s representative are required; (ii) copies of the Land Cadastre Certi cate & the Building Management Certi cate; (iii) a certi cate of reporting real transaction price; (iv) original copy of the executed sale agreement on which NRS should be a xed; (v) Property tax clearance; (vi) the Receipt of purchase of Housing Bonds; (vii) a registration certi cate which is in the possession of the seller; (viii) a Power of Attorney Takes place simultaneously with previous procedure. Details – Registering Property in Korea, Rep. – Measure of Quality Answer Score Quality of the land administration index (0-30) 27.5 Reliability of infrastructure index (0-8) 8.0 What is the institution in charge of immovable property registration? District Court Registration O ce In what format are the majority of title or deed records kept in the largest business city Computer/Fully 2.0 —in a paper format or in a computerized format (scanned or fully digital)? digital Is there an electronic database for checking for encumbrances (liens, mortgages, Yes 1.0 restrictions and the like)? Page 31   Takes place simultaneously with previous procedure. Doing Business 2018 Korea, Rep. Details – Registering Property in Korea, Rep. – Measure of Quality Answer Score Quality of the land administration index (0-30) 27.5 Reliability of infrastructure index (0-8) 8.0 What is the institution in charge of immovable property registration? District Court Registration O ce In what format are the majority of title or deed records kept in the largest business city Computer/Fully 2.0 —in a paper format or in a computerized format (scanned or fully digital)? digital Is there an electronic database for checking for encumbrances (liens, mortgages, Yes 1.0 restrictions and the like)? Institution in charge of the plans showing legal boundaries in the largest business city: Gu-O ces in Seoul In what format are the majority of maps of land plots kept in the largest business city— Computer/Fully 2.0 in a paper format or in a computerized format (scanned or fully digital)? digital Is there an electronic database for recording boundaries, checking plans and providing Yes 1.0 cadastral information (geographic information system)? Is the information recorded by the immovable property registration agency and the Di erent 1.0 cadastral or mapping agency kept in a single database, in di erent but linked databases databases but or in separate databases? linked Do the immovable property registration agency and cadastral or mapping agency use Yes 1.0 the same identi cation number for properties? Transparency of information index (0–6) 4.5 Who is able to obtain information on land ownership at the agency in charge of Anyone who 1.0 immovable property registration in the largest business city? pays the o cial fee Is the list of documents that are required to complete any type of property transaction Yes, online 0.5 made publicly available–and if so, how? Link for online access: www.iros.go.kr Is the applicable fee schedule for any property transaction at the agency in charge of Yes, online 0.5 immovable property registration in the largest business city made publicly available– and if so, how? Link for online access: www.iros.go.kr Does the agency in charge of immovable property registration commit to delivering a Yes, online 0.5 legally binding document that proves property ownership within a speci c time frame– and if so, how does it communicate the service standard? Link for online access: http://www.iros.g o.kr/pos1/html/e ng/PEngServiceH .html Page 32   legally binding document that proves property ownership within a speci c time frame– and if Doing so, how does Business it communicate 2018 the service standard? Korea, Rep. Link for online access: http://www.iros.g o.kr/pos1/html/e ng/PEngServiceH .html Is there a speci c and separate mechanism for ling complaints about a problem that No 0.0 occurred at the agency in charge of immovable property registration? Contact information: Are there publicly available o cial statistics tracking the number of transactions at the Yes 0.5 immovable property registration agency? Number of property transfers in the largest business city in 2015: According to the information provided by the Ministry of Land, Infrastructure, and Transportation,a lso (http://www.onn ara.go.kr) there were 366,447 transactions of parcels, and 354,682 transactions of buildings in Seoul in 2016. Who is able to consult maps of land plots in the largest business city? Freely accessible 0.5 by anyone Is the applicable fee schedule for accessing maps of land plots made publicly available Yes, online 0.5 —and if so, how? Link for online access: www.minwon.go. kr Fees are as follows: (i) the perusal of a parcel-register for site - in person : KRW 300, on line : KRW 200 (ii) the issuance of a certi ed parcel- register for site - in person : KRW 500, on line : KRW 300 (iii) the perusal of a cadastral map - on line : for free (iv) the issuance of a cadastral map - on line : Page 33   for free Is the applicable fee schedule for accessing maps of land plots made publicly available Yes, online 0.5 —and Doing if so, how? Business 2018 Korea, Rep. Link for online access: www.minwon.go. kr Fees are as follows: (i) the perusal of a parcel-register for site - in person : KRW 300, on line : KRW 200 (ii) the issuance of a certi ed parcel- register for site - in person : KRW 500, on line : KRW 300 (iii) the perusal of a cadastral map - on line : for free (iv) the issuance of a cadastral map - on line : for free Does the cadastral or mapping agency commit to delivering an updated map within a Yes, online 0.5 speci c time frame—and if so, how does it communicate the service standard? Link for online access: Building Ledger: http://www.minw on.go.kr/main? a=AA020InfoCap pViewApp&High CtgCD=A0200200 3&CappBizCD=15 000000098 Land Cadastre:  http://www.minw on.go.kr/main? a=AA020InfoCap pViewApp&High CtgCD=A0200900 6&CappBizCD=13 100000026 Is there a speci c and separate mechanism for ling complaints about a problem that No 0.0 occurred at the cadastral or mapping agency? Contact information: Geographic coverage index (0–8) 8.0 Are all privately held land plots in the economy formally registered at the immovable Yes 2.0 property registry? Are all privately held land plots in the largest business city formally registered at the Yes 2.0 immovable property registry? Are all privately held land plots in the economy mapped? Yes 2.0 Are all privately held land plots in the largest business city mapped? Yes 2.0 Page 34   Are all privately held land plots in the largest business city formally registered at the Yes 2.0 immovable Doing property Business 2018 registry? Korea, Rep. Are all privately held land plots in the economy mapped? Yes 2.0 Are all privately held land plots in the largest business city mapped? Yes 2.0 Land dispute resolution index (0–8) 7.0 Does the law require that all property sale transactions be registered at the immovable Yes 1.5 property registry to make them opposable to third parties? Is the system of immovable property registration subject to a state or private No 0.0 guarantee? Is there a speci c compensation mechanism to cover for losses incurred by parties who Yes 0.5 engaged in good faith in a property transaction based on erroneous information certi ed by the immovable property registry? Does the legal system require a control of legality of the documents necessary for a Yes 0.5 property transaction (e.g., checking the compliance of contracts with requirements of the law)? If yes, who is responsible for checking the legality of the documents? Registrar; Notary; Lawyer; Interested Parties. Does the legal system require veri cation of the identity of the parties to a property Yes 0.5 transaction? If yes, who is responsible for verifying the identity of the parties? Registrar; Notary; Lawyer; Interested Parties. Is there a national database to verify the accuracy of identity documents? Yes 1.0 For a standard land dispute between two local businesses over tenure rights of a Depending on property worth 50 times gross national income (GNI) per capita and located in the the exact largest business city, what court would be in charge of the case in the rst instance? location of the land within Seoul, the court of rst instance in charge may be: - Seoul Central District Court (Civil Collegiate Section), - Seoul Eastern District Court (Civil Collegiate Section), - Seoul Western District Court (Civil Collegiate Section), - Seoul Southern District Court (Civil Collegiate Section), - Seoul Page 35   Northern District Is there Doing a national Business database 2018 to verify Korea, Rep. the accuracy of identity documents? Yes 1.0 For a standard land dispute between two local businesses over tenure rights of a Depending on property worth 50 times gross national income (GNI) per capita and located in the the exact largest business city, what court would be in charge of the case in the rst instance? location of the land within Seoul, the court of rst instance in charge may be: - Seoul Central District Court (Civil Collegiate Section), - Seoul Eastern District Court (Civil Collegiate Section), - Seoul Western District Court (Civil Collegiate Section), - Seoul Southern District Court (Civil Collegiate Section), - Seoul Northern District Court (Civil Collegiate Section). How long does it take on average to obtain a decision from the rst-instance court for Less than a year 3.0 such a case (without appeal)? Are there any statistics on the number of land disputes in the rst instance? No 0.0 Number of land disputes in the largest business city in 2015: Equal access to property rights index (-2–0) 0.0 Do unmarried men and unmarried women have equal ownership rights to property? Yes 0.0 Do married men and married women have equal ownership rights to property? Yes 0.0 Getting Credit This topic explores two sets of issues—the strength of credit reporting systems and the e ectiveness of collateral and bankruptcy laws in facilitating lending. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Strength of legal rights index (0–12) Doing Business assesses the sharing of credit information and the legal rights of borrowers and lenders with respect to secured transactions Rights of borrowers and lenders through through 2 sets of indicators. The depth of credit information index collateral laws (0-10) measures rules and practices a ecting the coverage, scope and Protection of secured creditors’ rights through accessibility of credit information available through a credit registry or a bankruptcy laws (0-2) credit bureau. The strength of legal rights index measures the degree to Page 36   Depth of credit information index (0–8) which collateral and bankruptcy laws protect the rights of borrowers and Do married men and married women have equal ownership rights to property? Yes 0.0 Doing Business 2018 Korea, Rep. Getting Credit This topic explores two sets of issues—the strength of credit reporting systems and the e ectiveness of collateral and bankruptcy laws in facilitating lending. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Strength of legal rights index (0–12) Doing Business assesses the sharing of credit information and the legal rights of borrowers and lenders with respect to secured transactions Rights of borrowers and lenders through through 2 sets of indicators. The depth of credit information index collateral laws (0-10) measures rules and practices a ecting the coverage, scope and Protection of secured creditors’ rights through accessibility of credit information available through a credit registry or a bankruptcy laws (0-2) credit bureau. The strength of legal rights index measures the degree to Depth of credit information index (0–8) which collateral and bankruptcy laws protect the rights of borrowers and lenders and thus facilitate lending. For each economy it is first determined Scope and accessibility of credit information whether a unitary secured transactions system exists. Then two case distributed by credit bureaus and credit scenarios, case A and case B, are used to determine how a nonpossessory registries (0-8) security interest is created, publicized and enforced according to the law. Credit bureau coverage (% of adults) Special emphasis is given to how the collateral registry operates (if Number of individuals and firms listed in largest registration of security interests is possible). The case scenarios involve a credit bureau as a percentage of adult population secured borrower, company ABC, and a secured lender, BizBank. Credit registry coverage (% of adults) In some economies the legal framework for secured transactions will allow Number of individuals and firms listed in credit only case A or case B (not both) to apply. Both cases examine the same set registry as a percentage of adult population of legal provisions relating to the use of movable collateral. Several assumptions about the secured borrower (ABC) and lender (BizBank) are used: - ABC is a domestic limited liability company (or its legal equivalent). - ABC has up to 50 employees. - ABC has its headquarters and only base of operations in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city. - Both ABC and BizBank are 100% domestically owned. The case scenarios also involve assumptions. In case A, as collateral for the loan, ABC grants BizBank a nonpossessory security interest in one category of movable assets, for example, its machinery or its inventory. ABC wants to keep both possession and ownership of the collateral. In economies where the law does not allow nonpossessory security interests in movable property, ABC and BizBank use a fiduciary transfer-of-title arrangement (or a similar substitute for nonpossessory security interests). In case B, ABC grants BizBank a business charge, enterprise charge, floating charge or any charge that gives BizBank a security interest over ABC’s combined movable assets (or as much of ABC’s movable assets as possible). ABC keeps ownership and possession of the assets. OECD high OECD high Indicator Korea, Rep. income income Overall Best Performer Strength of legal rights index (0-12) 5 6.0 6.0 12.00 (4 Economies) Depth of credit information index (0-8) 8 6.6 6.6 8.00 (34 Economies) Page 37   Credit registry coverage (% of adults) 0.0 18.3 18.3 100.00 (3 Economies) possible). ABC keeps ownership and possession of the assets. Doing Business 2018 Korea, Rep. OECD high OECD high Indicator Korea, Rep. income income Overall Best Performer Strength of legal rights index (0-12) 5 6.0 6.0 12.00 (4 Economies) Depth of credit information index (0-8) 8 6.6 6.6 8.00 (34 Economies) Credit registry coverage (% of adults) 0.0 18.3 18.3 100.00 (3 Economies) Credit bureau coverage (% of adults) 100.0 63.7 63.7 100.00 (23 Economies) Figure – Getting Credit in Korea and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 90.00: Australia (Rank: 6) 75.00: India (Rank: 29) 65.00: Korea, Rep. (Rank: 55) 63.03: Regional Average (OECD high income) 60.00: China (Rank: 68) 45.00: Brazil (Rank: 105) Note: The ranking of economies on the ease of getting credit is determined by sorting their distance to frontier scores for getting credit. These scores are the distance to frontier score for the sum of the strength of legal rights index and the depth of credit information index. Figure – Legal Rights in Korea, Rep. and comparator economies 12 11 10 8 8 Index score 6.0 6 5 4 4 2 2 0 Korea, Rep. Australia Brazil China India OECD high income Details – Legal Rights in Korea, Rep. Strength of legal rights index (0-12) 5 Does an integrated or uni ed legal framework for secured transactions that extends to the creation, publicity and No enforcement of functional equivalents to security interests in movable assets exist in the economy? Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without No requiring a speci c description of collateral? Page 38   Korea, Rep. Australia Brazil China India OECD high income Doing Business 2018 Korea, Rep. Details – Legal Rights in Korea, Rep. Strength of legal rights index (0-12) 5 Does an integrated or uni ed legal framework for secured transactions that extends to the creation, publicity and No enforcement of functional equivalents to security interests in movable assets exist in the economy? Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without No requiring a speci c description of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring No a speci c description of collateral? May a security right extend to future or after-acquired assets, and does it extend automatically to the products, proceeds Yes or replacements of the original assets? Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and Yes obligations be secured between parties; and can the collateral agreement include a maximum amount for which the assets are encumbered? Is a collateral registry in operation for both incorporated and non-incorporated entities, that is uni ed geographically Yes and by asset type, with an electronic database indexed by debtor's name? Does a notice-based collateral registry exist in which all functional equivalents can be registered? No Does a modern collateral registry exist in which registrations, amendments, cancellations and searches can be Yes performed online by any interested third party? Are secured creditors paid rst (i.e. before tax claims and employee claims) when a debtor defaults outside an insolvency No procedure? Are secured creditors paid rst (i.e. before tax claims and employee claims) when a business is liquidated? No Are secured creditors subject to an automatic stay on enforcement when a debtor enters a court-supervised No reorganization procedure? Does the law protect secured creditors’ rights by providing clear grounds for relief from the stay and/or sets a time limit for it? Does the law allow parties to agree on out of court enforcement at the time a security interest is created? Does the law Yes allow the secured creditor to sell the collateral through public auction or private tender, as well as, for the secured creditor to keep the asset in satisfaction of the debt? Figure – Credit Information in Korea, Rep. and comparator economies 10 8 8 8 7 7 7 6.6 Index score 6 4 2 0 Korea, Rep. Australia Brazil China India OECD high income Details – Credit Information in Korea, Rep. Page 39   0 Rep. Korea,2018 Doing Business Korea, Australia Rep. Brazil China India OECD high income Details – Credit Information in Korea, Rep. Credit Credit Depth of credit information index (0-8) bureau registry Score Are data on both firms and individuals distributed? Yes No 1 Are both positive and negative credit data distributed? Yes No 1 Are data from retailers or utility companies - in addition to data from banks and financial institutions - Yes No 1 distributed? Are at least 2 years of historical data distributed? (Credit bureaus and registries that distribute more Yes No 1 than 10 years of negative data or erase data on defaults as soon as they are repaid obtain a score of 0 for this component.) Are data on loan amounts below 1% of income per capita distributed? Yes No 1 By law, do borrowers have the right to access their data in the credit bureau or credit registry? Yes No 1 Can banks and financial institutions access borrowers’ credit information online (for example, Yes No 1 through an online platform, a system-to-system connection or both)? Are bureau or registry credit scores offered as a value-added service to help banks and financial Yes No 1 institutions assess the creditworthiness of borrowers? Score ("yes" to either public bureau or private registry) 8 Note: An economy receives a score of 1 if there is a "yes" to either bureau or registry. If the credit bureau or registry is not operational or covers less than 5% of the adult population, the total score on the depth of credit information index is 0. Coverage Credit bureau Credit registry Number of individuals 46,176,090 0 Number of firms 1,824,937 0 Total 48,001,027 0 Percentage of adult population 100.0 0.0 Protecting Minority Investors This topic measures the strength of minority shareholder protections against misuse of corporate assets by directors for their personal gain as well as shareholder rights, governance safeguards and corporate transparency requirements that reduce the risk of abuse. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Extent of disclosure index (0–10): Review and To make the data comparable across economies, a case study uses several approval requirements for related-party assumptions about the business and the transaction. transactions; Disclosure requirements for related-party transactions The business (Buyer): Extent of director liability index (0–10): Ability of - Is a publicly traded corporation listed on the economy’s most important minority shareholders to sue and hold interested stock exchange. If the number of publicly traded companies listed on that directors liable for prejudicial related-party exchange is less than 10, or if there is no stock exchange in the economy, it is assumed that Buyer is a large private company with multiple Page 40   transactions; Available legal remedies (damages, Percentage of adult population 100.0 0.0 Doing Business 2018 Korea, Rep. Protecting Minority Investors This topic measures the strength of minority shareholder protections against misuse of corporate assets by directors for their personal gain as well as shareholder rights, governance safeguards and corporate transparency requirements that reduce the risk of abuse. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Extent of disclosure index (0–10): Review and To make the data comparable across economies, a case study uses several approval requirements for related-party assumptions about the business and the transaction. transactions; Disclosure requirements for related-party transactions The business (Buyer): Extent of director liability index (0–10): Ability of - Is a publicly traded corporation listed on the economy’s most important minority shareholders to sue and hold interested stock exchange. If the number of publicly traded companies listed on that directors liable for prejudicial related-party exchange is less than 10, or if there is no stock exchange in the economy, it transactions; Available legal remedies (damages, is assumed that Buyer is a large private company with multiple disgorgement of profits, fines, imprisonment, shareholders. rescission of the transaction) - Has a board of directors and a chief executive o cer (CEO) who may legally act on behalf of Buyer where permitted, even if this is not speci cally Ease of shareholder suits index (0–10): Access to required by law. internal corporate documents; Evidence - Has a supervisory board (applicable to economies with a two-tier board obtainable during trial and allocation of legal system) on which 60% of the shareholder-elected members have been expenses appointed by Mr. James, who is Buyer’s controlling shareholder and a Extent of conflict of interest regulation index member of Buyer’s board of directors. (0–10): Simple average of the extent of disclosure, - Has not adopted any bylaws or articles of association that di er from extent of director liability and ease of default minimum standards and does not follow any nonmandatory codes, shareholder indices principles, recommendations or guidelines relating to corporate Extent of shareholder rights index (0-10): governance. Shareholders’ rights and role in major corporate - Is a manufacturing company with its own distribution network. decisions Extent of ownership and control index (0-10): The transaction involves the following details: Governance safeguards protecting shareholders - Mr. James owns 60% of Buyer and elected two directors to Buyer’s ve- from undue board control and entrenchment member board. Extent of corporate transparency index (0-10): - Mr. James also owns 90% of Seller, a company that operates a chain of Corporate transparency on ownership stakes, retail hardware stores. Seller recently closed a large number of its stores. compensation, audits and financial prospects - Mr. James proposes that Buyer purchase Seller’s unused eet of trucks to expand Buyer’s distribution of its food products, a proposal to which Buyer Extent of shareholder governance index (0–10): agrees. The price is equal to 10% of Buyer’s assets and is higher than the Simple average of the extent of shareholders market value. rights, extent of ownership and control and - The proposed transaction is part of the company’s ordinary course of extent of corporate transparency indices business and is not outside the authority of the company. Strength of minority investor protection index - Buyer enters into the transaction. All required approvals are obtained, (0–10): Simple average of the extent of conflict of and all required disclosures made (that is, the transaction is not interest regulation and extent of shareholder fraudulent). governance indices - The transaction causes damages to Buyer. Shareholders sue Mr. James and the other parties that approved the transaction. OECD high OECD high Indicator Korea, Rep. income income Overall Best Performer Extent of conflict of interest regulation index (0- 7 6.4 6.4 9.3 (New Zealand) 10) Extent of shareholder governance index (0-10) 7.3 6.4 6.4 Page 41   9.00 (Kazakhstan) and the other parties that approved the transaction. Doing Business 2018 Korea, Rep. OECD high OECD high Indicator Korea, Rep. income income Overall Best Performer Extent of conflict of interest regulation index (0- 7 6.4 6.4 9.3 (New Zealand) 10) Extent of shareholder governance index (0-10) 7.3 6.4 6.4 9.00 (Kazakhstan) Figure – Protecting Minority Investors in Korea and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 80.00: India (Rank: 4) 71.67: Korea, Rep. (Rank: 20) 63.93: Regional Average (OECD high income) 63.33: Brazil (Rank: 43) 60.00: Australia (Rank: 57) 48.33: China (Rank: 119) Note: The ranking of economies on the strength of minority investor protections is determined by sorting their distance to frontier scores for protecting minority investors. These scores are the simple average of the distance to frontier scores for the extent of con ict of interest regulation index and the extent of shareholder governance index. Figure – Protecting Minority Investors in Korea, Rep. and comparator economies – Measure of Quality the Republic of Korea 9 6 7 6 7 8 Australia 9 2 8 4 5 8 Brazil 8 8 5 6 7 4 China 9 1 10 2 3 4 India 8 7 8 8 10 7 OECD high income 7.3 5.6 6.5 5.2 6.3 7.4 0 10 20 30 40 50 60 Sub-Indicator Score Extent of corporate transparency index (0­10) Extent of director liability index (0­10) Extent of disclosure index (0­10) Extent of ownership and control index (0­10) Extent of shareholder rights index (0­10) Ease of shareholder suits index (0­10) Details – Protecting Minority Investors in Korea, Rep. – Measure of Quality Answer Score Page 42   Extent of ownership and control index (0­10) Extent of shareholder rights index (0­10) Ease of shareholder suits index (0­10) Doing Business 2018 Korea, Rep. Details – Protecting Minority Investors in Korea, Rep. – Measure of Quality Answer Score Extent of con ict of interest regulation index (0-10) 7 Extent of disclosure index (0-10) 7 Which corporate body is legally su cient to approve the Buyer-Seller transaction? (0-3) Board of 2.0 directors excluding interested members Must an external body review the terms of the transaction before it takes place? (0-1) No 0.0 Must Mr. James disclose his con ict of interest to the board of directors? (0-2) Existence of a 1.0 con ict without any speci cs Must Buyer disclose the transaction in published periodic lings (annual reports)? (0-2) Disclosure on 2.0 the transaction and on the con ict of interest Must Buyer immediately disclose the transaction to the public and/or shareholders? (0- Disclosure on 2.0 2) the transaction and on the con ict of interest Extent of director liability index (0-10) 6 Can shareholders representing 10% of Buyer's share capital sue directly or derivatively Yes 1.0 for the damage the transaction caused to Buyer? (0-1) Can shareholders hold the interested director liable for the damage the transaction Liable if unfair or 2.0 caused to Buyer? (0-2) prejudicial Can shareholders hold the other directors liable for the damage the transaction caused Liable if unfair or 2.0 to Buyer (0-2) prejudicial Must Mr. James pay damages for the harm caused to Buyer upon a successful claim by Yes 1.0 shareholders? (0-1) Must Mr. James repay pro ts made from the transaction upon a successful claim by No 0.0 shareholders? (0-1) Is Mr. James disquali ed or ned and imprisoned upon a successful claim by No 0.0 shareholders? (0-1) Can a court void the transaction upon a successful claim by shareholders? (0-2) Only in case of 0.0 fraud or bad faith Ease of shareholder suits index (0-10) 8 Before suing can shareholders representing 10% of Buyer's share capital inspect the Yes 1.0 transaction documents? (0-1) Page 43   shareholder Ease ofBusiness Doing suits index 2018 (0-10) Korea, Rep. 8 Before suing can shareholders representing 10% of Buyer's share capital inspect the Yes 1.0 transaction documents? (0-1) Can the plainti obtain any documents from the defendant and witnesses at trial? (0-3) Any relevant 3.0 document Can the plainti request categories of documents from the defendant without Yes 1.0 identifying speci c ones? (0-1) Can the plainti directly question the defendant and witnesses at trial? (0-2) Preapproved 1.0 questions only Is the level of proof required for civil suits lower than that of criminal cases? (0-1) Yes 1.0 Can shareholder plainti s recover their legal expenses from the company? (0-2) Yes if successful 1.0 Extent of shareholder governance index (0-10) 7.3 Extent of shareholder rights index (0-10) 7 Does the sale of 51% of Buyer's assets require shareholder approval? Yes 1.0 Can shareholders representing 10% of Buyer's share capital call for a meeting of Yes 1.0 shareholders? Must Buyer obtain its shareholders’ approval every time it issues new shares? No 0.0 Do shareholders automatically receive preemption rights every time Buyer issues new Yes 1.0 shares? Must shareholders approve the election and dismissal of the external auditor? No 0.0 Are changes to the rights of a class of shares only possible if the holders of the a ected Yes 1.0 shares approve? Assuming that Buyer is a limited company, does the sale of 51% of its assets require Yes 1.0 member approval? Assuming that Buyer is a limited company, can members representing 10% call for a Yes 1.0 meeting of members? Assuming that Buyer is a limited company, must all members consent to add a new No 0.0 member? Assuming that Buyer is a limited company, must a member rst o er to sell their Yes 1.0 interest to the existing members before they can sell to non-members? Extent of ownership and control index (0-10) 6 Is it forbidden to appoint the same individual as CEO and chair of the board of No 0.0 directors? Must the board of directors include independent and nonexecutive board members? Yes 1.0 Can shareholders remove members of the board of directors without cause before the Yes 1.0 end of their term? Must the board of directors include a separate audit committee exclusively comprising No 0.0 board members? Page 44   Must a potential acquirer make a tender o er to all shareholders upon acquiring 50% Yes 1.0 Can shareholders remove members of the board of directors without cause before the Yes 1.0 end of Doing their term? Business 2018 Korea, Rep. Must the board of directors include a separate audit committee exclusively comprising No 0.0 board members? Must a potential acquirer make a tender o er to all shareholders upon acquiring 50% Yes 1.0 of Buyer? Must Buyer pay declared dividends within a maximum period set by law? Yes 1.0 Is a subsidiary prohibited from acquiring shares issued by its parent company? Yes 1.0 Assuming that Buyer is a limited company, must Buyer have a mechanism to resolve No 0.0 disagreements among members? Assuming that Buyer is a limited company, must a potential acquirer make a tender No 0.0 o er to all shareholders upon acquiring 50% of Buyer? Assuming that Buyer is a limited company, must Buyer distribute pro ts within a Yes 1.0 maximum period set by law? Extent of corporate transparency index (0-10) 9 Must Buyer disclose direct and indirect bene cial ownership stakes representing 5%? Yes 1.0 Must Buyer disclose information about board members’ primary employment and Yes 1.0 directorships in other companies? Must Buyer disclose the compensation of individual managers? Yes 1.0 Must a detailed notice of general meeting be sent 21 days before the meeting? No 0.0 Can shareholders representing 5% of Buyer’s share capital put items on the general Yes 1.0 meeting agenda? Must Buyer's annual nancial statements be audited by an external auditor? Yes 1.0 Must Buyer disclose its audit reports to the public? Yes 1.0 Assuming that Buyer is a limited company, must members meet at least once a year? Yes 1.0 Assuming that Buyer is a limited company, can members representing 5% put items on Yes 1.0 the meeting agenda? Assuming that Buyer is a limited company, must Buyer's annual nancial statements be Yes 1.0 audited by an external auditor? Paying Taxes This topic records the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year, as well as measures the administrative burden in paying taxes and contributions. The most recent round of data collection for the project was completed on June 30, 2017 covering for the Paying Taxes indicator calendar year 2016 (January 1, 2016 – December 31, 2016). Last year (Doing Business 2017) the scope of data collection was expanded to better understand the overall tax environment in an economy. The questionnaire was expanded to include new questions on post- ling processes: VAT refund and tax audit. The data shows where post ling processes and practices work e ciently and what drives the di erences in the overall tax compliance cost across economies. The new section covers both the legal framework and the administrative burden on businesses to comply with post ling processes. See the methodology for more information. Page 45   Assuming that Buyer is a limited company, must Buyer's annual nancial statements be Yes 1.0 audited by an external auditor? Doing Business 2018 Korea, Rep. Paying Taxes This topic records the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year, as well as measures the administrative burden in paying taxes and contributions. The most recent round of data collection for the project was completed on June 30, 2017 covering for the Paying Taxes indicator calendar year 2016 (January 1, 2016 – December 31, 2016). Last year (Doing Business 2017) the scope of data collection was expanded to better understand the overall tax environment in an economy. The questionnaire was expanded to include new questions on post- ling processes: VAT refund and tax audit. The data shows where post ling processes and practices work e ciently and what drives the di erences in the overall tax compliance cost across economies. The new section covers both the legal framework and the administrative burden on businesses to comply with post ling processes. See the methodology for more information. What the indicators measure Case study assumptions Tax payments for a manufacturing company in Using a case scenario, Doing Business records taxes and mandatory 2016 (number per year adjusted for electronic and contributions a medium size company must pay in a year, and measures joint ling and payment) the administrative burden of paying taxes, contributions and dealing with post ling processes. Information is also compiled on frequency of ling Total number of taxes and contributions paid, and payments, time taken to comply with tax laws, time taken to comply including consumption taxes (value added tax, with the requirements of post ling processes and time waiting. sales tax or goods and service tax) Method and frequency of filing and payment To make data comparable across economies, several assumptions are used: Time required to comply with 3 major taxes - TaxpayerCo is a medium-size business that started operations on January (hours per year) 1, 2015. It produces ceramic flowerpots and sells them at retail. All taxes Collecting information, computing tax payable and contributions recorded are paid in the second year of operation Completing tax return, filing with agencies (calendar year 2016). Taxes and mandatory contributions are measured at all levels of government. Arranging payment or withholding Preparing separate tax accounting books, if The VAT refund process: required - In June 2016, TaxpayerCo. makes a large capital purchase: the value of the Total tax and contribution rate (% of pro t before machine is 65 times income per capita of the economy. Sales are equally all taxes) spread per month (1,050 times income per capita divided by 12) and cost of goods sold are equally expensed per month (875 times income per Profit or corporate income tax capita divided by 12). The machinery seller is registered for VAT and excess Social contributions, labor taxes paid by input VAT incurred in June will be fully recovered after four consecutive employer months if the VAT rate is the same for inputs, sales and the machine and Property and property transfer taxes the tax reporting period is every month. Input VAT will exceed Output VAT Dividend, capital gains, financial transactions in June 2016. taxes The corporate income tax audit process: Waste collection, vehicle, road and other taxes - An error in calculation of income tax liability (for example, use of incorrect tax depreciation rates, or incorrectly treating an expense as tax deductible) Post ling Index leads to an incorrect income tax return and a corporate income Time to comply with a VAT refund tax underpayment. TaxpayerCo. discovered the error and voluntarily Time to receive a VAT refund noti ed the tax authority. The value of the underpaid income tax liability is Time to comply with a corporate income tax audit 5% of the corporate income tax liability due. TaxpayerCo. submits corrected information after the deadline for submitting the annual tax Time to complete a corporate income tax audit return, but within the tax assessment period. OECD high OECD high Indicator Korea, Rep. income income Overall Best Performer Payments (number per year) 12 10.9 10.9 3 (Hong Kong SAR, China) Page 46   return, but within the tax assessment period. Doing Business 2018 Korea, Rep. OECD high OECD high Indicator Korea, Rep. income income Overall Best Performer Payments (number per year) 12 10.9 10.9 3 (Hong Kong SAR, China) Time (hours per year) 188 160.7 160.7 55 (Luxembourg) Total tax and contribution rate (% of profit) 33.1 40.1 40.1 18.47% (32 Economies) Postfiling index (0-100) 93.04 83.45 83.45 99.38 (Estonia) Figure – Paying Taxes in Korea and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 86.69: Korea, Rep. (Rank: 24) 85.62: Australia (Rank: 26) 83.07: Regional Average (OECD high income) 66.06: India (Rank: 119) 62.90: China (Rank: 130) 32.97: Brazil (Rank: 184) Note: The ranking of economies on the ease of paying taxes is determined by sorting their distance to frontier scores on the ease of paying taxes. These scores are the simple average of the distance to frontier scores for each of the four component indicators – number of tax payments. time, total tax rate and post ling index – with a threshold and a nonlinear transformation applied to one of the component indicators, the total tax rate. The nonlinear distance to frontier for the total tax rate is equal to the distance to frontier for the total tax rate to the power of 0.8. The threshold is de ned as the total tax rate at the 15th percentile of the overall distribution for all years included in the analysis up to and including Doing Business 2015, which is 26.1%. All economies with a total tax rate below this threshold receive the same score as the economy at the threshold. Figure – Paying Taxes in Korea, Rep. and comparator economies – Measure of Quality 120 100 93.04 95.34 83.45 80 Index score 60 49.08 49.31 40 20 7.80 0 Korea, Rep. Australia Brazil China India OECD high income Details – Paying Taxes in Korea, Rep. Total tax and contribution Tax or mandatory Payments Notes on Time rate (% of Notes contribution (number) Payments (hours) Statutory tax rate Tax base profit) TTR onPage 47   Doing Business 2018 Korea, Rep. Figure – Paying Taxes in Korea, Rep. and comparator economies – Measure of Quality 120 100 93.04 95.34 83.45 80 Index score 60 49.08 49.31 40 20 7.80 0 Korea, Rep. Australia Brazil China India OECD high income Details – Paying Taxes in Korea, Rep. Total tax and contribution Tax or mandatory Payments Notes on Time rate (% of Notes contribution (number) Payments (hours) Statutory tax rate Tax base profit) on TTR Corporate income 1 online 83 10% (up to KRW 200 million), taxable 16.55 tax 20% (KRW 200 million to 20 profit billion) and 22%(over KRW 20 billion) Employer paid 1 online 80 4.5% gross 5.00 National pension salaries Employer paid 0 online 3.06% gross 3.45 National health and salaries insurance jointly Employer paid 0 online 2.9% gross 3.27 Accident and salaries compensation jointly insurance Corporate Local 1 online 1% (up to KRW 200 million), taxable 1.65 Income Tax 2% (KRW 200 million to 20 profit billion) and 2.2%(over KRW 20 billion) Employer paid 0 online 0.9% gross 1.02 Unemployment and salaries insurance jointly Acquisition tax for 1 2% base rate price of 0.96 building acquisition local income tax in 1 online 0.5% gross 0.56 proporation to salaries employee salaries Property tax 1 0.3% (building), 0.24%4.8% statutory 0.32 (land), 0.14% (city planning) standard price Page 48   proporation to salaries employee Doing salaries 2018 Business Korea, Rep. Property tax 1 0.3% (building), 0.24%4.8% statutory 0.32 (land), 0.14% (city planning) standard price Employer paid Long 0 online 6.55% gross 0.23 Term Care and salaries Insurance jointly Community facility 1 0.04%0.12% statutory 0.06 tax standard price of building Per capita resident 1 KRW 62,500 per entity + KRW per entity 0.02 tax 250 per ㎡ of business place Stamp duty 1 various rates contract 0.00 small value amount Fuel tax 1 various rates included in 0.00 the price of fuel Automobile tax 1 36,000 per truck per vehicle 0.00 Employee paid 0 online 0.65% gross 0.00 withheld Employment and salaries Insurance jointly Employee paid 0 online various rates gross 0.00 withheld Individual income and salaries tax settlement jointly Employee paid 0 online 3.00% gross 0.00 withheld National Health and salaries Insurance jointly Employee paid 0 online 4.5% gross 0.00 withheld National Pension and salaries jointly Value added tax 1 online 25 10% net sales 0.00 not (VAT) included Totals 12 188 33.1 Details – Paying Taxes in Korea, Rep. – Tax by Type Taxes by type Answer Profit tax (% of profit) 18.2 Labor tax and contributions (% of profit) 13.5 Other taxes (% of profit) 1.4 Page 49   Totals 12 188 33.1 Doing Business 2018 Korea, Rep. Details – Paying Taxes in Korea, Rep. – Tax by Type Taxes by type Answer Profit tax (% of profit) 18.2 Labor tax and contributions (% of profit) 13.5 Other taxes (% of profit) 1.4 Details – Paying Taxes in Korea, Rep. – Measure of Quality Answer Score Post ling index (0-100) 93.04 VAT refunds Does VAT exist? Yes Does a VAT refund process exist per the case study? Yes Restrictions on VAT refund process None Percentage of cases exposed to a VAT audit (%) 0% - 24% Is there a mandatory carry forward period? No Time to comply with VAT refund (hours) 0.0 100 Time to obtain a VAT refund (weeks) 10.5 85.91 Corporate income tax audits Does corporate income tax exist? Yes Percentage of cases exposed to a corporate income tax audit (%) 0% - 24% Time to comply with a corporate income tax audit (hours) 9.0 86.24 Time to complete a corporate income tax audit (weeks) No tax audit per 100 case study scenario Notes: Names of taxes have been standardized. For instance income tax, pro t tax, tax on company's income are all named corporate income tax in this table. The hours for VAT include all the VAT and sales taxes applicable. The hours for Social Security include all the hours for labor taxes and mandatory contributions in general. The post ling index is the average of the scores on time to comply with VAT refund, time to obtain a VAT refund, time to comply with a corporate income tax audit and time to complete a corporate income tax audit. N/A = Not applicable. Trading across Borders Doing Business records the time and cost associated with the logistical process of exporting and importing goods. Doing Business measures the time and cost (excluding tari s) associated with three sets of procedures—documentary compliance, border recent compliance and domestic transport—within the overall process of exporting or importing a shipment of goods. The mostPage 50   round of data collection for the project was completed in June 2017. See the methodology for more information. a corporate income tax audit and time to complete a corporate income tax audit. N/A = Not applicable. Doing Business 2018 Korea, Rep. Trading across Borders Doing Business records the time and cost associated with the logistical process of exporting and importing goods. Doing Business measures the time and cost (excluding tari s) associated with three sets of procedures—documentary compliance, border compliance and domestic transport—within the overall process of exporting or importing a shipment of goods. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. Given the importance of trade digitalization, in Doing Business 2018, the Trading across Borders questionnaire included research questions on the availability and status of implementation of Electronic Data Interchange (EDI) and Single Window (SW) systems. With this information, Doing Business built a comprehensive dataset on the adoption and level of sophistication of electronic platforms in 190 economies. These data are not used to compute the distance to frontier score or ranking of the ease of doing business. The new dataset on EDI and SW systems is available here. What the indicators measure Case study assumptions Documentary compliance To make the data comparable across economies, a few assumptions are made about the traded goods and the transactions: Obtaining, preparing and submitting documents during transport, clearance, inspections and port Time: Time is measured in hours, and 1 day is 24 hours (for example, 22 or border handling in origin economy days are recorded as 22×24=528 hours). If customs clearance takes 7.5 Obtaining, preparing and submitting documents hours, the data are recorded as is. Alternatively, suppose documents are required by destination economy and any transit submitted to a customs agency at 8:00a.m., are processed overnight and economies can be picked up at 8:00a.m. the next day. The time for customs clearance Covers all documents required by law and in would be recorded as 24 hours because the actual procedure took 24 practice, including electronic submissions of hours. information Border compliance Cost: Insurance cost and informal payments for which no receipt is issued are excluded from the costs recorded. Costs are reported in U.S. dollars. Customs clearance and inspections Contributors are asked to convert local currency into U.S. dollars based on Inspections by other agencies (if applied to more the exchange rate prevailing on the day they answer the questionnaire. than 20% of shipments) Contributors are private sector experts in international trade logistics and Handling and inspections that take place at the are informed about exchange rates. economy’s port or border Assumptions of the case study: - For all 190 economies covered by Doing Domestic transport Business, it is assumed a shipment is in a warehouse in the largest Loading or unloading of the shipment at the business city of the exporting economy and travels to a warehouse in the warehouse or port/border largest business city of the importing economy. - It is assumed each Transport between warehouse and port/border economy imports 15 metric tons of containerized auto parts (HS 8708) Traffic delays and road police checks while from its natural import partner—the economy from which it imports the largest value (price times quantity) of auto parts. It is assumed each shipment is en route economy exports the product of its comparative advantage (de ned by the largest export value) to its natural export partner—the economy that is the largest purchaser of this product. Shipment value is assumed to be $50,000. - The mode of transport is the one most widely used for the chosen export or import product and the trading partner, as is the seaport, or land border crossing. - All electronic information submissions requested by any government agency in connection with the shipment are considered to be documents obtained, prepared and submitted during the export or import process. - A port or border is a place (seaport, airport or land border crossing) where merchandise can enter or leave an economy. - Relevant government agencies include customs, port authorities, road police, border guards, standardization agencies, ministries or departments of agriculture or industry, national security agencies and any other government authorities. Page 51   of agriculture or industry, national security agencies and any other Doing Business 2018 Korea, Rep. government authorities. OECD high OECD high Indicator Korea, Rep. income income Overall Best Performer Time to export: Border compliance (hours) 13 12.7 12.7 0 (17 Economies) Cost to export: Border compliance (USD) 185 149.9 149.9 0.00 (19 Economies) Time to export: Documentary compliance 1 2.4 2.4 1.0 (25 Economies) (hours) Cost to export: Documentary compliance (USD) 11 35.4 35.4 0.00 (19 Economies) Time to import: Border compliance (hours) 6 8.7 8.7 0.00 (21 Economies) Cost to import: Border compliance (USD) 315 111.6 111.6 0.00 (27 Economies) Time to import: Documentary compliance 1 3.5 3.5 1.0 (30 Economies) (hours) Cost to import: Documentary compliance (USD) 27 25.6 25.6 0.00 (30 Economies) Figure – Trading across Borders in Korea and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 93.92: Regional Average (OECD high income) 92.52: Korea, Rep. (Rank: 33) 70.65: Australia (Rank: 95) 69.91: China (Rank: 97) 59.78: Brazil (Rank: 139) 58.56: India (Rank: 146) Note: The ranking of economies on the ease of trading across borders is determined by sorting their distance to frontier scores for trading across borders. These scores are the simple average of the distance to frontier scores for the time and cost for documentary compliance and border compliance to export and import (domestic transport is not used for calculating the ranking). Figure – Trading across Borders in Korea, Rep. – Time and Cost Time Cost 14 13 350 315 12 300 10 250 Time (hours) Cost (USD) 8 185 200 6 6 150 4 100 2 1 1 27 50 11 0 0 Export - Border Compliance Export - Documentary Compliance Import - Border Compliance Import - Documentary CompliancePage 52   Doing Business 2018 Korea, Rep. Figure – Trading across Borders in Korea, Rep. – Time and Cost Time Cost 14 13 350 315 12 300 10 250 Time (hours) Cost (USD) 8 185 200 6 6 150 4 100 2 1 1 27 50 11 0 0 Export - Border Compliance Export - Documentary Compliance Import - Border Compliance Import - Documentary Compliance Details – Trading across Borders in Korea, Rep. Characteristics Export Import Product HS 85 : Electrical machinery and equipment and parts thereof; sound recorders and HS 8708: Parts and reproducers, television image and sound recorders and reproducers, and parts and accessories of motor accessories of such articles vehicles Trade partner China Japan Border Incheon port Busan port Distance (km) 34 401 Domestic 1 7 transport time (hours) Domestic 216 568 transport cost (USD) Details – Trading across Borders in Korea, Rep. – Components of Border Compliance Time to Complete Associated Costs (hours) (USD) Export: Clearance and inspections required by customs authorities 0.7 41.0 Export: Clearance and inspections required by agencies other than customs 0.0 0.0 Export: Port or border handling 13.4 143.8 Import: Clearance and inspections required by customs authorities 1.0 36.9 Import: Clearance and inspections required by agencies other than customs 0.0 0.0 Import: Port or border handling 6.0 277.8 Page 53   Details – Trading across Borders in Korea, Rep. – Trade Documents (USD) Doing Business 2018 Korea, Rep. Details – Trading across Borders in Korea, Rep. – Components of Border Compliance Time to Complete Associated Costs (hours) (USD) Export: Clearance and inspections required by customs authorities 0.7 41.0 Export: Clearance and inspections required by agencies other than customs 0.0 0.0 Export: Port or border handling 13.4 143.8 Import: Clearance and inspections required by customs authorities 1.0 36.9 Import: Clearance and inspections required by agencies other than customs 0.0 0.0 Import: Port or border handling 6.0 277.8 Details – Trading across Borders in Korea, Rep. – Trade Documents Export Import Bill of lading Bill of lading Packing list Delivery Order Customs export declaration Customs import declaration SOLAS certificate SOLAS certificate Enforcing Contracts The enforcing contracts indicator measures the time and cost for resolving a commercial dispute through a local rst-instance court, and the quality of judicial processes index, evaluating whether each economy has adopted a series of good practices that promote quality and e ciency in the court system. The most recent round of data collection was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Time required to enforce a contract through the The dispute in the case study involves the breach of a sales contract courts (calendar days) between 2 domestic businesses. The case study assumes that the court hears an expert on the quality of the goods in dispute. This distinguishes Time to file and serve the case the case from simple debt enforcement. Time for trial and to obtain the judgment To make the data comparable across economies, Doing Business uses Time to enforce the judgment several assumptions about the case: Cost required to enforce a contract through the - The dispute concerns a lawful transaction between two businesses (Seller courts (% of claim) and Buyer), both located in the economy’s largest business city. For 11 Attorney fees economies the data are also collected for the second largest business city. - The buyer orders custom-made goods, then fails to pay. Court fees - The value of the dispute is 200% of the income per capita or the Enforcement fees equivalent in local currency of USD 5,000, whichever is greater. Quality of judicial processes index (0-18) - The seller sues the buyer before the court with jurisdiction over commercial cases worth 200% of income per capita or $5,000. Court structure and proceedings (-1-5) - The seller requests a pretrial attachment to secure the claim. Case management (0-6) - The dispute on the quality of the goods requires an expert opinion. Court automation (0-4) - The judge decides in favor of the seller; there is no appeal. Page 54   SOLAS certificate SOLAS certificate Doing Business 2018 Korea, Rep. Enforcing Contracts The enforcing contracts indicator measures the time and cost for resolving a commercial dispute through a local rst-instance court, and the quality of judicial processes index, evaluating whether each economy has adopted a series of good practices that promote quality and e ciency in the court system. The most recent round of data collection was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Time required to enforce a contract through the The dispute in the case study involves the breach of a sales contract courts (calendar days) between 2 domestic businesses. The case study assumes that the court hears an expert on the quality of the goods in dispute. This distinguishes Time to file and serve the case the case from simple debt enforcement. Time for trial and to obtain the judgment To make the data comparable across economies, Doing Business uses Time to enforce the judgment several assumptions about the case: Cost required to enforce a contract through the - The dispute concerns a lawful transaction between two businesses (Seller courts (% of claim) and Buyer), both located in the economy’s largest business city. For 11 Attorney fees economies the data are also collected for the second largest business city. - The buyer orders custom-made goods, then fails to pay. Court fees - The value of the dispute is 200% of the income per capita or the Enforcement fees equivalent in local currency of USD 5,000, whichever is greater. Quality of judicial processes index (0-18) - The seller sues the buyer before the court with jurisdiction over commercial cases worth 200% of income per capita or $5,000. Court structure and proceedings (-1-5) - The seller requests a pretrial attachment to secure the claim. Case management (0-6) - The dispute on the quality of the goods requires an expert opinion. Court automation (0-4) - The judge decides in favor of the seller; there is no appeal. Alternative dispute resolution (0-3) - The seller enforces the judgment through a public sale of the buyer’s movable assets. Standardized Case Claim value KRW 61,844,926.00 Court name Seoul Central District Court City Covered Seoul OECD high OECD high Indicator Korea, Rep. income income Overall Best Performer Time (days) 290 577.8 577.8 164.00 (Singapore) Cost (% of claim value) 12.7 21.5 21.5 9.00 (Iceland) Quality of judicial processes index (0-18) 14.5 11.0 11.0 15.50 (Australia) Figure – Enforcing Contracts in Korea and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 84.15: Korea, Rep. (Rank: 1) 79.00: Australia (Rank: 3) 78.23: China (Rank: 5) Page 55   of judicial processes Quality Business Doing index (0-18) 2018 Korea, Rep. 14.5 11.0 11.0 15.50 (Australia) Figure – Enforcing Contracts in Korea and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 84.15: Korea, Rep. (Rank: 1) 79.00: Australia (Rank: 3) 78.23: China (Rank: 5) 66.76: Regional Average (OECD high income) 66.00: Brazil (Rank: 47) 40.76: India (Rank: 164) Note: The ranking of economies on the ease of enforcing contracts is determined by sorting their distance to frontier scores for enforcing contracts. These scores are the simple average of the distance to frontier scores for each of the component indicators. Figure – Enforcing Contracts in Korea, Rep. – Time and Cost Time Cost 1600 35 1445 31.0 1400 30 Cost (% of claim value) 1200 23.2 25 22.0 21.5 Time (days) 1000 20 800 731 16.2 12.7 577.8 15 600 496.3 402 10 400 290 200 5 0 0 Australia Brazil China India Korea, Rep. OECD high income Figure – Enforcing Contracts in Korea, Rep. and comparator economies – Measure of Quality the Republic of Korea 3 4 4 3.5 Australia 2.5 5.5 3 4.5 Brazil 3 3 3 4.1 China 3 4.5 3 4.5 India 2.3 1.5 2 4.5 OECD high income 2.5 2.9 2 3.6 0 2 4 6 8 10 12 14 16 Page 56   18 0 0 Australia Brazil China India Korea, Rep. OECD high income Doing Business 2018 Korea, Rep. Figure – Enforcing Contracts in Korea, Rep. and comparator economies – Measure of Quality the Republic of Korea 3 4 4 3.5 Australia 2.5 5.5 3 4.5 Brazil 3 3 3 4.1 China 3 4.5 3 4.5 India 2.3 1.5 2 4.5 OECD high income 2.5 2.9 2 3.6 0 2 4 6 8 10 12 14 16 18 Sub-Indicator Score Alternative dispute resolution (0­3) Case management (0­6) Court automation (0­4) Court structure and proceedings (­1­5) Details – Enforcing Contracts in Korea, Rep. Indicator Time (days) 290 Filing and service 20 Trial and judgment 150 Enforcement of judgment 120 Cost (% of claim value) 12.7 Attorney fees 9 Court fees 3 Enforcement fees 0.7 Quality of judicial processes index (0-18) 14.5 Court structure and proceedings (-1-5) 3.5 Case management (0-6) 4.0 Court automation (0-4) 4.0 Alternative dispute resolution (0-3) 3.0 Details – Enforcing Contracts in Korea, Rep. – Measure of Quality Page 57   Alternative dispute resolution (0-3) 3.0 Doing Business 2018 Korea, Rep. Details – Enforcing Contracts in Korea, Rep. – Measure of Quality Answer Score Quality of judicial processes index (0-18) 14.5 Court structure and proceedings (-1-5) 3.5 1. Is there a court or division of a court dedicated solely to hearing commercial cases? No 0.0 2. Small claims court 1.5 2.a. Is there a small claims court or a fast-track procedure for small claims? Yes 2.b. If yes, is self-representation allowed? Yes 3. Is pretrial attachment available? Yes 1.0 4. Are new cases assigned randomly to judges? Yes, automatic 1.0 5. Does a woman's testimony carry the same evidentiary weight in court as a man's? Yes 0.0 Case management (0-6) 4.0 1. Time standards 0.0 1.a. Are there laws setting overall time standards for key court events in a civil case? Yes 1.b. If yes, are the time standards set for at least three court events? No 1.c. Are these time standards respected in more than 50% of cases? Yes 2. Adjournments 0.0 2.a. Does the law regulate the maximum number of adjournments that can be No granted? 2.b. Are adjournments limited to unforeseen and exceptional circumstances? No 2.c. If rules on adjournments exist, are they respected in more than 50% of cases? n.a. 3. Can two of the following four reports be generated about the competent court: (i) Yes 1.0 time to disposition report; (ii) clearance rate report; (iii) age of pending cases report; and (iv) single case progress report? 4. Is a pretrial conference among the case management techniques used before the Yes 1.0 competent court? 5. Are there any electronic case management tools in place within the competent court Yes 1.0 for use by judges? 6. Are there any electronic case management tools in place within the competent court Yes 1.0 for use by lawyers? Court automation (0-4) 4.0 1. Can the initial complaint be led electronically through a dedicated platform within Yes 1.0 the competent court? 2. Is it possible to carry out service of process electronically for claims led before the Yes 1.0 competent court? Page 58   1. Can the initial complaint be led electronically through a dedicated platform within Yes 1.0 Businesscourt? the competent Doing 2018 Korea, Rep. 2. Is it possible to carry out service of process electronically for claims led before the Yes 1.0 competent court? 3. Can court fees be paid electronically within the competent court? Yes 1.0 4. Publication of judgments 1.0 4.a Are judgments rendered in commercial cases at all levels made available to the Yes general public through publication in o cial gazettes, in newspapers or on the internet or court website? 4.b. Are judgments rendered in commercial cases at the appellate and supreme Yes court level made available to the general public through publication in o cial gazettes, in newspapers or on the internet or court website? Alternative dispute resolution (0-3) 3.0 1. Arbitration 1.5 1.a. Is domestic commercial arbitration governed by a consolidated law or Yes consolidated chapter or section of the applicable code of civil procedure encompassing substantially all its aspects? 1.b. Are there any commercial disputes—aside from those that deal with public No order or public policy—that cannot be submitted to arbitration? 1.c. Are valid arbitration clauses or agreements usually enforced by the courts? Yes 2. Mediation/Conciliation 1.5 2.a. Is voluntary mediation or conciliation available? Yes 2.b. Are mediation, conciliation or both governed by a consolidated law or Yes consolidated chapter or section of the applicable code of civil procedure encompassing substantially all their aspects? 2.c. Are there nancial incentives for parties to attempt mediation or conciliation (i.e., Yes if mediation or conciliation is successful, a refund of court ling fees, income tax credits or the like)? Resolving Insolvency Doing Business studies the time, cost and outcome of insolvency proceedings involving domestic legal entities. These variables are used to calculate the recovery rate, which is recorded as cents on the dollar recovered by secured creditors through reorganization, liquidation or debt enforcement (foreclosure or receivership) proceedings. To determine the present value of the amount recovered by creditors, Doing Business uses the lending rates from the International Monetary Fund, supplemented with data from central banks and the Economist Intelligence Unit. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Time required to recover debt (years) To make the data on the time, cost and outcome comparable across economies, several assumptions about the business and the case are Measured in calendar years used: Appeals and requests for extension are included - A hotel located in the largest city (or cities) has 201 employees and 50 Cost required to recover debt (% of debtor’s estate) suppliers. The hotel experiences nancial di culties. Page 59   Measured as percentage of estate value - The value of the hotel is 100% of the income per capita or the equivalent if mediation or conciliation is successful, a refund of court ling fees, income tax credits or the like)? Doing Business 2018 Korea, Rep. Resolving Insolvency Doing Business studies the time, cost and outcome of insolvency proceedings involving domestic legal entities. These variables are used to calculate the recovery rate, which is recorded as cents on the dollar recovered by secured creditors through reorganization, liquidation or debt enforcement (foreclosure or receivership) proceedings. To determine the present value of the amount recovered by creditors, Doing Business uses the lending rates from the International Monetary Fund, supplemented with data from central banks and the Economist Intelligence Unit. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Time required to recover debt (years) To make the data on the time, cost and outcome comparable across economies, several assumptions about the business and the case are Measured in calendar years used: Appeals and requests for extension are included - A hotel located in the largest city (or cities) has 201 employees and 50 Cost required to recover debt (% of debtor’s estate) suppliers. The hotel experiences nancial di culties. Measured as percentage of estate value - The value of the hotel is 100% of the income per capita or the equivalent Court fees in local currency of USD 200,000, whichever is greater. - The hotel has a loan from a domestic bank, secured by a mortgage over Fees of insolvency administrators the hotel’s real estate. The hotel cannot pay back the loan, but makes Lawyers’ fees enough money to operate otherwise. Assessors’ and auctioneers’ fees In addition, Doing Business evaluates the adequacy and integrity of the Other related fees existing legal framework applicable to liquidation and reorganization Outcome proceedings through the strength of insolvency framework index. The index tests whether economies adopted internationally accepted good Whether business continues operating as a going practices in four areas: commencement of proceedings, management of concern or business assets are sold piecemeal debtor’s assets, reorganization proceedings and creditor participation. Recovery rate for creditors Measures the cents on the dollar recovered by secured creditors Outcome for the business (survival or not) determines the maximum value that can be recovered Official costs of the insolvency proceedings are deducted Depreciation of furniture is taken into account Present value of debt recovered Strength of insolvency framework index (0- 16) Sum of the scores of four component indices: Commencement of proceedings index (0-3) Management of debtor’s assets index (0-6) Reorganization proceedings index (0-3) Creditor participation index (0-4) OECD high OECD high Indicator Korea, Rep. income income Overall Best Performer Recovery rate (cents on the dollar) 84.7 71.2 71.2 93.1 (Norway) Time (years) 1.5 1.7 1.7 0.4 (Ireland) Page 60   Cost (% of estate) 3.5 9.1 9.1 1.00 (Norway) Creditor participation index (0-4) Doing Business 2018 Korea, Rep. OECD high OECD high Indicator Korea, Rep. income income Overall Best Performer Recovery rate (cents on the dollar) 84.7 71.2 71.2 93.1 (Norway) Time (years) 1.5 1.7 1.7 0.4 (Ireland) Cost (% of estate) 3.5 9.1 9.1 1.00 (Norway) Outcome (0 as piecemeal sale and 1 as going 1 .. .. .. concern) Strength of insolvency framework index (0-16) 14.0 12.1 12.1 15.00 (6 Economies) Figure – Resolving Insolvency in Korea and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 89.33: Korea, Rep. (Rank: 5) 78.79: Australia (Rank: 18) 76.12: Regional Average (OECD high income) 55.82: China (Rank: 56) 47.46: Brazil (Rank: 80) 40.75: India (Rank: 103) Note: The ranking of economies on the ease of resolving insolvency is determined by sorting their distance to frontier scores for resolving insolvency. These scores are the simple average of the distance to frontier scores for the recovery rate and the strength of insolvency framework index. Figure – Resolving Insolvency in Korea, Rep. – Time and Cost Time Cost 4.5 4.3 25 4.0 22.0 4 3.5 20 Cost (% of estate) 3 Time (years) 15 2.5 12.0 2 1.7 9.0 1.7 9.1 8.0 1.5 10 1.5 1.0 1 3.5 5 0.5 0 0 Australia Brazil China India Korea, Rep. OECD high income Figure – Resolving Insolvency in Korea, Rep. and comparator economies – Measure of Quality the Republic of Korea 5.5 2.5 3 3 Page 61   0 0 Australia Brazil China India Korea, Rep. OECD high income Doing Business 2018 Korea, Rep. Figure – Resolving Insolvency in Korea, Rep. and comparator economies – Measure of Quality the Republic of Korea 5.5 2.5 3 3 Australia 5 2.5 3 0.5 Brazil 5.5 2.5 3 2 China 5 3 1 2.5 India 4.5 2 1 1 OECD high income 5.4 2.8 2.3 1.9 0 2 4 6 8 10 12 14 16 Sub-Indicator Score Management of debtor's assets index (0­6) Commencement of proceedings index (0­3) Creditor participation index (0­4) Reorganization proceedings index (0­3) Figure – Resolving Insolvency in Korea, Rep. and comparator economies – Recovery Rate Recovery Rate (cents on the dollar) 90 84.7 82.5 80 71.2 70 60 50 40 36.9 30 26.4 20 12.7 10 0 Korea, Rep. Australia Brazil China India OECD high income Details – Resolving Insolvency in Korea, Rep. Indicator Answer Explanation Proceeding reorganization Mirage would initiate reorganization (rehabilitaion) as it is the best way to preserve the value of the hotel and keep the supplier/employee network. The Mirage management will file a petition to the Seoul Bankruptcy Court. Outcome going concern The reorganization plan gets approved by the creditors and the company would continue operating as a going concern. Time (in years) 1.5 The approval of the reorganization plan will likely be made within 1 year. Considering that a separate decision by the court is necessary to conclude the reorganization procedure, approximately 18 months are expected to be taken in order to conclude the entire reorganization procedure. Cost (% of 3.5 The cost associated with the case would amount to 3.5% of the value of the debtor's estate. Page 62   estate) The cost incurred during the entire insolvency process mainly include court or government Korea, Rep. Australia Brazil China India OECD high income Doing Business 2018 Korea, Rep. Details – Resolving Insolvency in Korea, Rep. Indicator Answer Explanation Proceeding reorganization Mirage would initiate reorganization (rehabilitaion) as it is the best way to preserve the value of the hotel and keep the supplier/employee network. The Mirage management will file a petition to the Seoul Bankruptcy Court. Outcome going concern The reorganization plan gets approved by the creditors and the company would continue operating as a going concern. Time (in years) 1.5 The approval of the reorganization plan will likely be made within 1 year. Considering that a separate decision by the court is necessary to conclude the reorganization procedure, approximately 18 months are expected to be taken in order to conclude the entire reorganization procedure. Cost (% of 3.5 The cost associated with the case would amount to 3.5% of the value of the debtor's estate. estate) The cost incurred during the entire insolvency process mainly include court or government agency fees (up to 1%), attorneys' fees (up to 1.5%), insolvency representative fees (0.5%), fees of accountants, assessors, inspectors and other professionals (1%). Recovery rate (cents on the 84.7 dollar) Details – Resolving Insolvency in Korea, Rep. – Measure of Quality Answer Score Strength of insolvency framework index (0-16) 14.0 Commencement of proceedings index (0-3) 2.5 What procedures are available to a DEBTOR when commencing insolvency (a) Debtor may 1.0 proceedings? le for both liquidation and reorganization Does the insolvency framework allow a CREDITOR to le for insolvency of the debtor? (b) Yes, but a 0.5 creditor may le for liquidation only What basis for commencement of the insolvency proceedings is allowed under the (c) Both (a) and 1.0 insolvency framework? (b) options are available, but only one of them needs to be complied with Management of debtor's assets index (0-6) 5.5 Does the insolvency framework allow the continuation of contracts supplying essential Yes 1.0 goods and services to the debtor? Does the insolvency framework allow the rejection by the debtor of overly burdensome Yes 1.0 contracts? Page 63   Does the insolvency framework allow avoidance of preferential transactions? Yes 1.0 dollar) Doing Business 2018 Korea, Rep. Details – Resolving Insolvency in Korea, Rep. – Measure of Quality Answer Score Strength of insolvency framework index (0-16) 14.0 Commencement of proceedings index (0-3) 2.5 What procedures are available to a DEBTOR when commencing insolvency (a) Debtor may 1.0 proceedings? le for both liquidation and reorganization Does the insolvency framework allow a CREDITOR to le for insolvency of the debtor? (b) Yes, but a 0.5 creditor may le for liquidation only What basis for commencement of the insolvency proceedings is allowed under the (c) Both (a) and 1.0 insolvency framework? (b) options are available, but only one of them needs to be complied with Management of debtor's assets index (0-6) 5.5 Does the insolvency framework allow the continuation of contracts supplying essential Yes 1.0 goods and services to the debtor? Does the insolvency framework allow the rejection by the debtor of overly burdensome Yes 1.0 contracts? Does the insolvency framework allow avoidance of preferential transactions? Yes 1.0 Does the insolvency framework allow avoidance of undervalued transactions? Yes 1.0 Does the insolvency framework provide for the possibility of the debtor obtaining credit Yes 1.0 after commencement of insolvency proceedings? Does the insolvency framework assign priority to post-commencement credit? (a) Yes over all 0.5 pre- commencement creditors, secured or unsecured Reorganization proceedings index (0-3) 3.0 Which creditors vote on the proposed reorganization plan? (b) Only creditors 1.0 whose rights are a ected by the proposed plan Does the insolvency framework require that dissenting creditors in reorganization Yes 1.0 receive at least as much as what they would obtain in a liquidation? Are the creditors devided into classes for the purposes of voting on the reorganization Yes 1.0 plan, does each class vote separately and are creditors in the same class treated Page 64   equally? Does the insolvency framework require that dissenting creditors in reorganization Yes 1.0 receive Doing at least as Business much as 2018 what they Korea, Rep.would obtain in a liquidation? Are the creditors devided into classes for the purposes of voting on the reorganization Yes 1.0 plan, does each class vote separately and are creditors in the same class treated equally? Creditor participation index (0-4) 3.0 Does the insolvency framework require approval by the creditors for selection or No 0.0 appointment of the insolvency representative? Does the insolvency framework require approval by the creditors for sale of substantial Yes 1.0 assets of the debtor? Does the insolvency framework provide that a creditor has the right to request Yes 1.0 information from the insolvency representative? Does the insolvency framework provide that a creditor has the right to object to Yes 1.0 decisions accepting or rejecting creditors' claims? Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice”. Labor Market Regulation Doing Business presents the data for the labor market regulation indicators in an annex. The report does not present rankings of economies on these indicators or include the topic in the aggregate distance to frontier score or ranking on the ease of doing business. Detailed data collected on labor market regulation are available on the Doing Business website (http://www.doingbusiness.org/data/exploretopics/labor-market-regulation). The most recent round of data collection was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Hiring To make the data comparable across economies, several assumptions (i) whether xed-term contracts are prohibited for about the worker and the business are used. permanent tasks; (ii) maximum cumulative duration of xed-term contracts; (iii) length of the The worker: probationary period; (iv) minimum wage. - Is a cashier in a supermarket or grocery store, age 19, with one year of work experience. Working hours - Is a full-time employee. (i) maximum number of working days allowed per - Is not a member of the labor union, unless membership is mandatory. week; (ii) premiums for work: at night, on a weekly rest day and overtime; (iii) whether there are The business: restrictions on work at night, work on a weekly rest - Is a limited liability company (or the equivalent in the economy). day and for overtime work; (iv) whether nonpregnant - Operates a supermarket or grocery store in the economy’s largest and nonnursing women can work same night hours business city. For 11 economies the data are also collected for the second as men; (v) length of paid annual leave. largest business city. - Has 60 employees. Redundancy rules - Is subject to collective bargaining agreements if such agreements cover (i) whether redundancy can be basis for terminating more than 50% of the food retail sector and they apply even to rms that workers; (ii) whether employer needs to notify are not party to them. and/or get approval from third party to terminate 1 - Abides by every law and regulation but does not grant workers more redundant worker and a group of 9 redundant bene ts than those mandated by law, regulation or (if applicable) collective workers; (iii) whether law requires employer to bargaining agreements. reassign or retrain a worker before making worker redundant; (iv) whether priority rules apply for redundancies and reemployment. Redundancy cost Page 65   (i) notice period for redundancy dismissal; (ii) the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice”. Doing Business 2018 Korea, Rep. Labor Market Regulation Doing Business presents the data for the labor market regulation indicators in an annex. The report does not present rankings of economies on these indicators or include the topic in the aggregate distance to frontier score or ranking on the ease of doing business. Detailed data collected on labor market regulation are available on the Doing Business website (http://www.doingbusiness.org/data/exploretopics/labor-market-regulation). The most recent round of data collection was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Hiring To make the data comparable across economies, several assumptions (i) whether xed-term contracts are prohibited for about the worker and the business are used. permanent tasks; (ii) maximum cumulative duration of xed-term contracts; (iii) length of the The worker: probationary period; (iv) minimum wage. - Is a cashier in a supermarket or grocery store, age 19, with one year of work experience. Working hours - Is a full-time employee. (i) maximum number of working days allowed per - Is not a member of the labor union, unless membership is mandatory. week; (ii) premiums for work: at night, on a weekly rest day and overtime; (iii) whether there are The business: restrictions on work at night, work on a weekly rest - Is a limited liability company (or the equivalent in the economy). day and for overtime work; (iv) whether nonpregnant - Operates a supermarket or grocery store in the economy’s largest and nonnursing women can work same night hours business city. For 11 economies the data are also collected for the second as men; (v) length of paid annual leave. largest business city. - Has 60 employees. Redundancy rules - Is subject to collective bargaining agreements if such agreements cover (i) whether redundancy can be basis for terminating more than 50% of the food retail sector and they apply even to rms that workers; (ii) whether employer needs to notify are not party to them. and/or get approval from third party to terminate 1 - Abides by every law and regulation but does not grant workers more redundant worker and a group of 9 redundant bene ts than those mandated by law, regulation or (if applicable) collective workers; (iii) whether law requires employer to bargaining agreements. reassign or retrain a worker before making worker redundant; (iv) whether priority rules apply for redundancies and reemployment. Redundancy cost (i) notice period for redundancy dismissal; (ii) severance payments due when terminating a redundant worker. Job quality (i) whether law mandates equal remuneration for work of equal value and nondiscrimination based on gender in hiring; (ii) whether law mandates paid or unpaid maternity leave; (iii) length of paid maternity leave; (iv) whether employees on maternity leave receive 100% of wages; (v) availability of ve fully paid days of sick leave a year; (vi) eligibility requirements for unemployment protection. Details – Labor Market Regulation in Korea, Rep. Answer Hiring Page 66   Fixed-term contracts prohibited for permanent tasks? No days of sick leave a year; (vi) eligibility requirements for unemployment protection. Doing Business 2018 Korea, Rep. Details – Labor Market Regulation in Korea, Rep. Answer Hiring Fixed-term contracts prohibited for permanent tasks? No Maximum length of a single xed-term contract (months) 24.0 Maximum length of xed-term contracts, including renewals (months) 24.0 Minimum wage applicable to the worker assumed in the case study (US$/month) 967.7 Ratio of minimum wage to value added per worker 0.3 Maximum length of probationary period (months) 3.0 Working hours Standard workday 8.0 Maximum number of working days per week 6.0 Premium for night work (% of hourly pay) 50.0 Premium for work on weekly rest day (% of hourly pay) 50.0 Premium for overtime work (% of hourly pay) 50.0 Restrictions on night work? No Whether nonpregnant and nonnursing women can work the same night hours as men Yes Restrictions on weekly holiday? No Restrictions on overtime work? No Paid annual leave for a worker with 1 year of tenure (working days) 15.0 Paid annual leave for a worker with 5 years of tenure (working days) 17.0 Paid annual leave for a worker with 10 years of tenure (working days) 19.0 Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in working days) 17.0 Redundancy rules Dismissal due to redundancy allowed by law? Yes Third-party noti cation if one worker is dismissed? Yes Third-party approval if one worker is dismissed? No Third-party noti cation if nine workers are dismissed? Yes Third-party approval if nine workers are dismissed? No Retraining or reassignment obligation before redundancy? No Page 67   Third-party Doing approval Business 2018 if nine workers Korea, are dismissed? Rep. No Retraining or reassignment obligation before redundancy? No Priority rules for redundancies? No Priority rules for reemployment? Yes Redundancy cost Notice period for redundancy dismissal for a worker with 1 year of tenure 4.3 Notice period for redundancy dismissal for a worker with 5 years of tenure 4.3 Notice period for redundancy dismissal for a worker with 10 years of tenure 4.3 Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure) 4.3 Severance pay for redundancy dismissal for a worker with 1 year of tenure 4.3 Severance pay for redundancy dismissal for a worker with 5 years of tenure 21.7 Severance pay for redundancy dismissal for a worker with 10 years of tenure 43.3 Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure) 23.1 Job quality Equal remuneration for work of equal value? No Gender nondiscrimination in hiring? Yes Paid or unpaid maternity leave mandated by law? Yes Minimum length of maternity leave (calendar days)? 90.0 Receive 100% of wages on maternity leave? Yes Five fully paid days of sick leave a year? No Unemployment protection after one year of employment? Yes Minimum contribution period for unemployment protection (months)? 6.0 Business Reforms in Korea In the year ending June 1, 2017, 119 economies implemented 264 total reforms across the di erent areas measured by Doing Business. Doing Business has recorded more than 2,900 regulatory reforms making it easier to do business since 2004. Reforms inspired by Doing Business have been implemented by economies in all regions. The following are the reforms for Korea implemented since Doing Business 2008. = Doing Business reform making it easier to do business. = Change making it more di cult to do business. DB2017 Starting a Business: The Republic of Korea made starting a business faster by eliminating post-registration procedures. DB2016 Paying Taxes: The Republic of Korea made paying taxes more complicated and costly for companies by requiring separate ling and payment of the local income tax and by increasing the rates for unemployment insurance and national health insurance paid by employers. Page 68   Minimum contribution period for unemployment protection (months)? 6.0 Doing Business 2018 Korea, Rep. Business Reforms in Korea In the year ending June 1, 2017, 119 economies implemented 264 total reforms across the di erent areas measured by Doing Business. Doing Business has recorded more than 2,900 regulatory reforms making it easier to do business since 2004. Reforms inspired by Doing Business have been implemented by economies in all regions. The following are the reforms for Korea implemented since Doing Business 2008. = Doing Business reform making it easier to do business. = Change making it more di cult to do business. DB2017 Starting a Business: The Republic of Korea made starting a business faster by eliminating post-registration procedures. DB2016 Paying Taxes: The Republic of Korea made paying taxes more complicated and costly for companies by requiring separate ling and payment of the local income tax and by increasing the rates for unemployment insurance and national health insurance paid by employers. DB2015 Registering Property: The Republic of Korea made transferring property easier by reducing the time needed to buy housing bonds and to register the property transfer. Protecting Minority Investors: The Republic of Korea strengthened minority investor protections by increasing the level of transparency expected from companies on managerial compensation. DB2014 Getting Credit: Korea revised its secured transactions framework by creating new types of security rights that can be publicized through registration. DB2013 Getting Electricity: Korea made getting electricity less costly by introducing a new connection fee schedule and an installment payment system. Protecting Minority Investors: Korea strengthened investor protections by making it easier to sue directors in cases of prejudicial related-party transactions. Paying Taxes: Korea made paying taxes less costly for companies by reducing the pro t tax rate. Resolving Insolvency: Korea expedited the insolvency process by implementing a fast track for company rehabilitation. DB2012 Starting a Business: Korea made starting a business easier by introducing a new online one-stop shop, Start-Biz. Paying Taxes: Korea eased the administrative burden of paying taxes for rms by merging several taxes, allowing 4 labor taxes and contributions to be paid jointly and continuing to increase the use of the online tax payment system. Enforcing Contracts: Korea made ling a commercial case easier by introducing an electronic case ling system. DB2011 Resolving Insolvency: Korea made it easier to deal with insolvency by introducing post ling nancing, granting superpriority to the repayment of loans given to companies undergoing reorganization. DB2010 Starting a Business: Korea made starting a business easier by reducing costs, allowing online payment of registration taxes, setting time limits for value added tax registration and eliminating the minimum capital requirement and notarization requirements. Paying Taxes: Korea accelerated its corporate income tax reduction program, shortening it from 5 years to 3. Page 69   DB2009 Starting a Business: Korea made starting a business easier by reducing costs, allowing online payment of registration taxes, setting Doing time limits for Business value added 2018 taxRep. Korea, registration and eliminating the minimum capital requirement and notarization requirements. Paying Taxes: Korea accelerated its corporate income tax reduction program, shortening it from 5 years to 3. DB2009 Trading across Borders: Korea made trading across borders easier by upgrading the electronic data interchange system. Labor Market Regulation: Korea increased the maximum duration of xed-term contracts. Page 70   Trading across Borders: Korea made trading across borders easier by upgrading the electronic data interchange system. Labor DoingMarket 2018 Korea Regulation: Business Rep. the maximum duration of xed-term contracts. increased Korea, Page 71