58826 -- Korea, Rep. © 2010 The International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington, DC 20433 Telephone 202-473-1000 Internet www.worldbank.org All rights reserved. 1 2 3 4 08 07 06 05 A copublication of The World Bank and the International Finance Corporation. This volume is a product of the staff of the World Bank Group. The findings, interpretations and conclusions expressed in this volume do not necessarily reflect the views of the Executive Directors of the World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. Rights and Permissions The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. The World Bank encourages dissemination of its work and will normally grant permission to reproduce portions of the work promptly. For permission to photocopy or reprint any part of this work, please send a request with complete information to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, USA; telephone 978-750-8400; fax 978-750-4470; Internet www.copyright.com. All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher,The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax 202-522-2422; e-mail pubrights@worldbank.org. Additional copies of Doing Business 2011: Making a Difference for Entrepreneurs, Doing Business 2010: Reforming through Difficult Times, Doing Business 2009, Doing Business 2008, Doing Business 2007: How to Reform, Doing Business in 2006: Creating Jobs, Doing Business in 2005: Removing Obstacles to Growth and Doing Business in 2004:Understanding Regulations may be purchased at www.doingbusiness.org. ISBN: 978-0-8213-7960-8 E-ISBN: 978-0-8213-8630-9 DOI: 10.1596/978-0-8213-7960-8 ISSN: 1729-2638 Library of Congress Cataloging-in-Publication data has been applied for. Printed in the United States Current features News on the Doing Business project http://www.doingbusiness.org Rankings How economies rank-from 1 to 183 Contents http://www.doingbusiness.org/rankings/ Reformers Short summaries of DB2011 reforms, lists of reformers since DB2004 and a ranking simulation tool Introduction http://www.doingbusiness.org/reforms/ and Aggregate Rankings Historical data Customized data sets since DB2004 5 - Year Measure of http://www.doingbusiness.org/custom-query/ Cumulative Change Methodology and research Starting a Business The methodologies and research papers underlying Doing Business http://www.doingbusiness.org/Methodology/ Dealing with Download reports Construction Permits Access to Doing Business reports as well as subnational and regional reports, reform case studies and customized country and regional Registering Property profiles http://www.doingbusiness.org/reports/ Getting Credit Subnational and regional projects Differences in business regulations at the subnational and regional level Protecting Investors http://www.doingbusiness.org/subnational-reports/ Paying Taxes Law Library Online collection of business laws and regulations relating to business and gender issues Trading Across Borders http://www.doingbusiness.org/law-library/ http://wbl.worldbank.org/ Enforcing Contracts Local partners Closing a Business More than 8,200 specialists in 183 economies who participate in Doing Business http://www.doingbusiness.org/Local-Partners/Doing-Business/ Doing Business 2011 Business Reforms Business Planet Interactive map on the ease of doing business http://rru.worldbank.org/businessplanet Doing Business 2011 : Making a Difference for Entrepreneurs is the eighth in a series of annual reports investigating regulations that enhance business activity and those that constrain it. Doing Business presents quantitative indicators on business regulations and the protection of property rights that can be compared across 183 economies, from Afghanistan to Zimbabwe, over time. A set of regulations affecting 9 stages of a business's life are measured: starting a business, dealing with construction permits, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing a business. Data in Doing Business 2011 are current as of June 1, 2010*. The indicators are used to analyze economic outcomes and identify what reforms have worked, where, and why. The Doing Business methodology has limitations. Other areas important to business such as an economy's proximity to large markets, the quality of its infrastructure services (other than those related to trading across borders), the security of property from theft and looting, the transparency of government procurement, macroeconomic conditions or the underlying strength of institutions, are not studied directly by Doing Business. To make the data comparable across economies, the indicators refer to a specific type of business, generally a local limited liability company operating in the largest business city. Because standard assumptions are used in the data collection, comparisons and benchmarks are valid across economies. The data not only highlight the extent of obstacles to doing business; they also help identify the source of those obstacles, supporting policymakers in designing reform. The data set covers 183 economies: 46 in Sub-Saharan Africa, 32 in Latin America and the Caribbean, 25 in Eastern Europe and Central Asia, 24 in East Asia and Pacific, 18 in the Middle East and North Africa and 8 in South Asia, as well as 30 OECD high-income economies. The following pages present the summary Doing Business indicators for Korea, Rep.. The data used for this economy profile come from the Doing Business database and are summarized in graphs. These graphs allow a comparison of the economies in each region not only with one another but also with the "good practice" economy for each indicator. The good-practice economies are identified by their position in each indicator as well as their overall ranking and by their capacity to provide good examples of business regulation to other countries. These good-practice economies do not necessarily rank number 1 in the topic or indicator, but they are in the top 10. More information is available in the full report. Doing Business 2011 : Making a Difference for Entrepreneurs presents the indicators, analyzes their relationship with economic outcomes and recommends reforms. The data, along with information on ordering the report, are available on the Doing Business website (www.doingbusiness.org). * Except for the Paying Taxes indicator that refers to the period January to December of 2009. Note: 2008-2010 Doing Business data and rankings have been recalculated to reflect changes to the methodology and the addition of new economies (in the case of the rankings). 1 Economy Rankings - Ease of Doing Business Korea, Rep. is ranked 16 out of 183 economies. Singapore is the top ranked economy in the Ease of Doing Business. Korea, Rep. - Compared to global good practice economy as well as selected economies: Korea, Rep.'s ranking in Doing Business 2011 Rank Doing Business 2011 Ease of Doing Business 16 Starting a Business 60 Dealing with Construction Permits 22 Registering Property 74 Getting Credit 15 Protecting Investors 74 Paying Taxes 49 Trading Across Borders 8 Enforcing Contracts 5 Closing a Business 13 2 Summary of Indicators - Korea, Rep. Starting a Business Procedures (number) 8 Time (days) 14 Cost (% of income per capita) 14.7 Min. capital (% of income per capita) 0.0 Dealing with Construction Permits Procedures (number) 13 Time (days) 34 Cost (% of income per capita) 131.2 Registering Property Procedures (number) 7 Time (days) 11 Cost (% of property value) 5.1 Getting Credit Strength of legal rights index (0-10) 7 Depth of credit information index (0-6) 6 Public registry coverage (% of adults) 0.0 Private bureau coverage (% of adults) 93.3 Protecting Investors Extent of disclosure index (0-10) 7 Extent of director liability index (0-10) 2 Ease of shareholder suits index (0-10) 7 Strength of investor protection index (0-10) 5.3 Paying Taxes Payments (number per year) 14 Time (hours per year) 250 Profit tax (%) 15.3 Labor tax and contributions (%) 12.9 Other taxes (%) 1.6 Total tax rate (% profit) 29.8 Trading Across Borders Documents to export (number) 3 Time to export (days) 8 Cost to export (US$ per container) 790 Documents to import (number) 3 Time to import (days) 7 Cost to import (US$ per container) 790 3 Enforcing Contracts Procedures (number) 35 Time (days) 230 Cost (% of claim) 10.3 Closing a Business Recovery rate (cents on the dollar) 81.7 Time (years) 1.5 Cost (% of estate) 4 The 5 year measure of cumulative change illustrates how the business regulatory environment has changed in 174 economies from Doing Business 2006 to Doing Business 2011. Instead of highlighting which countries currently have the most business friendly environment, this new approach shows the extent to which an economy's regulatory environment for business has changed compared with 5 years ago. This snapshot reflects all cumulative changes in an economy's business regulation as measured by the Doing Business indicators-such as a reduction in the time to start a business thanks to a one-stop shop or an increase in the strength of investor protection index thanks to new stock exchange rules that tighten disclosure requirements for related-party transactions. This figure shows the distribution of cumulative change across the 9 indicators and time between Doing Business 2006 and Doing Business 2011 Doing business has become easier (DB change score) 6 1. Benchmarking Starting a Business Regulations: Korea, Rep. is ranked 60 overall for Starting a Business. Ranking of Korea, Rep. in Starting a Business - Compared to good practice and selected economies: 7 The following table shows Starting a Business data for Korea, Rep. compared to good practice and comparator economies: Good Practice Procedures Time (days) Cost (% of Min. capital (number) income per (% of income Economies capita) per capita) Denmark* 0.0 New Zealand* 1 1 0.0 Selected Economy Korea, Rep. 8 14 14.7 0.0 Comparator Economies Australia 2 2 0.7 0.0 Brazil 15 120 7.3 0.0 China 14 38 4.5 118.3 India 12 29 56.5 188.8 Japan 8 23 7.5 0.0 Russian Federation 9 30 3.6 1.9 * The following economies are also good practice economies for : Procedures (number): Canada Cost (% of income per capita): Slovenia 8 2. Historical data: Starting a Business in Korea, Rep. Starting a Business data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 55 60 Procedures (number) 10 10 8 8 Time (days) 17 17 14 14 Cost (% of income per capita) 17.1 16.9 14.7 14.7 Min. capital (% of income per capita) 296.0 268.9 0.0 0.0 3. The following graphs illustrate the Starting a Business sub indicators in Korea, Rep. over the past 4 years: 9 Starting a Business Summary - Korea, Rep. This table summarizes the procedures and costs associated with setting up a business in the Republic of Korea. STANDARDIZED COMPANY Legal Form: Jusik Hoesa City: Seoul Registration Requirements: No: Procedure Time to complete Cost to complete 1 Check the availability of trade name and obtain a certificate of name 1 no charge availability 2 Make company seal 1 KRW 30,000 3 Obtain bank statement from a bank 1 KRW 3,500 4 File the application package for incorporation registered with the District 1 KRW 24,000 Government Office and obtain a corporate registration tax bill. 5 Registered with the Commercial Registry Office in the Seoul District 1 KRW 3,167,007 Court and obtain certificate of seal impression of corporation. 6 Register with the District Tax office for a business certificate within 20 7 no charge days of commencement of business and get a tax identification number under the Value Added Tax Act 7 Register electronically for Public Health Insurance Program, National 1 no charge Pension Fund, and Employment Insurance and Industrial Accident Compensation Insurance 10 8 Submit the rules of employmentto the local labor office of Labor Minister 1 no charge 11 Starting a Business Details - Korea, Rep. Procedure 1 Check the availability of trade name and obtain a certificate of name availability Time to complete: 1 Cost to complete: no charge Comment: No trade name that has been registered by another person shall be registered as a trade name by the same kind of business, in the same city, metropolitan area, or kun. The name search can be done through the Supreme Court Web site (www.iros.go.kr). Procedure 2 Make company seal Time to complete: 1 Cost to complete: KRW 30,000 Comment: The promoters may use their personal seal and thus there is no need to make a new one Procedure 3 Obtain bank statement from a bank Time to complete: 1 Cost to complete: KRW 3,500 Comment: According to new government reforms, a bank certificate is not required, but a bank statement, as a simpler and less expensive method, is still necessary. Procedure 4 File the application package for incorporation registered with the District Government Office and obtain a corporate registration tax bill. Time to complete: 1 Cost to complete: KRW 24,000 Comment: One must go to the relevant district government office and show the registration application to be submitted to the commercial registry. The district government office will then issue a registration tax bill which needs to be paid at a bank, and the receipt issued by such bank after payment of the registration tax needs to be submitted to the commercial registry. Procedure 5 Registered with the Commercial Registry Office in the Seoul District Court and obtain certificate of seal impression of corporation. Time to complete: 1 Cost to complete: KRW 3,167,007 Comment: The company's incorporation is registered with the Commercial Registry Office in the Seoul District Court. Documents to be filed include the application form; the articles of incorporation; the application for shares; the record of examinations by directors, auditors, and inspectors, together with related documents; the minutes of inaugural general meetings and the minutes of board of director meetings on the appointment of directors; the inspector reports, confirming completion of in-kind investments; and documents confirming custody of paid-in capital. 12 The corporate registration tax is 0.4% of capital unless the corporation is located in a major city, where the registration tax is higher. For example, in Seoul, the registration tax is 1.2% of capital, and the education tax is 20% of the registration tax. The amount of bond to be purchased is 0.1% of capital. A new method of submitting the registration documents has been added. Before, there was only the "e-registration form" (requires user registration beforehand with the Supreme Court and electronic ID certification) and "non-e-registration form" (personal submission of documents), but now there is also the "e-form" (the application form can be filed on-line, but the attachments must be submitted personally). Procedure 6 Register with the District Tax office for a business certificate within 20 days of commencement of business and get a tax identification number under the Value Added Tax Act Time to complete: 7 Cost to complete: no charge Comment: To register for a business certificate, the company must complete registration forms for VAT and corporate income tax. The following documents must be submitted in person to the Tax Office: the certificate of incorporation; the articles of incorporation; the promoter's names, addresses, and share portions; a detailed list of property and assets; the office space lease agreement (if any); and the company's registered seal of the company. There are many cases where the tax registration is completed on the date of the application, however, additional time is required when the tax office decides to verify whether the company in question is a real entity by making a visit to its physical location. Procedure 7 Register electronically for Public Health Insurance Program, National Pension Fund, and Employment Insurance and Industrial Accident Compensation Insurance Time to complete: 1 Cost to complete: no charge Comment: Company founder fills out an electronic form, which gets forwarded to the respective agencies. The registration is obligatory for firms with 1 or more employees. A certificate of authenticity must be obtained, using the company's tax identification, to file via the Internet. Procedure 8 Submit the rules of employmentto the local labor office of Labor Minister Time to complete: 1 Cost to complete: no charge Comment: The rules are submitted along with proof of accident insurance. The procedure is required for companies hiring 10 or more employees. 13 14 1. Benchmarking Dealing with Construction Permits Regulations: Korea, Rep. is ranked 22 overall for Dealing with Construction Permits. Ranking of Korea, Rep. in Dealing with Construction Permits - Compared to good practice and selected economies: 15 The following table shows Dealing with Construction Permits data for Korea, Rep. compared to good practice and comparator economies: Good Practice Procedures Time (days) Cost (% of (number) income per Economies capita) Denmark 6 Qatar 0.8 Singapore 25 Selected Economy Korea, Rep. 13 34 131.2 Comparator Economies Australia 16 221 11.7 Brazil 18 411 46.6 China 37 336 523.4 India 37 195 2143.7 Japan 15 187 20.8 Russian Federation 53 540 4141.0 16 2. Historical data: Dealing with Construction Permits in Korea, Rep. Dealing with Construction Permits data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 22 22 Procedures (number) 13 13 13 13 Time (days) 34 34 34 34 Cost (% of income per capita) 170.2 154.6 135.6 131.2 3. The following graphs illustrate the Dealing with Construction Permits sub indicators in Korea, Rep. over the past 4 years: 17 Dealing with Construction Permits in Korea, Rep. The table below summarizes the procedures, time, and costs to build a warehouse in the Republic of Korea. BUILDING A WAREHOUSE City: Seoul Registration Requirements: No: Procedure Time to complete Cost to complete 1 Request and obtain proof of ownership of land 1 day KRW 800 2 Purchase and sell National Housing Bonds (NHBs) 1 day KRW 169,078 3 Request and obtain a building permit 9 days KRW 245,000 4 Hire a certified inspector 1 day KRW 9,059,980 5 * Request and obtain electricity inspection certificate 1 day KRW 142,500 6 * Request and obtain telephone inspection certificate 1 day KRW 40,000 7 * Request and obtain fire inspection certificate 1 day no charge 8 Request and obtain an occupancy permit and request final inspection 7 days no charge 18 9 * Receive an on-site inspection by the local government 1 day no charge 10 Register the building with the court registry 4 days KRW 6,756,310 11 * Request and receive connection to electricity 7 days KRW 9,684,400 12 * Request and receive connection to water and sewerage services 7 days KRW 2,600,000 13 * Request and receive connection to telephone services 1 day KRW 60,000 * Takes place simultaneously with another procedure. 19 Dealing with Construction Permits Details - Korea, Rep. Procedure 1 Request and obtain proof of ownership of land Time to complete: 1 day Cost to complete: KRW 800 Agency: Property Register Comment: BuildCo should 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 filed with the licensing authority, this authority will forward the design drawing to the relevant regulatory agencies: the fire department and the sewage department. It is possible to obtain proof of ownership (court registry) immediately after applying over the Internet, and the cost has been reduced to KRW 800 per registry. Procedure 2 Purchase and sell National Housing Bonds (NHBs) Time to complete: 1 day Cost to complete: KRW 169,078 Agency: Commercial Bank Comment: 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 to KRW 1,300 per square meter, depending upon the structure of the warehouse. If the warehouse is constructed in steel frame, the rate of KRW 1,300 per square meter is applied. The company 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 x 1300.6 sq.m = KRW 1,690,780. However, many sell the NHBs immediately at a discount of 10%, which brings the actual cost incurred by the company to KRW 169,078. Procedure 3 Request and obtain a building permit Time to complete: 9 days Cost to complete: KRW 245,000 Agency: County (Ku) Office of Construction Comment: BuildCo must submit an application for a building permit to the County (Ku) Office of Construction. The application must include (a) the size of construction lot; (b) documentation showing BuildCo's ownership or the right to use the construction lot; and (c) 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 filed with the licensing authority, this authority forwards the design drawings to the relevant regulatory agencies (such as the sewerage department and the fire 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 20 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 effect of the advance decision is valid for 2 years from the date of issuance, before the builder applies for building permit itself. In addition, it is possible to submit simultaneous applications for an advance decision and for the traffic 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 3­14 days, subject to certain circumstances, including whether the work is performed by an agent (a certified 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 notification application, including (a) a copy of all relevant contract(s) between the relevant parties (owner, construction company, architect, building inspector, etc.); and (b) the design drawings, which must specify the location of the water pipes, sewage, septic tank, electrical facilities, and telephone lines. Procedure 4 Hire a certified inspector Time to complete: 1 day Cost to complete: KRW 9,059,980 Comment: A certified inspector conducts inspections throughout the period of construction. If the company does not hire a certified inspector during construction, there is a penalty of up to 2 years' imprisonment or a fine 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 cost of KRW 9,059,980 is calculated by multiplying the value of the project, KRW 702,324,000, with the relevant rate of 1.29%, in accordance with the Regulation for Scope of Architect Services and Fee Standard. Procedure 5 Request and obtain electricity inspection certificate Time to complete: 1 day Cost to complete: KRW 142,500 Agency: Korea Electrical Safety Corp. Comment: The Electricity Business Act requires that anyone who installs electrical facilities apply for an inspection by the relevant authority before using the facilities. According to the relevant authority, the inspection should be completed in a day. The cost of inspection is calculated as follows: KRW 90,000 + Additional fee of KRW 52,500 (140 kilowatts x KRW 375/Kilowatts). 21 Procedure 6 Request and obtain telephone inspection certificate Time to complete: 1 day Cost to complete: KRW 40,000 Agency: Korea Telecom Corporation Comment: The Information Telecommunication Construction Business Act requires that an inspection certificate be obtained from the relevant authority for information or technology facilities before the facilities are used. According to the act's enforcement provision, the time to complete the inspection should be 14 days, and the cost is KRW 40,000. There is no penalty for the authorities if the time line is missed, but they generally meet the deadline. Procedure 7 Request and obtain fire inspection certificate Time to complete: 1 day Cost to complete: no charge Agency: Fire Department Comment: When the company applies for an occupancy permit, the approval authority will ask the Fire Department to inspect the building. The Fire Department will issue an inspection certificate after inspection of the premises. The average waiting time is a week. Procedure 8 Request and obtain an occupancy permit and request final inspection Time to complete: 7 days Cost to complete: no charge Comment: The company must apply for an occupancy permit within 7 days of the completion of construction. The occupancy permit is issued after the inspections mentioned in the next procedures. Procedure 9 Receive an on-site inspection by the local government Time to complete: 1 day Cost to complete: no charge Comment: Acquisition tax must be paid within 30 days of receiving the occupancy permit. The acquisition tax is 2% of the value of the project (in this case, KRW 702,324,000), amounting KRW 14,046,480. The farming and fishing village special tax of 10% of the acquisition tax (in this case, KRW 1,404,648) should also be imposed. The total tax is KRW 15,451,128. Procedure 10 Register the building with the court registry Time to complete: 4 days Cost to complete: KRW 6,756,310 Agency: Court Registry 22 Comment: BuildCo must register the warehouse within 60 days from the inspection completion date. The cost of registration is composed of three parts: (a) registration tax for title preservation, which is 0.8% of official price of the building (in this case, the value of the project amounting KRW 702,324,000); (b) education tax, which is 20% of the registration tax; and (c) stamp tax, which is KRW 14,000 per land parcel. Procedure 11 Request and receive connection to electricity Time to complete: 7 days Cost to complete: KRW 9,684,400 Agency: Korea Electric Power Corp. (KEPCO) Comment: The cost of an electricity connection is calculated using the following formula: a basic fee of KRW 182,400 (up to 5 kilowatts) + KRW 70,400 for every additional kilowatt. Accordingly, the cost in this case is KRW 9,686,400 for electricity connection of 140 kilowatts. Procedure 12 Request and receive connection to water and sewerage services Time to complete: 7 days Cost to complete: KRW 2,600,000 Agency: Korea Water Company Comment: Procedure 13 Request and receive connection to telephone services Time to complete: 1 day Cost to complete: KRW 60,000 Agency: Korea Telecom Corporation Comment: 23 24 1. Benchmarking Registering Property Regulations: Korea, Rep. is ranked 74 overall for Registering Property. Ranking of Korea, Rep. in Registering Property - Compared to good practice and selected economies: 25 The following table shows Registering Property data for Korea, Rep. compared to good practice and comparator economies: Good Practice Procedures Time (days) Cost (% of (number) property Economies value) New Zealand* 2 Norway* 1 Saudi Arabia 0.0 Selected Economy Korea, Rep. 7 11 5.1 Comparator Economies Australia 5 5 5.0 Brazil 14 42 2.7 China 4 29 3.6 India 5 44 7.4 Japan 6 14 5.5 Russian Federation 6 43 0.1 * The following economies are also good practice economies for : Procedures (number): United Arab Emirates Time (days): Saudi Arabia, Thailand, United Arab Emirates 26 2. Historical data: Registering Property in Korea, Rep. Registering Property data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 72 74 Procedures (number) 7 7 7 7 Time (days) 11 11 11 11 Cost (% of property value) 5.1 5.1 5.1 5.1 3. The following graphs illustrate the Registering Property sub indicators in Korea, Rep. over the past 4 years: 27 Registering Property in Korea, Rep. This topic examines the steps, time, and cost involved in registering property in the Republic of Korea. STANDARDIZED PROPERTY Property Value: 1,096,182,957.37 City: Seoul Registration Requirements: No: Procedure Time to complete Cost to complete 1 Obtain their commercial registry extracts from the 1 day KW 800 each x 2 (online) commercial registry 2 Obtain a copy of the Land Cadastre Certificate and the 1 day No cost Building Management Certificate and the registry extract of the concerned land and building 3 Obtain a statement of taxes to be paid from the tax 1 day no cost department of the jurisdictional district office 28 4 Buyer buys and affixes a National Revenue stamp & 1-2 days Fee for real estate agent prepare sale agreement (broker fees between 0.2-0.9% of sale price, agreed by the parties) + National Revenue Stamp, according to the following schedule: Property value (in KW)NRS From 10 to 30 millionsKW 20,000 From 30 to 50 millionsKW 40,000 From 50 to 100 millionsKW 70,000 From 100 to 1,000 millionsKW 150,000 Above 1,000 millionsKW 350,000 5 Buyer pays taxes online 1 day 2 % of sale price for the Acquisition tax (transfer tax)2 % of sale price for the Registration tax20% of registration tax (0.4% of sale price) for the Education tax10% of Acquisition tax (0.2% of sale price) for the Agricultural and Fisheries Tax 6 The buyer buys Housing Bonds 1-3 days 5% of sale price (not included in calculation of total cost) 7 Buyer applies for the registration of the titles 3 days Cost per real property (land + building) for court registry stamp: In person: KRW14,000; Electronic standard form application: KRW10,000; Electronic application: KRW 6,000 29 Registering Property Details - Korea, Rep. Procedure 1 Obtain their commercial registry extracts from the commercial registry Time to complete: 1 day Cost to complete: KW 800 each x 2 (online) Agency: Commercial Registry Comment: The buyer obtains a certificate of its registered corporate seal issued by the commercial registry office (KW 1200). The buyer obtains its commercial registry from the commercial registry office. The buyer and seller obtains its commercial registry extract from the commercial registry office. There is more than one way (in person, via website -KW 800, through an unattended machine -KW 1000) to obtain the certificates. Most people obtain the extract through an unattended machine placed in a governmental district office or from the website (www.iros.go.kr ) of the Supreme Court. Procedure 2 Obtain a copy of the Land Cadastre Certificate and the Building Management Certificate and the registry extract of the concerned land and building Time to complete: 1 day Cost to complete: No cost Agency: Land and Building Registry Comment: The seller obtains from the jurisdictional district office an official copy of the extract from the land registry, or the Land Cadastre Certificate and an official copy of the extract from the building registry or the Building Management Certificate. The actual sale price is currently used as the standard real property price. Both buyer and seller should obtain the jurisdictional district office's stamp of the original copy of the contract executed by both parties. Prices for certificates can be found on the website www.onnara.go.kr. The land and building registry extracts are obtained at the Land and Building registry office and the land cadastre certificate and building management certificate are obtained at governmental offices of various levels (Governmental office at city (Si), district (Gun), or borough (Gu) level). Also, the extracts can be obtained online at www.iros.go.kr and the certificates at www.egov.go.kr. Procedure 3 Obtain a statement of taxes to be paid from the tax department of the jurisdictional district office Time to complete: 1 day Cost to complete: no cost Agency: Tax department of jurisdictional district office Comment: The parties need to obtain a statement of taxes due from the tax department of jurisdictional district office after calculating the taxes payable: - Registration Tax: 2% of the sale price - Education Tax: 20% of the registration tax - Acquisition Tax: 2% of the purchase price - Agricultural and Fisheries Tax: 10% of the acquisition tax 30 - Stamp Duties: KW 150,000 for KW 500 millions; KW 350,000 if above KW 1 billion The Local Tax Law was amended effective January 5, 2005. According to the newly amended Local Tax Law, registration tax for sale and purchase of property between legal entities is 2% (1% for transfers between individuals for residential properties). Under Korean law, the parties to an agreement for sale of real property must, within 60 days of signing such agreement, report to the relevant government office prescribed information regarding the real property transaction such as the transaction price (may be reported online at http://rtms.mltm.go.kr). This is to prevent tax evasion. Once this real property transaction report is made and cleared, a certificate is issued by the government office (also needed for the title transfer registration). Procedure 4 Buyer buys and affixes a National Revenue stamp & prepare sale agreement Time to complete: 1-2 days Cost to complete: Fee for real estate agent (broker fees between 0.2-0.9% of sale price, agreed by the parties) + National Revenue Stamp, according to the following schedule: Property value (in KW)NRS From 10 to 30 millionsKW 20,000 From 30 to 50 millionsKW 40,000 From 50 to 100 millionsKW 70,000 From 100 to 1,000 millionsKW 150,000 Above 1,000 millionsKW 350,000 Agency: District government office Comment: The buyer buys and affixes a National Revenue stamp to obtain an approval for the sale agreement from the district government office. The lawyer or real estate agent had previously prepared the sale agreement. The seller was responsible for gathering all the documents to be presented to the lawyer or real estate agent. For small operations, the real estate agent will connect the parties and prepare the sale agreement. For more important operations such as the one analyzed here, both a lawyer and the real estate agent will be used. The real estate agent will help connect the parties and the lawyer will prepare the sale agreement. Official rate of 0.2-0.8% of the sale price for the real estate agent. In most cases the real estate agent fee is more than the official rate. Lawyer fees will be between KW 100,000 and KW 250,000 per hour of work. It is estimated that on average a lawyer will charge between 5 and 10 hours to prepare the sale agreement. The documentation shall include: For the preparation of the sale agreement, the following documentation is needed: · The Certificate of Registration that is in the possession of the seller · A copy of Property Register to show the owner and encumbrances (obtained in Step 1) · Land Cadastre Certificate and Building Management Certificate (obtained in Step 2) · Seller ID (a copy of Corporate Commercial Register) · Official Chop/Seal of the seller company · Property tax clearance Procedure 5 Buyer pays taxes online Time to complete: 1 day Cost to complete: 2 % of sale price for the Acquisition tax (transfer tax)2 % of sale price for the Registration tax20% of registration tax (0.4% of sale price) for the Education tax10% of Acquisition tax (0.2% of sale price) for the Agricultural and Fisheries Tax 31 Agency: online at wetax.go.kr Comment: The buyer pays the Acquisition tax, Registration tax, Education tax, and the Agricultural and Fisheries Tax online at wetax.go.kr Procedure 6 The buyer buys Housing Bonds Time to complete: 1-3 days Cost to complete: 5% of sale price (not included in calculation of total cost) Agency: Commercial bank (handling national housing bonds) Comment: The bonds have a maturity of 5 years, after which they are redeemed with interest. Typically the buyer sells the bonds at a discount immediately after purchasing them, usually at 10% (but this may change depending on market cirumstances. The rate as of Apr. 21, 2010 was 9.2%). Value of bonds that need to be purchased by the buyer: For land located in Seoul with: 1) Standard market price of KRW 5M or more ~ less than KRW 50M: 2.5% of sale price 2) KRW 50M or more ~ less than KRW 100M: 4% 3) KRW 100M or more: 5% For a warehouse located in Seoul with: 1) Standard market price of KRW 10M or more ~ less than KRW 130M: 1% of sale price 2) KRW 130M or more ~ less than KRW 250M: 1.6% 3) KRW 250M or more: 2% The base used for determining the value of bonds to be purchased is not the actual transaction price but the "standard market price," which can be obtained from the tax department at the relevant government office. (Procedure 6 is not included in the calculation of total cost.) Procedure 7 Buyer applies for the registration of the titles Time to complete: 3 days Cost to complete: Cost per real property (land + building) for court registry stamp: In person: KRW14,000; Electronic standard form application: KRW10,000; Electronic application: KRW 6,000 Agency: Court Registry Comment: The buyer prepares an application form and applies for the registration of the title to a competent court registry under the buyer's name. Parties must purchase the required revenue stamp and attach it to the title transfer registration application. Land and building are registered separately. The documentation shall include: · Certificate of buyer's registered corporate seal (obtained in Procedure 1) · Buyer and seller's commercial registry extracts (obtained in Procedure 1) · Seller's registry extract of the concerned land and building (obtained in Procedure 1) · Land Cadastre Certificate (obtained in Procedure 2) · Building Management Certificate (obtained in Procedure 2) · Sale agreement with the National Revenue Stamp affixed (obtained in Procedure 4) 32 · Tax payments' receipts (paid in Procedure 5) · Receipt of purchase of Housing Bonds (bought in Procedure 6) · Report of real property transaction Certificate (obtained in Procedure 3) Fees for title transfer registration for 1 real property have been changed as follows: - KRW 14,000 if applied in person - KRW 10,000 if applied in person using a standard form that is available online (need to fill it out online, print it, and submit it to the registry) - KRW 6,000 via online 33 34 1. Benchmarking Getting Credit Regulations: Korea, Rep. is ranked 15 overall for Getting Credit. Ranking of Korea, Rep. in Getting Credit - Compared to good practice and selected economies: 35 The following table shows Getting Credit data for Korea, Rep. compared to good practice and comparator economies: Good Practice Strength of Depth of Public registry Private bureau legal rights credit coverage (% coverage (% Economies information index (0-10) of adults) of adults) index (0-6) New Zealand* 100.0 Portugal 67.1 Singapore* 10 United Kingdom 6 Selected Economy Korea, Rep. 7 6 0.0 93.3 Comparator Economies Australia 9 5 0.0 100.0 Brazil 3 5 26.9 53.5 China 6 4 63.9 0.0 India 8 4 0.0 10.0 Japan 7 6 0.0 76.1 Russian Federation 3 5 0.0 14.4 * The following economies are also good practice economies for : Strength of legal rights index (0-10): Hong Kong, China, Kenya, Kyrgyz Republic, Malaysia Private bureau coverage (% of adults): Argentina, Australia, Canada, Iceland, Ireland, Norway, Sweden, United Kingdom, United States 27 countries have the highest credit information index. 36 2. Historical data: Getting Credit in Korea, Rep. Getting Credit data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 14 15 Strength of legal rights index (0-10) 7 7 7 7 Depth of credit information index (0-6) 5 6 6 6 Private bureau coverage (% of adults) 74.2 90.4 93.8 93.3 Public registry coverage (% of adults) 0.0 0.0 0.0 0.0 3. The following graphs illustrate the Getting Credit sub indicators in Korea, Rep. over the past 4 years: 37 Getting Credit in Korea, Rep. The following table summarize legal rights of borrowers and lenders, and the availability and legal framework of credit registries in the Republic of Korea. Getting Credit Indicators (2010) Indicator Private credit Public credit Private bureau coverage (% of adults) 6 bureau registry Are data on both firms and individuals distributed? Yes No 1 Are both positive and negative data distributed? Yes No 1 Does the registry distribute credit information from retailers, trade Yes No 1 creditors or utility companies as well as financial institutions? Are more than 2 years of historical credit information distributed? Yes No 1 Is data on all loans below 1% of income per capita distributed? Yes No 1 Is it guaranteed by law that borrowers can inspect their data in the Yes No 1 largest credit registry? Coverage 93.3 0.0 Number of individuals .. 0 Number of firms .. 0 38 Strength of legal rights index (0-10) 7 Can any business use movable assets as collateral while keeping possession of the assets; and any financial institution Yes accept such assets as collateral ? Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without Yes requiring a specific description of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring Yes a specific description of collateral? May a security right extend to future or after-acquired assets, and may 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, so that all types of obligations and Yes debts can be secured by stating a maximum amount rather than a specific amount between the parties ? Is a collateral registry in operation, that is unified geographically and by asset type, as well as indexed by the grantor's No name of a security right ? Do secured creditors have absolute priority to their collateral outside bankruptcy procedures? No Do secured creditors have absolute priority to their collateral in bankruptcy procedures? No During reorganization, are secured creditors' claims exempt from an automatic stay on enforcement? Yes Does the law authorize parties to agree on out of court enforcement? Yes 39 40 1. Benchmarking Protecting Investors Regulations: Korea, Rep. is ranked 74 overall for Protecting Investors. Ranking of Korea, Rep. in Protecting Investors - Compared to good practice and selected economies: 41 The following table shows Protecting Investors data for Korea, Rep. compared to good practice and comparator economies: Good Practice Strength of investor Economies protection index (0-10) New Zealand 9.7 Selected Economy Korea, Rep. 5.3 Comparator Economies Australia 5.7 Brazil 5.3 China 5.0 India 6.0 Japan 7.0 Russian Federation 5.0 42 2. Historical data: Protecting Investors in Korea, Rep. Protecting Investors data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 73 74 Strength of investor protection index (0-10) 5.3 5.3 5.3 5.3 3. The following graph illustrates the Protecting Investors index in Korea, Rep. compared to best practice and selected Economies: Note: The higher the score, the greater the investor protection. 43 Protecting Investors in Korea, Rep. The table below provides a full breakdown of how the disclosure, director liability, and shareholder suits indexes are calculated in the Republic of Korea. Protecting Investors Data (2010) Indicator Extent of disclosure index (0-10) 7 2 What corporate body provides legally sufficient approval for the transaction? 2 Whether immediate disclosure of the transaction to the public and/or shareholders is required? 2 Whether disclosure of the transaction in published periodic filings (annual reports) is required? 1 Whether disclosure of the conflict of interest by Mr. James to the board of directors is required? 0 Whether an external body must review the terms of the transaction before it takes place? Extent of director liability index (0-10) 2 0 Whether shareholders can hold Mr. James liable for the damage that the Buyer-Seller transaction causes to the company? 1 Whether shareholders can hold the approving body (the CEO or board of directors) liable for the damage that the Buyer-Seller transaction causes to the company? 0 Whether a court can void the transaction upon a successful claim by a shareholder plaintiff? 0 Whether Mr. James pays damages for the harm caused to the company upon a successful claim by the shareholder plaintiff? 44 0 Whether Mr. James repays profits made from the transaction upon a successful claim by the shareholder plaintiff? 0 Whether fines and imprisonment can be applied against Mr. James? 1 Whether shareholders can sue directly or derivatively for the damage that the Buyer-Seller transaction causes to the company? Ease of shareholder suits index (0-10) 7 3 Whether the plaintiff can obtain any documents from the defendant and witnesses during trial? 1 Whether the plaintiff can directly question the defendant and witnesses during trial? 1 Whether the plaintiff can request categories of documents from the defendant without identifying specific ones? 1 Whether shareholders owning 10% or less of Buyer's shares can request an inspector to investigate the transaction? 1 Whether the level of proof required for civil suits is lower than that of criminal cases? 0 Whether shareholders owning 10% or less of Buyer's shares can inspect transaction documents before filing suit? Strength of investor protection index (0-10) 5.3 45 46 1. Benchmarking Paying Taxes Regulations: Korea, Rep. is ranked 49 overall for Paying Taxes. Ranking of Korea, Rep. in Paying Taxes - Compared to good practice and selected economies: 47 The following table shows Paying Taxes data for Korea, Rep. compared to good practice and comparator economies: Good Practice Payments Time (hours Total tax rate (number per per year) (% profit) Economies year) Maldives* 3 0 Timor-Leste 0.2 Selected Economy Korea, Rep. 14 250 29.8 Comparator Economies Australia 11 109 47.9 Brazil 10 2600 69.0 China 7 398 63.5 India 56 258 63.3 Japan 14 355 48.6 Russian Federation 11 320 46.5 * The following economies are also good practice economies for : Payments (number per year): Qatar 48 2. Historical data: Paying Taxes in Korea, Rep. Paying Taxes data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 48 49 Total tax rate (% profit) 31.2 33.5 31.9 29.8 Payments (number per year) 14 14 14 14 Time (hours per year) 290 250 250 250 3. The following graphs illustrate the Paying Taxes sub indicators in Korea, Rep. over the past 4 years: 49 Paying Taxes in Korea, Rep. The table below addresses the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year in Korea, Rep., as well as measures of administrative burden in paying taxes. Tax or mandatory Payments Notes on Time Statutory tax Tax Totaltax rate Notes on contribution (number) Payments (hours) rate base (% profit) TTR Value added tax (VAT) 1 online filing 50 10.0% Net Sales Stamp duty 1 various rates contract value Business place tax per 1 KRW 250 per Size of 0.00 property of business place business place Per capita resident tax 1 62,500 per per entity 0.00 entity Automobile tax 1 46,800 per per vehicle 0.00 truck Property tax 1 0.3%(buildin Statutory 0.10 g), standard price 0.24%~4.8%( land) 50 City planning tax 1 online filing 0.2% Adjusted 0.10 publically announced price of land & Statutory standard price of building Community facility tax 1 0.05%~0.13 Statutory 0.10 % standard price of building Business place tax per 1 online filing 0.5% gross salaries 0.60 employee Unemployment insurance 0 paid jointly 1.2% gross salaries 0.80 Fuel tax 1 various rates included in the 1.30 price of fuel National health insurance 1 online filing 5.1% gross salaries 2.90 Accident compensation 1 online filing 3.2% gross salaries 3.60 insurance National pension 1 online filing 80 9.0% gross salaries 5.10 Corporate income tax 1 online filing 120 11% for Earnings 15.30 income up to before Tax 200,000 and 22% after that Totals 14 250 29.8 51 52 1. Benchmarking Trading Across Borders Regulations: Korea, Rep. is ranked 8 overall for Trading Across Borders. Ranking of Korea, Rep. in Trading Across Borders - Compared to good practice and selected economies: 53 The following table shows Trading Across Borders data for Korea, Rep. compared to good practice and comparator economies: Good Practice Documents to Time to export Cost to export Documents to Time to Cost to import export (days) (US$ per import import (days) (US$ per Economies (number) container) (number) container) Denmark* 5 France 2 2 Malaysia 450 Singapore 4 439 Selected Economy Korea, Rep. 3 8 790 3 7 790 Comparator Economies Australia 6 9 1060 5 8 1119 Brazil 8 13 1790 7 17 1730 China 7 21 500 5 24 545 India 8 17 1055 9 20 1025 Japan 4 10 1010 5 11 1060 Russian Federation 8 36 1850 13 36 1850 * The following economies are also good practice economies for : Time to export (days): Estonia 54 2. Historical data: Trading Across Borders in Korea, Rep. Trading Across Borders data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 8 8 Cost to export (US$ per container) 745 767 742 790 Cost to import (US$ per container) 745 747 742 790 Documents to export (number) 4 4 3 3 Documents to import (number) 6 6 3 3 Time to export (days) 11 8 8 8 Time to import (days) 10 8 8 7 3. The following graphs illustrate the Trading Across Borders sub indicators in Korea, Rep. over the past 4 years: 55 56 Trading Across Borders in Korea, Rep. These tables list the procedures necessary to import and export a standardized cargo of goods in Korea, Rep.. The documents required to export and import the goods are also shown. Nature of Export Procedures (2010) Duration (days) US$ Cost Documents preparation 2 60 Customs clearance and technical control 1 30 Ports and terminal handling 3 200 Inland transportation and handling 2 500 Totals 8 790 Nature of Import Procedures (2010) Duration (days) US$ Cost Documents preparation 2 60 Customs clearance and technical control 1 30 Ports and terminal handling 2 200 Inland transportation and handling 2 500 Totals 7 790 57 Documents for Export and Import Export Packing list Bill of lading Customs export declaration Import Bill of lading Customs import declaration Terminal handling receipts 58 59 1. Benchmarking Enforcing Contracts Regulations: Korea, Rep. is ranked 5 overall for Enforcing Contracts. Ranking of Korea, Rep. in Enforcing Contracts - Compared to good practice and selected economies: 60 The following table shows Enforcing Contracts data for Korea, Rep. compared to good practice and comparator economies: Good Practice Procedures Time (days) Cost (% of Economies (number) claim) Bhutan 0.1 Ireland 20 Singapore 150 Selected Economy Korea, Rep. 35 230 10.3 Comparator Economies Australia 28 395 20.7 Brazil 45 616 16.5 China 34 406 11.1 India 46 1420 39.6 Japan 30 360 22.7 Russian Federation 37 281 13.4 61 2. Historical data: Enforcing Contracts in Korea, Rep. Enforcing Contracts data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 5 5 Procedures (number) 35 35 35 35 Time (days) 230 230 230 230 Cost (% of claim) 10.3 10.3 10.3 10.3 3. The following graphs illustrate the Enforcing Contracts sub indicators in Korea, Rep. over the past 4 years: 62 Enforcing Contracts in Korea, Rep. This topic looks at the efficiency of contract enforcement in Korea, Rep.. Nature of Procedure (2010) Indicator Procedures (number) 35 Time (days) 230 Filing and service 20.0 Trial and judgment 90.0 Enforcement of judgment 120.0 Cost (% of claim)* 10.30 Attorney cost (% of claim) 9.0 Court cost (% of claim) 0.6 Enforcement Cost (% of claim) 0.7 63 Court information: Seoul Central District Court ("") * Claim assumed to be equivalent to 200% of income per capita. 64 65 1. Benchmarking Closing Business Regulations: Korea, Rep. is ranked 13 overall for Closing a Business. Ranking of Korea, Rep. in Closing Business - Compared to good practice and selected economies: 66 The following table shows Closing Business data for Korea, Rep. compared to good practice and comparator economies: Good Practice Recovery rate Time (years) Cost (% of (cents on the estate) Economies dollar) Ireland 0.4 Japan 92.7 Singapore* 1 Selected Economy Korea, Rep. 81.7 1.5 4 Comparator Economies Australia 81.8 1.0 8 Brazil 17.1 4.0 12 China 36.4 1.7 22 India 16.3 7.0 9 Japan 92.7 0.6 4 Russian Federation 25.3 3.8 9 * The following economies are also good practice economies for : Cost (% of estate): Colombia, Kuwait, Norway 67 2. Historical data: Closing Business in Korea, Rep. Closing a Business data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 12 13 Time (years) 1.5 1.5 1.5 1.5 Cost (% of estate) 4 4 4 4 Recovery rate (cents on the dollar) 81.2 80.5 80.5 81.7 3. The following graphs illustrate the Closing Business sub indicators in Korea, Rep. over the past 4 years: 68 Since 2004 Doing Business has been tracking reforms aimed at simplifying business regulations, strengthening property rights, opening access to credit and enforcing contracts by measuring their impact on 10 indicator sets . * Nearly 1,000 reforms have had an impact on these indicators. Doing Business 2011, covering June 2009 to June 2010, reports that 117 economies implemented 216 reforms to make it easier to start a business. 64% of economies measured by Doing Business have reformed this year, focusing on easing business start-up, lightening the tax burden, simplifying import and export regulations and improving credit information systems. The top 10 most-improved in Doing Business 2011 Dealing with Construction Trading Across Borders Positive Change Registering Property Enforcing Contracts Protecting Investors Starting a Business Closing a Business Getting Credit Negative Change Paying Taxes Permits Economy Kazakhstan Rwanda Peru Vietnam Cape Verde Tajikistan Zambia Hungary Grenada Brunei Darussalam * For Doing Business 2011 the Employing Workers indicator is not included in the aggregate ease of doing business ranking. 69 Summary of changes to business regulation in top 10 most improved economies in Doing Business 2011 and selected comparator economies. Brazil Brazil eased business start-up by further enhancing the electronic synchronization between federal and state tax authorities. Brunei Darussalam Brunei Darussalam made starting a business easier by improving efficiency at the company registrar and implementing an electronic system for name searches. Brunei Darussalam reduced the corporate income tax rate from 23.5% to 22% while also introducing a lower tax rate for small businesses, ranging from 5.5% to 11%. The introduction of an electronic customs system in Brunei Darussalam made trading easier. Cape Verde Cape Verde made start-up easier by eliminating the need for a municipal inspection before a business begins operations and computerizing the system for delivering the municipal license. Cape Verde eased property registration by switching from fees based on a percentage of the property value to lower fixed rates. Cape Verde abolished the stamp duties on sales and checks. China China's new corporate income tax law unified the tax regimes for domestic and foreign enterprises and clarified the calculation of taxable income for corporate income tax purposes. Grenada Grenada eased business start-up by transferring responsibility for the commercial registry from the courts to the civil administration. The appointment of a registrar focusing only on property cut the time needed to transfer property in Grenada by almost half. Grenada's customs administration made trading faster by simplifying procedures, reducing inspections, improving staff training and enhancing communication with users. Hungary Hungary implemented a time limit for the issuance of building permits. Hungary reduced the property registration fee by 6% of the property value. Hungary simplified taxes and tax bases. Amendments to Hungary's bankruptcy law encourage insolvent companies to consider reaching agreements with creditors out of court so as to avoid bankruptcy. India India eased business start-up by establishing an online VAT registration system and replacing the physical stamp previously required with an online version. India reduced the administrative burden of paying taxes by abolishing the fringe benefit tax and improving electronic payment. Japan Japan made it easier to deal with insolvency by establishing a new entity, the Enterprise Turnaround Initiative Corporation, to support the revitalization of companies suffering from excessive debt but professionally managed. Kazakhstan Kazakhstan eased business start-up by reducing the minimum capital requirement to 100 tenge ($0.70) and eliminating the need to have the memorandum of association and company charter notarized. Kazakhstan made dealing with construction permits easier by implementing a one-stop shop related to technical conditions for utilities. Kazakhstan strengthened investor protections by requiring greater corporate disclosure in company annual reports. Kazakhstan speeded up trade through efforts to modernize customs, including implementation of a risk management system and improvements in customs automation. Korea, Rep. Korea made it easier to deal with insolvency by introducing postfiling financing, granting superpriority to the repayment of loans given to companies undergoing reorganization. Peru Peru eased business start-up by simplifying the requirements for operating licenses and creating an online one-stop shop for business registration. Peru streamlined construction permitting by implementing administrative reforms. Peru introduced fast-track procedures at the land registry, cutting by half the time needed to register property. Peru made trading easier by implementing a new web-based electronic data interchange system, risk-based inspections and payment deferrals. Russian Federation Russia eased construction permitting by implementing a single window for all procedures related to land use. Russia introduced a series of legislative measures in 2009 to improve creditor rights and the insolvency system. 70 Rwanda Rwanda made dealing with construction permits easier by passing new building regulations at the end of April 2010 and implementing new time limits for the issuance of various permits. Rwanda enhanced access to credit by allowing borrowers the right to inspect their own credit report and mandating that loans of all sizes be reported to the central bank's public credit registry. Rwanda reduced the number of trade documents required and enhanced its joint border management procedures with Uganda and other neighbors, leading to an improvement in the trade logistics environment. Tajikistan Tajikistan made starting a business easier by creating a one-stop shop that consolidates registration with the state and the tax authority. Tajikistan strengthened investor protections by requiring greater corporate disclosure in the annual report and greater access to corporate information for minority investors. Tajikistan lowered its corporate income tax rate. Vietnam Vietnam eased company start-up by creating a one-stop shop that combines the processes for obtaining a business license and tax license and by eliminating the need for a seal for company licensing. Vietnam made dealing with construction permits easier by reducing the cost to register newly completed buildings by 50% and transferring the authority to register buildings from local authorities to the Department of National Resources and Environment. Vietnam improved its credit information system by allowing borrowers to examine their own credit report and correct errors. Zambia Zambia eased business start-up by eliminating the minimum capital requirement. Zambia eased trade by implementing a one-stop border post with Zimbabwe, launching web-based submission of customs declarations and introducing scanning machines at border posts. Zambia improved contract enforcement by introducing an electronic case management system in the courts that provides electronic referencing of cases, a database of laws, real-time court reporting and public access to court records. 71 72