South Korea

Legal Framework

South Korea's AI Basic Act (Basic Act on the Development of Artificial Intelligence and the Establishment of a Trustworthy Foundation) was passed by the National Assembly in December 2024, enacted on 21 January 2025, and came into force with its Enforcement Decree (Presidential Decree No. 36053) on 22 January 2026. MSIT says the Act sets obligations on AI ethics, verification and certification, transparency, safety and high-impact AI. Under the Enforcement Decree, operators that provide products or services using high-impact or generative AI must inform users in advance that AI is being used, and generative AI outputs, including deepfakes, must be clearly labelled; content other than deepfakes may use invisible watermarks. The safety obligation applies only to systems trained with more than 10^26 floating-point operations that also use state-of-the-art technology and pose a risk of broad and significant impact on fundamental rights. MSIT published Guidelines on Ensuring AI Transparency on 22 January 2026 and granted a grace period of at least one year in which fact-finding investigations and penalties are deferred, except in highly exceptional cases such as loss of life, human rights violations or other serious social harm. It also offers businesses advisory consultations on the Act. The National Strategy for AI (2019) set the foundation for government investment and talent development, and crypto is regulated under the Virtual Asset Users Protection Act. Sources: https://www.msit.go.kr/eng/bbs/view.do?bbsSeqNo=42&mId=4&mPid=2&nttSeqNo=1214&sCode=eng ; https://www.msit.go.kr/eng/bbs/view.do?bbsSeqNo=42&mId=4&nttSeqNo=1215&sCode=eng ; https://www.law.go.kr/LSW/lsInfoP.do?ancYnChk=0&chrClsCd=010202&efYd=20260122&lsiSeq=282879&urlMode=lsInfoP

Key Laws & Regulations

• ◆AI Basic Act (enacted 21 January 2025, in force 22 January 2026)
• ◆Enforcement Decree of the AI Basic Act (Presidential Decree No. 36053, in force 22 January 2026)
• ◆MSIT Guidelines on Ensuring AI Transparency (22 January 2026)
• ◆National Strategy for Artificial Intelligence (2019)
• ◆Virtual Asset Users Protection Act

Business Formation

Standard entity types include Chusik Hoesa (stock corporation) and Yuhan Hoesa (LLC). Foreign investment is generally welcome in the tech sector with streamlined registration through KOTRA.

Tax Implications

Progressive CIT from 9% to 24% based on taxable income brackets. R&D tax credits available for AI-related investments. Special tax zones offer additional incentives.