Who may be affected?
Foreign AI business operators without a Korean address or place of business
The Act may apply to conduct outside Korea when it affects the Korean market or Korean users. The domestic-representative requirement must be assessed for the relevant AI business operator under Articles 2, 4 and 36 of the Act and Article 29 of the Enforcement Decree.
What is an AI business operator?
Under Article 2, an AI business operator is a person or entity conducting business related to the AI industry in either of the following roles. The classification depends on what the relevant foreign entity actually develops, provides or offers—not only on how it describes itself.
- AI developer business operator: A person or entity that develops AI and provides it to others. This can include developers of AI models, systems, APIs or other AI capabilities.
- AI-using business operator: A person or entity that uses AI provided by an AI developer to provide its own AI product or AI service to others. This can include a company embedding a third-party model in its own application, platform or commercial service.
A company does not automatically become an AI business operator merely because its employees use an AI tool internally. The key question is whether the company develops and provides AI, or uses AI to provide an AI product or AI service to customers or other users.
What are AI products and AI services?
The Act uses AI product for a product developed, manufactured, produced or distributed using AI or AI technology, and AI service for a related service. A conventional product or service does not become an AI product or service merely because AI is used somewhere in the company's internal operations.
Common business profiles
- Foreign companies that develop and provide AI systems, AI products or AI services
- Generative AI providers, foundation-model providers and AI platforms; “foundation model” is a practical market term rather than a separate Article 2 business category
- Foreign companies that use third-party AI to provide their own AI products or services
- Other overseas AI businesses whose AI products or services affect the Korean market or Korean users
Preliminary applicability test
The test has two stages. The first two basic conditions must both be satisfied. After that, the requirement applies if the AI business operator meets any one of the four alternative triggers in Enforcement Decree Article 29.
Step 1 · Confirm both basic conditions
- The relevant foreign entity qualifies as an AI developer business operator or an AI-using business operator under Article 2.
- That same AI business operator has no address or place of business in Korea. The test is entity-specific: the existence of a separate Korean affiliate should be reviewed, but does not by itself answer whether the relevant foreign operator has a Korean address or place of business.
Step 2 · Check whether any one trigger applies
- Total-revenue trigger: Its revenue for the preceding year—or the preceding fiscal year for a corporation—is at least KRW 1 trillion.
- AI-service revenue trigger: Revenue attributable to its AI-service segment for the preceding year—or the preceding fiscal year for a corporation—is at least KRW 10 billion. This is a segment-specific test and may require supporting financial records.
- Korean-user trigger: As of the end of the preceding year, the average daily number of users in Korea of that operator's AI products and AI services during the immediately preceding three months is at least 1 million. This is not the same as global users or general website traffic unrelated to the AI product or service.
- Specific enforcement-history trigger: The operator has previously received the Article 43(1)(3) administrative fine for failing to comply with an Article 40(3) suspension or corrective order. A different type of regulatory warning or fine does not satisfy this trigger merely because it concerns AI.
The four triggers are alternatives
The company does not need to meet all four triggers. Meeting any one trigger is sufficient once both Step 1 conditions are satisfied.
For the two revenue triggers, foreign-currency amounts are converted into Korean won using the average exchange rate for the relevant preceding year or fiscal year.
If the requirement applies, the domestic representative must be designated in writing and the designation must be reported to MSIT.
Who may serve as the Korean AI domestic representative?
Article 36(2) requires the domestic representative to have an address or place of business in Korea. Unlike certain other Korean domestic-representative regimes, Article 36 does not state that a qualifying Korean affiliate must be appointed before an independent representative. The written appointment and service framework should define the representative's authority to perform the three statutory functions, the MSIT reporting workflow, approved contact channels and client approval controls.