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R&D Incentives

The Korean government provides incentives for global headquarters and R&D centers to attract
high value added foreign investment. Other incentives include taxation, human resources,
finance and technology support.

Incentives for the headquarters of global companies in Korea

Incentives for the headquarters of global companies in Korea
Classification Description
Income tax deduction
  • Foreign employees working in the headquarters will benefit from special treatment that imposes the same tax rate (currently 17%) regardless of their income.
National tax and other tax procedure support
  • When the local offices of foreign-invested companies transact with their overseas subsidiary companies, an advance adjustment system wherein the Korean National Tax Service and Korea Customs Service jointly participate and deliberate the scope of appropriate prices will be applied to solve the uncertainties arose from the differences in price policies of national taxes and customs at an early stage.
  • When the appropriate prices of intangible assets in Korea are different to those in the country where the headquarters is located, the uncertainties will be solved at an early stage through an advance pricing agreement between the headquarters and the tax imposing country.
Simplification of taxation documents
  • To expand those exempt from the obligation of submitting evidential taxation materials for headquarters service transactions.

    * (Currently) when the total service transactions are less than KRW 500 million and when the service transactions among specially related companies are less than KRW 100 million --> (Revised) when the total service transactions are less than KRW 1 billion and when the service transactions among specially related companies are less than KRW 200 million

Convenient immigration service
  • To expand the stay limit of D8 visa that is currently set to one to three years for foreigners working in the headquarters in Korea to a maximum of five years in line with the working period.
Eligibility
  • (Market status) Foreign companies whose mother companies posted average annual salesof over KRW 3 trillion in the last five years or companies recognized as global companies by the Foreign Investment Committee.
  • (Function) When more than two foreign corporations perform more than one of the function (planning, finance, human resources, marketing, purchasing, logistics, R&D, production and other core functions).
  • (Employment) When the headquarters have more than 10 employees.
  • (Investment) When foreign investment is over KRW 100 million and when the foreign investment accounts for more than 50% of the total investment.

 

Incentives for the R&D centers of global companies in Korea

Incentives for the R&D centers of global companies in Korea
Classification Description
Income tax deduction
  • To reduce income tax (two years, 50%) applied to foreign technology experts working in foreign-invested R&D centers until 2018.
Site support
  • To support the rental of buildings along with the currently provided factory lot to the R&D centers of the foreign-invested companies.
Simplification of taxation documents
  • To support foreign-invested R&D centers when theypromoteresearch cooperation with Korean industries, academiaand research institutesthrough industrial cluster support projects*.

    *Designateda total of 193 industrial complexes (25 bases, 168 related complexes) to build industry-academia-research centers N/W, operate thebiz-doctors centers and implementforeign exchange and cooperation projects (’14 budget: KRW 57.73 billion).

  • To support joint research between Korean research centers and foreign-invested R&D centers for government-promoted national projects.
Eligibility
  • (Sectors) Advanced technology and other industrial sectors.
  • (Employment) When the companies hire more than 5 researchers with over a master’s degree or with a bachelor’s degree and over three yearswork experience
  • (Investment) When the foreign investment is more than KRW 100 million and when the foreign investment accounts for more than 30% of thetotal investment.

R&D support system

Tax support

  • Tax deduction for research
    and HR development cost
    (new growth engines and
    source technology sectors)
  • Local tax exemption for real
    estate for subsidiary
    corporate research centers
  • Customs reduction for
    industrial technology R&D
    products
  • Income tax reduction for
    foreign technology experts
  • Corporate tax reduction for
    cutting-edge technology
    companies working in special
    R&D zones

Human resources support

  • Special research expert
    system
  • Brain pool project
  • Science card system for
    foreign scientists and
    technology experts
  • Gold card system for foreign
    researchers with excellent
    technological expertise
  • Contact Korea system

Certification support

  • Notification and certification
    system for subsidiary
    corporate research centers/
    R&D departments
  • New Excellent Technology
    (NET) certification system
  • New Excellent Product (NEP)
    certification system
  • Green Certification system
  • Korea Good Recycled
    Product (GR) certification
  • IR52 Jang Young-shil Award
  • This Month’s Engineer
    Award
  • Korea Creative Economy
    Awards
  • Korea Technology Awards
  • Awards for the Win-Win
    Growth of Large Enterprises
    and SMEs

Financial support

  • R&D guarantee

Technology support

  • Industry-academia-research
    center cluster support
    project
  • Technology acquisition
    strategy support project
    based on intellectual
    property rights
R&D support system
Category Project Overview
Tax support Tax deduction for research and HR development cost
(new growth engines and source technology sectors)
  • A system to deduct a certain percentage of income tax or corporate tax for expenses used for training and research in the fields of new growth engines and source technologies.(Article 10 of the Restriction of Special Taxation Act)
Local tax exemption for real estate for subsidiary corporate research centers
  • A system to exempt tax for the acquisition of real estate to be directly used by a subsidiary corporate research center and to exempt property tax for real estate used for a research center as of the date of tax imposition.(Article 46 of theLocal Tax Incentives Limitation Law)
Customs reduction for industrial technology R&D products
  • A system to partially reduce tariff for goods imported for R&Ds of science and industrial technology.(Article 90 of the Customs Act)
Income tax reduction for foreign technology experts
  • A system to reduce income tax by 50% for foreign technicians in accordance with technology introduction contracts or for theirprovision of work to Koreans in Korea.(Article 18 of the Restriction of Special Taxation Act)
Corporate tax reduction for cutting-edge technology companies working in special R&D zones
  • A system to reduce or exempt income tax or corporate tax for research companies or cutting-edge technology companies working in fields subject to tax reduction or exemption in special R&D zones in accordance with the “Special Act on the Support of Daedeok Special Research and Development Zone, etc.”(Article 12.2 of the Restriction of Special Taxation Act)
Financial support Financial support
  • A systemic financial support for R&D by financially matching R&D throughout the entire process, from the stage of coming up with ideas to the stage of commercializing them.
Human resources support Special research
expert system
  • A system to allow those subject to active service (over Master’s degree) towork as a researcher with three years’ worth of expertise at a company (research institute) designated by the commissioner of the Military Manpower Administration of Korea or those subject toreservist duty (Bachelor’s degree)to work as a public service worker, considering such work as having completed one’s compulsory military service to smoothly support the research workforce.
Brain pool project
  • Bringing world-class, globally renowned scientists and technology experts to work in Korean R&D centers in order to upgrade the R&D level of Korea, create a research-friendly environment, break down technology protection barriers and reduce the tendency of avoiding the transfer of key technologies by developed countries.
Science card system for foreign scientists and technology experts
  • A system to provide convenience when issuing permits to highly-qualified foreign scientists and technology experts for their residence in Korea (qualification, activities, period, etc.) and visa acquisitions.
Gold card system for foreign researchers with excellent technological expertise
  • A system to provide special country entry and exitbenefits to excellent overseas technology workers Korean companies want to employ and supportthem to receive special activities visa (E-7) by issuing employment recommendation forms (Gold Cards) in the name of the KOTRA CEO entrusted by the Minister of Trade, Industry and Energy.
Contact Korea system
  • Launching and managing Contact Korea at KOTRA as an institution exclusively responsible for drawing excellent global expert workforce from overseas into Korea to enhance the international competitiveness of Korean companies and the potential for continued growth of the Korean economy.
Technology support Industry-academia-research center cluster support project
  • A project to build knowledge clusters to ensure high-technology information exchanges and a joint research culture and to draw up and support joint research through cooperation between companies.
Technology acquisition strategy support project based on intellectual property rights
  • A project to propose optimal strategies that would help companies consolidate the most powerful patent portfolios and patents to develop global Hidden Champions equipped with powerful patents and, thus, enhance national technology competitiveness.
Certification support Certification support
  • A system to report and recognize departments exclusivelyresponsible for R&D and subsidiary corporate research centers that meet certain conditions in accordance with the“Act to Promote Basic Research and Support Technological Development” for them to benefit from taxation, tariff, workforce and funds support, as well as special compulsory military service treatment.
New Excellent Technology (NET) certification system
  • A system to find new technologies developed by Korean corporate research centers, research institutes and universities and to certify them as NET to promote their commercialization and technology transaction as well as support their advancement into the market and procurement.
New Excellent Product (NEP) certification system
  • A system to certify products that have applied alternative technologies that were first developed in Korea to support the initial development of their sales routes and promote technological development.
Green Certification system
  • Creating a base for reaching green growth goals and inducing the active participation of the private sector to make concrete green growth policy achievements.
Korea Good Recycled Product (GR) certification
  • System to test, analyze and evaluate recycled products developed and produced in Korea.Then, to evaluate and certify the quality of such products.
IR52 Jang Young-shil Award
  • IR is the acronym for industrial technology research and52 means that an award is given every week for 52 weeks. The award is endowed to products that are based on excellent new technologies developed by a Korean company or technology research center to encourage technological development, publicize new technologies and support their initial advancement into the market.
This Month’s Engineer Award
  • Excellent engineers who have largely contributed to the development of Korean companies and national competitiveness with technological innovation in industrial fields are discovered and awarded to boost the morale of those developing industrial technologies as well as create the norm of companies and the society to give preferential treatment to technology experts working at companies.
Korea Creative Economy Awards
  • A system to give awards to those who have led the creative economy by creatinga new added value based on creative challenge-taking and innovation to boost their morale and honor.
Korea Technology Awards
  • A system to awardcompanies or institutions that have developed new excellent technologies and products to publicize the excellence of Korean technologies and form a national consensus on the importance of industrial technologies.
Awards for the Win-Win Growth of Large Enterprises and SMEs
  • A system to find and award those who have contributed to national economic development and improved corporate competitivenessby pursuing win-win growth through the partnership of large and small enterprises.

 

R&D support procedure

*Source: Korean Ministry of Science, ICT and Future Planning