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1. Tax Reduction

(Foreign Investment Promotion Act article 9, Tax Restriction and Exemption Control Act article 121 of 2)
Reducing national tax for 7 years and local tax for 15 years as much as the ratio of foreign investment, from a tax year when the first income is generated after foreign investment company operates (Duty, VAT, and individual consumption tax have nothing to do with the ratio of foreign investment.

· Basic Reduction Conditions

Reduction condition Reduction period
National Tax Local Tax
A. Industrial Support Service Business and High Technology Business (Foreign-invested companies establishing plant equipment)
▶ High Technology Business, Industrial Support Service Business
ㆍTechnology, which has great economical or technological ripple effects on national economy and is essential in heightening industrial structure and enhancing industrial competitiveness.
ㆍTechnology, introduced within three years. If not, extraordinary technology, whose economical effects or technical performances are better than already introduced ones.
ㆍTechnology whose process is mostly worked in Korea
Total 7 years (5 years: 100%, 2 years: 50%) 100% for 15 years
B. Individual Foreigner Investment Zone (FIZ) Enterprise (In case of establishing plant equipment)
Division Foreign investment Employment Total 7 years (5 years: 100%, 2 years: 50%) 100% for 15 years
① Manufacturing, Computer Progamming, System Integration and Management, Data Processing • Hosting Services USD 30 million or more
② Tourist Hotel Business, Water Tourist Hotel Business and Korean Traditional Hotel Business, Special Resort Business, General Resort Business and Amusement Business, International Conference Facilities, Resort Condominium Business, Youth Training Facilities USD 20 million or more
③ logistics project, social overhead capital (SOC) facilities USD 10 million or more
④ R&D project USD 2 million or more 10 Masters or more who have three years of research experience
⑤ Foreign-invested companies with at least 2 staff members USD 30 million or more
C. Enterprises in complex type foreign investment zone Manufacturing USD 10 million or more Total 5years (3 years: 100%, 2 years: 50%) 100% for 15 years
Logistics USD 5 million or more

· Reduction

Division Reduction Record date Application of reduction Remarks
National tax Corporate tax A·B : 100% for 5 years, 50% for next 2 years
C : 100% for 3 years, 50% for next 2 years
The fastest tax year among the following:
- The first income
- The tax year that includes the fifth year from the opening date of business
Until the end date of the tax year that includes the opening date of business (For capital increase, 2 years from its filing date) - Reducing as much as the foreign investment from the income subject to tax reduction
- Local tax needs exemption decision before acquiring property
Local tax Acquisition tax
Property tax
A·B·C : 100% reduction for 5 years from the opening date of business opening date of business
(For acquisition before the opening date: date of acquisition)
-
Others Capital tax
Importing duties on capital goods
Individual consumption tax
Value added tax
A·B : Exemption of duties, special consumption tax and VAT
C : Exemption of duties only
- For import declaration, apply to the customhouse director - Should be directly applied to the reduction businesses
- An import declaration should be completed within 5 years from the day of investment declaration

2. Rent Reduction of National Property

Division Contents
Legal basis Foreign Investment Promotion Act article 13, Enforcement Ordinance for Same Act article 19
Subject of property Individual type of foreign investment zone, national industrial complex, national property in general industrial complex
Rent period Within the range of 50 years (rent renewal is possible within the range of 50 years)
Standard rental fee More than 1/100 of land(property) price
Reduction conditon When the ratio of foreign investment is more than 30% or the first stockholder is a foreigner
Reduction standard and ratio 100% Reduction: Foreign investment in Individual type of foreign investment area, high technology • industrial support services with more than USD 1 million of foreign investment, businesses with more than USD 5 million of foreign investment and will reside in the foreign investment area (complex type) for parts and materials
75% Reduction: Manufacturing industry with more than USD 5 million of foreign investment, businesses that contribute to the SOC expansion, industrial restructuring, and local government's financial independence (in complex type foreign investment area)
50% Reduction: Lands in national industrial complexes, general industrial complexes, urban high-tech industrial complexes, and agricultural industrial complexes

3. Special Cases of Rent and Sale of National and Public Properties

Division Supports
National and public properties in industrial complexes, agricultural industrial complexes and knowledge industrial centers · Supporting to purchase national and public properties in industrial complexes at the construction cost
· If a lump sum payment is difficult, payment in installments is allowed
   - National Property : 20 yearly installments, 4% interest rate
   - Public Property : 20 yearly installments, 3% interest rate

4. Supporting Subsidies for Employment and Training

Standard for financial support
Division Employment subsidy Training subsidy
Support target A foreign-invested company that has over 20 new regular employees after its registration A foreign-invested company that has over 20 new regular employees after its registration
Number of people Provide subsidies to the extra workers when a foreign-invested company hires more than 20 new employees Provide subsidies to all trainees, when a foreign-invested company hires and trains more than 20 new employees
Support amount Support monthly KRW 1 million at the most per person for six months Support monthly KRW 1 million at the most per person for six months
Payment period Up to five years since the registration of a foreign-invested company Up to five years since the registration of a foreign-invested company

5. Cash Grant

Division Supports
Support target · Greenfield-type investment where the ratio of foreign investment is more than 30% (newly-established and expanded plants)
· Industrial support services businesses, high technology businesses, parts and materials industry, large-scale employment businesses
· R&D of industrial support services business and high technology business (more than 10 regular researchers)
Support scale Support more than a certain percentage of foreign investment (up to 30% of FDI, up to 40% of R&D center)
Support content Legal Use : Subsidies for employment and training, land purchase, rental fee, construction cost, infrastructure installation cost, capital goods and research equipment costs

6. Others

Division Supports
Infrastructure supports · Support road, water, gas, electricity, sewage treatment facilities in foreign investment zones
· Support medical facilities, educational facilities, housing facilities in foreign investment zones
※ Tax reduction and investment incentives are decided through prior consultations of the government departments and a vote from the Committee on Foreign Investment.
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