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FDI Procedures & Incentives

Foreign direct investment (FDI) system, procedures and investment incentives

Foreign direct investment system

Foreign direct investment (FDI) refers to foreigners’ acquisition of the stocks or shares of a Korean company in order to build lasting economic relations, and generally involves participation in management or technology transfer.

Forms of foreign direct investment

  • Acquisition of the stocks or shares of a domestic company

  • Contribution to a Non-Profit Organization (NPO)

  • Long-term loans

Foreign Investment Promotion Act

The Foreign Investment Promotion Act is designed to facilitate foreign investment by supporting foreign investment and enhancing investors’ convenience. The Foreign Investment Promotion Act serves as the basic law for foreign investment, and its subordinate statutes include the Enforcement Decree of the Foreign Investment Promotion Act and the Enforcement Rule of the Foreign Investment Promotion Act, which prescribe matters delegated by the Foreign Investment Promotion Act and matters necessary for the enforcement thereof, and the Regulations on Foreign Investment and Technology Introduction.

FDI incentives

Forms of FDI incentives

Tax support

Most of the FDI incentives offered by the Korean government are provided via tax support.

  • Corporate tax and income tax reduction
    (if submitted the application by 31 Dec 2018)

  • Local tax
    (acquisition tax,
    property tax)
    reduction

  • Exemption from
    customs duties,etc.

Cash grant

For foreign investments that satisfy certain conditions, the central and local governments of Korea may provide cash grants.

  • Land purchase
    expense

  • Lease expense

  • Employment
    /education
    /training subsidy

Industrial site support

Korea leases land to foreign-invested companies that meet specific requirements at a reasonable rate or for free.

  • Location
    support

  • Subsidy for
    difference
    of sale price

  • Rent reduced∙
    subsidized

  • Other support

Incentives & Qualifications

Incentives for FDI
Qualifications Incentives
Tax
Reductions
New Growth Engines & Indigeneous-Tech Businesses
  • Technogies by field that fall into the categories of new growth engines and original technologies; and the establishment and operation of factories to do businesses utilizing related technologies, materials and production process.
  • Income tax, corporate tax: 100% for 5 years, 50% for 2 years after that (if submitted the application by 31 Dec 2018)
  • Acquisition tax, property tax: 100% for 15 years (check the ordinance)
  • Customs tariff, value-added tax, special consumption tax: 100% for 5 years
Foreign Investment Zones Individual type
  • Manufacturing: min. $30M
  • Tourism & resort, international convention: min. $20M
  • Logistics: min. $10M
  • R&D centers: min. $2M & min. 10 researchers
Complex type
  • Manufacturing: min. $10M
  • Logistics: min. $5M
  • Income tax, corporate tax: 100% for 3 years, 50% for 2 years after that
    (if submitted the application by 31 Dec 2018)
  • Acquisition tax, property tax: 100% for 15 years
    (check the ordinance)
  • Customs tariff: 100% for 5 years
Free Economic Zones
  • Manufacturing, tourism & resort, international convention: min. $10M
  • Logistics, medical institutions: min. $5M
  • R&D centers: min. $1M (min. 10 researchers)
Land Support
  • Min. 30% foreign investment
  • Reduction of rent fee
  • Support for infrastructure
Cash Grants
  • Min. 30% foreign investment
  • Manufacturing: Parts & materials specialty businesses, new growth engines and indigeneous-tech businesses
  • R&D centers: New R&D facilities (min. 5 researchers)
  • Negotiable

 

FDI procedures

Foreign investment procedures

Foreign investment procedures consist of the following: foreign investment notification, remittance of investment funds,registration of incorporation & business, and registration of foreign-invested company.

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Follow-up management of foreign investment

When changes occur in the shareholdings or the company name after registration of a foreign-invested company, the changes should be registered. When there is a cause for cancellation of registration, registration shall be cancelled by the authority of the Ministry of Trade, Industry and Energy, or the head of the entrusted organization.

ICC Information

TEL1600-7119

  • Hours : Mon.thru Fri.: 9:00-18:00
    (lunch break: 12:00-13:00)
  • FAX : 02-3497-1616
  • Email : ikp@kotra.or.kr
  • Address : IKP 4F., 7 Heolleung-ro, Seocho-gu, Seoul, Korea
  • Language spoken : English, Korean

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