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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 reduction
  • 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 reduction
  • 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

View Details

R&D support procedure

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Source : Korean Ministry of Science, ICT and Future Planning

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