Investment Incentive

Tax Reduction

(Foreign Investment Promotion Act article 9, Tax Restriction and Exemption Control Act article 121 of 2)

Of local taxes, the acquisition tax will be cut for 15 years while the property tax will be cut 100% for 5-7 years, and 50% for the next 3 years, from a tax year when the first income is generated after foreign investment company operates

Basic Reduction Conditions

Basic Reduction Conditions: Reduction condition, National Tax, Local Tax
Reduction condition				Reduction period
Reduction condition				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 Technology, which has great economical or technological ripple effects on national economy and is essential in heightening industrial structure and enhancing industrial competitiveness. Technology, introduced within three years. If not, extraordinary technology, whose economical effects or technical performances are better than already introduced ones. Technology whose process is mostly worked in Korea				Total 7 years (5 years: 100%, 2 years: 50%)	for 15 years 100%
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%)	for 15 years 100%
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%)	for 15 years 100%
C. Enterprises in complex type foreign investment zone	Logistics	5USD 5 million or more		Total 5years (3 years: 100%, 2 years: 50%)	for 15 years 100%

Reduction

Reduction: Division, Reduction, Record date, Application of reduction, Remarks
Division		Reduction	Record Date	Application of Reduction	Remarks
Local Tax	Acquisition tax Property tax	A·B·C : 100% reduction of acquisition tax for 15 years, 100% reduction of property tax for 5-7 years and 50% for the following 3 years, from the opening date of business	opening date of business (For acquisition before the opening date: date of acquisition)	-	Reducing as much as the foreign investment from the income subject to tax reduction Local tax needs exemption decision before acquiring property
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

Rent Reduction of National Property

Rent Reduction of National Property: Division, Contents
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

Special Cases of Rent and Sale of National and Public Properties

Special Cases of Rent and Sale of National and Public Properties: Division, Supports
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

Supporting Subsidies for Employment and Training

Standard for Financial Support

Standard for Financial Support: Division, Employment subsidy, Training subsidy
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

Cash Grant

Cash Grant: Division, Supports
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

Others

Others: Division, Supports
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.