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Enforcement Decree revised to recognize "Reshoring Enterprise" for downsizing overseas sites by 25%

According to Yonhap News,

(SEJONG=Yonhap News) It becomes possible to be recognized as "reshoring company" even if returning to Korea by reducing an overseas site by a fourth.

On August 12, the Ministry of Trade, Industry, and Energy (MOTIE) said that the revision to the enforcement decree of the act on assistance to reshoring Korean off-shore enterprises is to come into effect, easing the requirements for production of the same products home and abroad, and reduction of overseas business places.

To date, prior to the revision, the products produced after returning to Korea must be classified in the same class (4 digits) as the products produced overseas, according to Korea Standard Industrial Classification. However, it became possible to be recognized as reshoring enterprise if products produced in Korean and overseas fall into the same group (3 digits). Groups are further broken down into classes.

For instance, if a company used to produce phones (wired communication device, class code 2641) in a foreign country returns to Korea and produces mobile phone parts (wireless communication device, class code 2642), it will be recognized as a communication device manufacturer (group code 264), being granted the status as a reshoring enterprise.

It will allow reshoring enterprises to diversify their products, encouraging more companies to return home.

With the revision, the "requirement for reduction of overseas business site" will be eased as well.

To date, companies had to reduce production in overseas business site by 50 percent or more. However, going forward, they can be realized as reshoring enterprise with 25 percent downsizing.

There have been fewer number of companies to come home because they had to reduce more than half of their production in overseas business sites in the past.

With the revision, MOTIE expects more companies to expand or make new investment in Korea with downsizing overseas sites, as they are relieved of burden to reduce overseas business sites.

The revisions to enforcement decree and enforcement rules are one of follow-up measures to "Comprehensive support for reshoring enterprises" announced at a meeting held to review national affairs, presided over by Prime Minister in November last year.

Once selected as reshoring enterprises, they are eligible for support on reduction of corporate tax and tariffs, site and facility, and employment subsidy.

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Source Text

Source: Yonhap News (August 12, 2019)

** This article was translated from Korean.

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