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Korea to grant government aid for Koreans startups overseas

According to Pulse by Maeil Business News Korea,

The South Korean government has laid the legal foundation to extend its existing startup support program, previously limited to companies in Korea, to businesses founded by Koreans outside the country.

The Ministry of SMEs and Startups (MSS) said Tuesday that the Cabinet approved a bill to amend the Small and Medium Business Startup Support Act and its enforcement regulations to allow the government to support overseas startups.

Under the revised rule, Korean businesses that form foreign entities or become subsidiaries of newly established foreign corporations via a process known as ‘flip’ will now be eligible for government assistance. This move signifies a departure from the previous policy, which restricted government support to startups founded in Korea.

Until now, government support was limited to startups established by Koreans domestically, posing constraints on supporting these startups to grow into global enterprises, the ministry said. It anticipates that more Korean-founded startups will achieve success overseas moving forward.

The amended Startup Support Act defines ‘overseas startups’ as corporations where Koreans and domestic entities collectively hold total shares or investment stakes granting them substantial control. It also specifies that an overseas startup is a corporation that has started its business abroad within the last seven years. With clearer definitions of concepts including overseas startups, these businesses can also benefit from support under other laws, such as the ‘Venture Investment Promotion Act’ and the ‘Special Tax Treatment Control Law.’

To ensure that the law effectively supports Korean-led and domestically controlled overseas startups, the enforcement decree will outline additional criteria. These criteria will require that such businesses substantially contribute to the Korean economy by generating employment, revenue, and added value. The amended Startup Support Act is set to be promulgated on February 27th, 2024, and will come into effect six months later. The new enforcement decree is scheduled to be implemented from March 15th onwards.

By Kim Dong-eun and Minu Kim

Copyrights Pulse by Maeil Business News Korea. All Rights Reserved.

Source: Pulse by Maeil Business News Korea (February 21, 2024)

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