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Application Criteria for Local Investment Promotion Subsidy

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Application Criteria for Local Investment Promotion Subsidy (MOTIE Notice No. 2020-171)

Details
Application Criteria for Local Investment Promotion Subsidy
Subsidy For Regional Classification Subsidy Type Scope of Subsidy Others
Large business Mid Market Enterprise SMEs
Relocation from
the Capital area

Mutually Beneficial
Job Creation

A company once based in
Kaesong
Industrial Complex
Balanced Growth
Middle-region
Location - Within 10% of
land purchase price
Within 30% of
land purchase price
* Proportion of Gov’ funding
- (Balanced growth-middle)
Up to 65% of subsidy
* Local co-sharing 3:7

- (Balanced growth-lower)
Up to 75% of subsidy
* Local co-sharing 5:5
Eastern area 7:3

* Support Limit : Gov. funding KRW 10bln
Facilities Within 5% of
facility investment
Within 7% of
facility investment
Within 9% of
facility investment
Balanced Growth
Lower-region
Location - Within 20% of
land purchase price
Within 40% of
land purchase price
Facilities Within 8% of
facility investment
Within 11% of
facility investment
Within 14% of
facility investment
Industrial Crisis
Response region
Location - Within 25% of
land purchase price
Within 50% of
land purchase price
Facilities Within 11% of
facility investment
Within 19% of
facility investment
Within 24% of
facility investment
New/ Expansion Balanced Growth
Middle-region
Facilities Investments Within 5% of
facility investment
Within 7% of
facility investment
Within 9% of
facility investment
Balanced Growth
Lower-region
Within 8% of
facility investment
Within 11% of
facility investment
Within 14% of
facility investment
Industrial Crisis
Response region
Within 11% of
facility investment
Within 19% of
facility investment
Within 24% of
facility investment
Regional Classification
(Article 3)
  • (Priority Regions for Support) National Innovation-Convergence Cluster(Within 3-6 years from the date of construction approval, when sales rate is less than 50%
Support For
(Article 8)
  • Limited to entities engaged in the manufacturing industry, the ICT industry and the knowledge industry, among those belong to Relocation from the capital area (Article 9), New or Expansion of Facilities (Article 10), Mutually Beneficial Job Creation (Article 10-2), and once based in Kaesong Industrial Complex (Article 12) (If a sole proprietor incorporates hi/her business, he/she shall be eligible for subsidy application.)
    * Of those excluded from support, exception might apply for companies in the construction industry, etc.
  • When purchasing an abandoned building, it must be objectively proved (utility bill payment, KICOX on-site inspection)
A company
moving from
capital areas
(Article 9)
*Corporate Tax Reduction
  • (Pre-Existing)
    1. ①Those who have run business for 3 or more years in a row or have headquarters or research center in the Density Control Area of the Capital Region
    2. ②30 or more full-time employees※ ※ Article 15 (Exception) applicable to 10 or more full-time employees (Jeollabuk-do included)
  • (To Be Invested)
    1. ①Relocate HQ, factory, research centers, and other independent place of business from the Density Control Area of the Capital Region to local districts
    2. ②The industry must belongs to the same Group (3-digit number) in Korea Standard Industry Code (KSIC) as the industry run in the pre-existing place of business
    3. ③30 or more full-time employees + KRW 1 billion or more investment amount (Large business KRW 30 billion)
    4. ④Prior to completion of investment, pre-existing place of business must be shut down or sold off(For inevitable reasons, sell off before the end of project implementation period)
A company newly
establishing or expanding
production plants
(Article 10)
  • (Newly Establishing) Install facilities by newly constructing a building or changing the purpose of an existing building or purchasing an abandoned building for the purpose of business place
  • (Expanding) Must increase the gross floor area of a building in the pre-existing place of business cf)Those engaged in contract manufacturing organization for overseas are allowed without expanding the pre-existing place of business
  • (Eligibility)
    1. ① Having operated manufacturing, ICT, or knowledge service industry in Korea for 3 or more years consecutively
    2. ② 10 or more full-time employees in the pre-existing place of business (All located in Korea)
    3. ④ New full-time employees in the place of business to be invested shall be 10% or more of pre-existing place of business (at least 10)
      However, 30 or more for SMEs and MMEs with more than 300 full-time employees at pre-existing place of business, and 70 or more for large business with more than 700 full-time at pre-existing place of business
    4. Where a company invests KRW1 billion or more (Large business KRW 30 billion or more, Jeollabuk-do KRW 15 billion or more)
    5. ⑥ Where the company keeps running its pre-existing business within the districts (No sale, shutdown, lease, downscale)
      *Not required to keep pre-existing business located in Density Control Area of Capital Region
      *In case of disposing pre-existing place of business within 1 year prior to the application date of subsidy or after the investment MOU signing date, it constitutes a reason for subsidy disqualification.
  • (Exception of obligation to keep pre-existing business place)
    1. ① When re-assigning or reducing part of pre-existing place of business in a new place of business to be invested, it should be included in the business plan submitted in applying for subsidy, and the decision will be made after deliberation by the deliberation committee
    2. ② Business Reorganizing Company
    3. ③ Able to reassign within 30% of the number of full-time employees at pre-existing place of business
Application By
(Article 17)
  • Prohibited from separately applying for location subsidy and facility investment subsidy in the same investment plan(location subsidy must not exceed facility subsidy)
  • Application period : Facilities (3 months from the date of reporting commencement of construction), Location (within 1 year from the date of signing location contract. however, if 3 months from reporting commencement of construction arrives first, within 3 months from the date of reporting construction commencement)
    *Must not separately apply for location subsidy and facility investment subsidy
  • the day of investment completion shall not exceed 3 years from the initial date of construction registration
  • (not allowed to apply for subsidy) *③ is not applicable for mutually beneficial job creation company
    1. ①The achievement rate of investment or employment is less than 70% during settlement of upfront investment, or the average achievement rate of employment is less than 50% during project implementation period
    2. ②If a company carrying out upfront investment did not completed settlement of upfront investment
    3. ③If debt ratio is 50% or more, or in full impairment of capital
Investment Implementation
(Article 20)
  • Must report commencement of construction within 1 year from the date of subsidy notification
  • (subject to approval by leader of local governments and MOTIE minister approval ) xtension of investment period (Within 3 years-Leader of local government approval, notify the MOTIE/3 years or more-MOTIE approval), Change of major facility investment details, movement of place of business to be invested, Change of industry sector, Change of company ownership, Change of main assets, provision of main assets as collateral, new construction or leases other than the place of business to be invested, change to company classification, etc.
    *Exception on the notification to MOTIE minister exists
Subsidy Settlement
(Article 21)
  • Within 3 months from the date of investment completion, apply the settlement of subsidy to the leader of local government (application is possible prior to the date of investment completion)
  • When doing settlement, the number of full-time employees shall be based on the month to which the date of investment completion belongs *Not at the time of application date for settlement
  • Only the amount executed from the MOU signing to the date of investment completion accepted
  • * Exceptive acceptance in case remainder of machinery equipment is paid out after the date of investment completion (In this case, payment shall be done prior to 30% of subsidy remainder payment)
Post Management
  • Business maintenance, Not allowed to dispose land : For 5 years from the date when an investor sends a letter of application for settlement (Counting from the 1st day of the month when the settlement application is made)
  • Conclusion of supplementary business : Submit to MOTIE minister within 3 months from the conclusion of supplementary business
※ Purchase VAT not accepted as investment
※ Density Control Area of the Capital Region : Effective since July 1, 2020
  • ① The city of Seoul, The city of Incheon (Ganghwa-gun, Ongjin-gun, Daegok-dong of Seo-gu, Bullo-dong, Majeon-dong, Geumgok-dong, Oryu-dong, Wanggil-dong, Dangha-dong, Wondang-dong, Incheon Free Economic Zone excluded(including those removed from FEZ) and Namdong Industrial Complex excluded
  • ② Gyeonggi Province: Uijeongbu city, Guri city, Namyangju city(Hopyeong-dong, Pyeongnae-dong, Geumgok-dong, Ilpae-dong, Ipae-dong, Sampae-dong, Gaun-dong, Suseok-dong, Jigeum-dong, Donong-dong only) Hanam city , Goyang city, Suwon city, Seongnam city Anyang city, Bucheon city, Gwangmyeong city, Gwacheon city, Uiwang city, Gunpo city, Siheung city (Banwol Special Area (including those removed from special area) excluded)

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