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Support for foreign investors

I. Foreign Investment Incentives

Type Requirements Application Details
Tax Reduction
(Articles 121-2 and 121-3, Special Taxation Act) 		National Tax
Reduction 		Local Tax
Acquisition Tax
(Province) 		Property Tax
(City・Country)
Businesses with new growth engine technologies
  • EnforcementDecree, Special
    Taxation Act[Annexed Table 7]
    and USD2 million or more
Tariff, excise tax,VAT
=>Exempt
(capitalgoods, 5 years) 		15years
100% 		Pursuant for
City Country
ordinances

ex)
Changwon :
100% for 10years
+
50% for 5years
Individual type foreign investment zones
  • Manufacturing : USD 30 million or higher
  • Tourism: USD 20 million or higher
  • Logistics: USD 10 million or higher
  • R&D : USD 2 million or higher
Complex type foreign investment zoned
  • Manufacturing: USD 10 million or higher
  • Logistics: USD 5 million or higher
 Tariff→ Exempt
(capitalgoods,5 years)
*Capital goods induced via means of international payment
or means of domestic payment invested by foreign Investors
Free economic
zones
  • Manufacturing・Tourism: USD 10 million or higher
  • Logistics・Hospital: USD 5 million or higher
  • R&D: USD 1 million or higher
Free trade
zones
  • Manufacturing: USD 10 million or higher
  • Logistics: USD 5 million or higher
 Bonded area
(non- tariff area)
Tax reduction for business relocation from Seoul Capital Area(SCA)
to non-SCA areas (63-2, Special Taxation Act)		 Corporate tax reduction
SCA business relocation to non-SCA areas
  • Relocationfrom Overcrowding Control Regionsto non-SCA areas
    → Relocation of the head office or entire factories
100% for7 years
+
50% for3 years
Type Requirements Application Details
Tax reduction for SMEs
(Articles6,7, and99-9, Special Taxation Act) 		Corporate tax reduction
Startups in crisis
areas
(Article 99-9,
Special Taxation Act)
  • Startups and new business establishment
  • 18 businesses under Article 6, Special Taxation Act, including manufacturing, construction, restaurants, Restaurants, etc.)
 100% for5 years + 50% for 2 years

*Reduction limit(not applicable to SMEs)
- 50% of investments + full-time employees X KRW 15 million

SME startups
(Article6, Special Taxation Act)
  • 18 businesses under Article 6, Special Taxation Act, including manufacturing, construction, restaurants, R&D etc.
  • SME startups by young entrepreneurs
    • Other than SCA overcrowding Control
      Regions: 100% for 5 years
  • SME startups
    • Other than SCA overcrowding Control
      Regions: 50% for 5 years
      ※ Up to 100% depending on employment growth
SMEs in general
(Article7, Special Taxation Act)
  • 48 business types, including
    manufacturing, mining, and construction
  • Special tax reduction 5% ~ 30%
    ※ Rates vary depending on location
    (SCA/non-SCA)and size
Rent Reduction
(Article19, Enforcement Decree, Foreign Investment Promotion Act) 		Reduction
Rate		 Lease Period/ Rent
Individual type FIZ 100%
  • Period: Up to 50 years
    (10-year contract)
  • Rent : 1% of the land price
    (official land price or development costs, whichever is higher)
Parts and materials complex USD 5 million or higher
Complex type
FIZ
  • Businesses with new growth engine technologies & USD 1 million
  • Manufacturing USD2.5 million & 200 full-time employees or more
  • Manufacturing USD 2,5 million & 150-200 full-time employees
 90%
  • ManufacturingUSD2.5 million & 70-150 full-time employess
 75%
  • Manufacturing USD 5million
Type Requirements Application Details
Tax reduction for local special zones
(business cities, R&D etc.), resident companies 		Corporate tax
reduction
(Strong SMEs)
R&D special zone
(Article 12-2)
  • High-tech businesses or research centers, including bioengineering, ICT & high-tech products
 100% for3years + 50%
for2 years

*Reduction limit

- 50% of investments
+ full-time employees
X KRW 15 million
Business Cities, local special development zones (Article 121-17)
  • Startups or new business establishments
    • Manufacturing KRW 2 billion & 30 employees
    • Logistics KRW 1 billion & 15 employees
    • R&D KRW 0.5 billion& 10 employees
High-Tech Medical Complex (Article 121-22)
  • Companies operating health-care technology businesses
Employment Growth Tax credit Benefits
Corporate tax reduced
per increased employee(Article29-7, Special Taxation Act)
Catergory SMEs Middle-standing Enterprises Large Enterprises
SCA Non-SCA
Full-time employees KRW
7million		 KRW
7.7million		 KRW
4.5million		 -
Full-time youth worker Youth friendly company KRW
11 million		 KRW
12million		 KRW
8million		 KRW
4million
Tax benefits for foeign engineers/workers
(Articles 18and 18-2, Special Taxation Act)		 Benefits
Income tax reduction for foreign engineers
  • Engineers under engineering technology adoption technologies
  • Researchers at R&D centers
 50% for 10 years
  • Applied to leading companies specializing in materials, parts, equipments, etc.
70% for 3 years
50% for 2 years
Special taxation for Foreign Workers
  • foreign workers
 May choose a fixed rate(19%) instead of a general income tax rate
Tax benefits for new growth engine technologies
(Articles10, Annexed table 7, Special Taxation Act)		 Details
New growth engine and source technology R&D
  • 157 technologies under the Enforcement Decree, Special Taxation Act: Annexed Table 7
 20~30% Corporate Tax
(or income tax)
Commeroialization facilities for new growth technologies (Annexed Table 8-8)
  • 155 commercialization facilities for new growth technologies
Large Enterprises 3%
Middle-Standing
enterprises 6%
SMEs 12%
Cash Support (Under Consultation)
Support Cap and Provision
  • Within 30% of total foreign investments (excluding long-term loans)
    • High-Technology Industry(Within40%)/National Strategic Technology, National High-Technology Strategic Industry(Within 50%)
    • Paid in lump sum within a year from the cash support decision or paid in 10installments over 5years
Support Items
  • Land/Building prices orrent; construction expenses, capitalgoods, infrastructure installation costs, employment subsidies and training subsidies
Type Requirements Application Details
Eligibility Businesses with new
growth engine
technologies
  • 13 areas* and 260 technologies under Article121-2, Special Taxation Act

    *13 areas: future vehicles, smart information, next-generation software security, next-generation electronic information devices, next-generation broadcasting and communication, bio-health, new energy industries / environment,convergence materials robots,aviation and space, High-tech materials, part& equipment, carbon neutrality

Businesses with
High-Technologies and
High-tech products
  • 35 areas and* 3,043 technologies under Notice 2022-36[Mark1], The Ministry of Trade, Industry and Energy

    *135areas: Carbon·Nano Convergence, Fiber&Clothing, Chemical Process Material, Ceramic, Bio, Metal Material, Manufacturing base, Semiconductor, LED·Light application, Display, Network, Mobile communication, Broadcasting, Satellite, Information Appliances, Smart Service, Information Security, Medical Device. Secondary Battery, Manufacturing System, Robot, Automobile, Shipbuilding & Marine, Aviation, Drone, Energy Resource, Nuclear Power, New Renewable Energy, Electricity, SW Based Computing, SW Convergence, Embedded SW, Information Service, Plant EngineeringClean Base
Parts and materials
businesses
  • 15 business types* under the Act on Special Measures for the Promotion of Specialized Enterprises, etc. for Materials and Components

    *15 business types: textile, pulp, chemical, pharmaceutical, rubber, plastic, nonmetal minerals, primary metal, metal processing, electronic parts, computers, video/audio/communication equipment, medical / precision / optical devices, electrical equipment, machinery/equipment, automobile/trailer, other transport equipment, and furniture
Large-scale job
creation
  • 300 or more: manufacturing, construction, transport, information service
  • 200 or more: wholesale/retail, accomodations, finance and insurance,science and technologies, and leisure services
R&D center
  • 5 or more researchers* and research facility construction/expansion

    *Master’s degree or higher in new growth engine areas, or bachelor’s degree with three or more years of experience
Regional
headquarters of
global enterprises
  • 2 or more sites in Korea (if meeting all of the following requirements)
    • Parent company’s revenue: KRW 3 trillion or higher (recent5year average)
    • Foreign investment 50% or higher
    • 10 or more full-time employees for each core function (production, sale, logistics, human resources)
Others
  • Falls under a local specialized industry ora cooperation region industry and deemed to contribute to local economic growth
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