GyeongGi-Do ::

Foreign Investment Incentive System

Tax Reduction Support for Foreign Direct Investment(FD)

Application and Procedure for Tax Reduction/Exemption

Process	Contents
1	FDI Notification	- New investment or captal increase
2	Application for Tax Reduction/ Exemption (Pre-confirmation of tax exemption)	Period - For new investment: By the closing date of the tax year in which and FDI company starts its project - For capital increase: Within two years from the notification date of the capital increase (tax reduction application necessary every time a capital increase occurs) - After assigned period: Tax reduction for the remaining period Institution accepting applications: Ministry of Finance and Economy(MOFE), Economic Cooperation Division (82-2-2150-2523, 82-2-2110-2183) ※Pre-confirmation of tax exemption policy - Help foreign investors with investment decisions by confirming eligibility for tax exemption or reduction. - Even though a business is confirmed as eligible for tax exemption or reduction the business has to apply for tax exemption/reduction after reporting foreign investment.
3	Consultation with Relevant Government Authorities	Minister of the relevant ministry
4	Decision on Reduction/ Exemption (Within 20 days)	Ministry of Finance and Economy will confirm eligibility for tax exemption/reduction based on the results of consultations with relevant government authorities.

Tax Incentives

	Requirements						Period of Relief
Basic Requirements For Reduction/ Exemption	A. High-tech or supporting service business (Foreign invested companies that establish manufacturing plants)
	B. Company in Foreign Investment Zone(FIZ) (In case of new manufacturing facility establishment)
	Type of Business				Investment Size	Recruitment	Total of 7 years (5 years: 100% 2 years : 50%)
		1	Manufacturing		USD 30 million and over
		2	Tourist Hotels, Lodgings, Resort Facilities, International Convention Centers		USD 20 million and over
		3	Logistic business, SOC Construction Project		USD 10 million and over
		4	R&D Institute		USD 5 million and over	Must employ 10 or more researchers
		5	Foreign-invested Company (more than 2 personnel)		USD 30 million and over
	C. Company in Foreign Exclusive Industrial Complex			Manufacturing	USD 10 million and over		Total of 5 years (3 years: 100% 2 years: 50%)
				Logistics	USD million and over
	Requirement: Period of Relief				Starting Point		Remarks
Corporate Tax Income Tax	- A & B: 100% for the first 5 years and 50% for the following 2 years - C: 100% for the first 3 years and 50% for the following 2 years				If profit is not made after 5 years from the commencement of business, the time period will be calculated from the day of the fifth year.		The reduction rate is applicable to the amount corresponding to the foreign investment ratio
Property Tax, Acquisition Tax, Registration Tax	- A & B & C: Full exemption up to 15 years				From the commencement of business		-
Customs Duty Tax Special Excise Tax, Value Added Tax	- A & B: Customs Duty, Special Excise, Value Added Tax is reduced - C: Only Customers Duty will be reduced				-		Import notification must be completed within 3 years of the filing date of the foreign investment report

Lease Incentives

Category	Detail
Eligible Properties	National and local government properties within foreign exclusive industrial complexes national industry complex, and local industrial complexes
Lease Period	Can be extended up to 50 years (renewed every 10 years)
Qualifying Industry	Company’s foreign investment ratio more than 30%(or a foreign national should be the largest stock holder) - FDI companies located in Foreign Investment Zones (FIZ) - Companies in a High-tech or supporting service business with FDI of at least USD 1 million - Manufacturing companies with FDI of at least USD 5 million
Eligibility Requirements	Category		Foreign Investment Zones (FIZ) - Jangan, I, II, Dangdong Complex	Foreign Exclusive Industrial Complexes (FEIC) - Hyeongok, Eoyeon Hansan, Chupal, Poseung Complex
	Rent		1/100 of either the land development cost or the relevant public land price
	Rent Exemption Critera	National Property	- High-technology business (more than USD 1 million FDI): 100% - Manufacturing business (more than USD 5 million FDI): 75%	- High-technology business (more than USD 1 million FDI): 50% - Manufacturing business (more than USD 5 million FDI): 50%
		Provincial Property	- High-technology business (more than USD 1 million FDI): 100% - Manufacturing business (more than USD 20 million FDI): 100% - Manufacturing business (more than USD 10 million FDI and less than USD 20 million FDI): 75% - Manufacturing business (more than USD 5 million FDI and less than USD 10 million FDI): 50%	- High-technology business (more than USD 1 million FDI): 100% - Manufacturing business (more than USD 20 million FDI): 100% - Manufacturing business (more than USD 10 million FDI and less than USD 20 million FDI): 75% - Manufacturing business (more than USD 5 million FDI and less than USD 10 million FDI): 50%
Exemption Application	Once all required documents are prepared, companies can submit their exemption application to the head of the local government

cash grant

If foreign investment satisfying the following requirements is made, the central and municipal governments may provide a cash grant for the construction of a facility. Such a grant depends on whether or not highly advanced technologies will accompany the foreign investment, on how many new jobs will be created, on whether or not the investor has already obtained funding from the government through a cash grant program for local businesses, and on the appropriateness of the location.

Classification	Details
Eligibility	Support is provided for foreign direct investment(greenfield-type) that satisfies the following conditions: - Business support service, advanced technology, or parts or materials business with USD 10 million or more invested - Business support service or R&D in advanced technology with USD 5 million or more invested ※20 or more personnel shall be permanently employed for research work.
Amount & Usage	- Cash grant ratio Minimum 5% or more of total foreign investment is supported through negotiation. The maximum limit is calculated using a formula that is not disclosed. - Legally, usage is limited to ① Employment and training subsidy; ② Land purchase or lease rate; ③ Building construction; ④ Infrastructure facilities; ⑤ Purchase of capital equipment, research equipment and materials.
Assessment Criteria	- Introduction or transfer of advanced technologies - Redundancy with existing local investment - Spillover effect to local economy - Project survivability - Scale of employment - Appropriateness of location
Obligations of the Beneficiary	- Shall continue business to which the cash grant is provided for a minimum of 10 years - Shall maintain the minimum number of employees defined under the Cash Grant Agreement - If the contract obligations are not met, the grant shall be either returned or reduced, or the mandatory obligation period shall be extended

Application Procedure

Classification	Details
Application for Cash Grant (Foreigner)	- Submit a cash grant application form to the Ministry of Industry & Energy supported with an investment plan following a request for counseling - Application details, total investment breakdown, and employment size to be provided
Negotiation & Decision (Industry Minister)	After negotiating with the foreign investor, the Minister of Industry & Energy decides the cash grant and its amount through consultation with the Minister of Planning & Budget and review by the Foreign Direct Investment Deliberation Committee. ※ Usually decided within 60 days of application submission, but may be extended by 30 days.
Cash Support Contract and Payment (Industry Minister)	Cash grant contract is signed upon decision. The grant may be fully paid in the year following the year the decision is made or partially paid through 10 installment payments within five years of the decision date.

Personnel Training Support

Classification	Details
Target of support	Those who intend to implement new R&D programs for advanced technologies that will offer significant spillover effects for local industries or that will contribute to the upgrading of Korean industries; or Those who intend to invest in the extension of existing R&D centers which are expected to entail spillover effects.
Support Details	Personnel dedicated to R&D functions - Qualification/duration: BS degree holders or higher (including candidates) / two years from hire - Support limit: Up to 80% of the annual salary of the personnel concerned; maximum of 30 million year Up to 50% of the annual salary of the personnel concerned; maximum of KRW 30 million year for three years if hired for three or more years after the two base years Education/Training Personnel - Qualification: Foreign R&D education/training instructors dispatched to Korea - Support limit: Up to 50% of cost of stay; up to KRW 50 million per person/year
Eligibility	A local or foreign profit or non-profit corporation that satisfies one or more of the following: - Those that have 100 or more research personnel or overseas branches in 10 or more countries. - Business or research organizations that have world-leading advanced technologies and global marketing capabilities and that may export the developed products and whose research will have a spillover effects for local industries. - Business or research organizations that are capable of training advanced personnel through in-house education/training.
Operator	KOTRA Invest Korea New Industry Inducement Team