- home
- Incentive
- Incentive
- Tax Exemption and Reduction
Tax Exemption and Reduction
Tax Exemption and Reduction
Foreign investors are eligible for the cuts or exemption of acquisition
and property tax on real estate in accordance with the Restriction
of Special Local Taxation Act in cases where they meet the following requirements.
Eligibility
- Advanced technology businesses equipped with technologies that are underdeveloped or undeveloped in Korea
- High-value-added service industries with significant ripple effects to support the growth of other sectors, such as support for the manufacturing industry Companies in individual-type foreign investment zones
Requirements
- Newly installing a factory or a place of business
- Investing USD two million or more
※ The required minimum amount of investment varies by eligible industry and type of business.
Details
- Reduction and exemption of acquisition tax and property tax
- For ten years from the date of the commencement of business: The tax amount subject to cuts and exemption X 100%
- For the following five years: The tax amount subject to reduction and exemption X 50%
※ The tax amount subject to cuts and exemption = The calculated tax amount for the said property
- Exemption of tariffs, individual consumption tax, and value-added tax
- Exempting these taxes in accordance with the Restriction of Special Local Taxation Act in the
case of capital goods introduced in response to the investment declaration by foreigners upon
acquiring newly-issued stocks among the below- mentioned capital goods ① and ② that are required
for businesses eligible for tax reduction and exemption
- Capital goods that foreign investment companies imported as instruments of foreign payment or domestic payment methods funded by foreign investors
- ② Capital goods that foreign investors import for the purpose of investment
- Exempting these taxes in accordance with the Restriction of Special Local Taxation Act in the
case of capital goods introduced in response to the investment declaration by foreigners upon
acquiring newly-issued stocks among the below- mentioned capital goods ① and ② that are required
for businesses eligible for tax reduction and exemption
Application and Determination Process for Tax Exemption
-
Application for prior confirmation of eligibility of the concerned business for tax exemption
- Competent authority : Ministry of Economy and Finance
-
Report of foreign investment
-
Only for foreign investment made through the acquisition of newly issued stock
※ Foreign investment made by acquiring existing stocks or equity is not eligible for tax exemption. - Competent authority : Ministry of Economy and Finance
-
Only for foreign investment made through the acquisition of newly issued stock
-
Application for tax exemption
- Application period : By the end of the taxable year in which the concerned company commenced business operation
- Documents to be submitted : One copy of foreign investment notification form, an application form for tax reduction or exemption, and evidential documents on sophisticated technology
- Competent authority: Ministry of Economy and Finance
-
Determination on tax exemption
-
Consultation by relevant ministries : Ministry of Economy and Finance and
other authorities related to the technologies applied
※ In cases where technical documents are insufficient or consultation between the relevant authorities is delayed, the authorities may request supplementary documents and give notice of extension of the processing period.
-
Consultation by relevant ministries : Ministry of Economy and Finance and
other authorities related to the technologies applied
-
Notice of determination on tax exemption
- Notice given within 20 days from the application date
- Competent authority : Ministry of Economy and Finance