Gyeonggi Province will significantly expand the acquisition tax reduction application period for foreign-invested companies from 7 years to 15 years so as to revitalize the local economy and create new jobs.

According to a May 10 announcement by Gyeonggi Province, the partial amendment of the Gyeonggi Metropolitan Tax Reduction Ordinance proposed by Gyeonggi Provincial Assembly Member Park Se-won (Hwaseong 3 District, Democratic Party of Korea), passed the 368th Gyeonggi Provincial Assembly plenary session on April 27 and will be promulgated on May 17.

The main content of this amendment is the expansion of the acquisition tax exemption period and reduction rate for business real estate acquired or transferred by foreign-invested companies. However, only foreign-invested companies that have received a tax reduction decision from the government by December 31, 2025, can receive the related benefits.

First, the period application for a full reduction in business real estate acquisition tax for foreign-invested companies will be expanded to 15 years. Previously, when a foreign-invested company purchased real estate for investment purposes, the acquisition tax reduction or exemption period was fully exempted for up to 7 years and reduced by 50% for 8 to 10 years. As of this year, with this ordinance revision, foreign-invested companies in Gyeonggi Province will no longer have to bear acquisition tax on business real estate for a 15-year period.

Second, when a foreign-invested company acquires factories or facilities from an existing operator (business takeover), the acquisition tax reduction application period will also be expanded by 2 years from 5 years to 7 years, and reduced by 30% for 8 to 10 years.

With the ordinance revision, provincial officials expect that the achievement of Gyeonggi Province Governor Dong Yeon Kim’s policy goal of preparing for the future by attracting KRW 100 trillion in domestic and foreign investment within his term will gain momentum.

Gyeonggi Province has been endeavoring to create an innovative ecosystem in the province (through such efforts as the attraction of high-tech companies and research institutes from home and abroad) so as to foster high-tech industries (e.g. future vehicles, bio and health). An innovative ecosystem refers to a virtuous cycle structure that combines advanced knowledge through research and development with an industrial ecosystem to realize innovation.

Gyeonggi Province plans to continue and expand efforts to attract high-tech foreign companies by easing entry barriers for foreign investment and creating a global innovation ecosystem by attracting global-caliber companies.

Choi Won-sam, Director of Gyeonggi Province’s Tax Administration Division, said, “The increase of local tax cuts is expected to have significant economic effects, such as attracting foreign investment to the province as well as creating new jobs. Considering the recent and prolonged economic recession, we will actively work to revitalize the local economy through institutional improvements, such as continuously identifying areas in need of ordinance revision.”