o The package complaint processing is a system where license/ permit complaints are classified into several complaint groups to speed up the process and, if some of major complaints are finished, the rest complaints are considered to have been processed together.

o Kinds of complaints subject to the package processing

In case of factory establishment-related license/ permit, when the approval of factory foundation is achieved 20 complaints including the farmland conversion permit are processed comprehensively.

– If a small and medium sized company business plan is approved, 14 legal matters and 21 complaints are processed comprehensively.

– When the building permit is made, 10 legal matters and 18 complaints including the land trait change permission are processed comprehensively.

– In the environment related permits, when the permit on wastewater discharge facility is made, 6 legal matters and 7 complaints are processed comprehensively including the permit on air pollutant discharge facility.

– In building-related license/ permit, when the permit on building use is achieved, 15 legal matters and 13 complaints are processed comprehensively including the permit on house electricity facilities.

– When the permit on tourism complex construction plan is processed, 17 legal matters and 19 complaints are processed comprehensively.

– When the permit on tourism business registration is achieved, 8 legal matters and 8 complaints are processed comprehensively.

– When the permit on registered physical exercise facility business plan is processed, 9 legal matters and 9 complaints including the permit on the farmland conversion are processed comprehensively.

– When the permit on the DB project in accordance with the regulations of Jeju International City Special Act is achieved, 25 legal matters and 27 complaints including the permit on grass composition are processed comprehensively.

– When the factory registration is made in accordance with regulations of “Industrial Cluster Development and Factory Establishment Act, 25 legal matters and 27 complaints including the registration of publication business or reporting of printing company are processed comprehensively.

o The package processing of complaints is being processed directly by IK on behalf of a foreign investor applicant made by discussion with related authorities.

o Object of investment

– Cash (in case of cash contribution, the applicable foreign capital should be directly received or transferred through a domestic bank and be withdrawn in won)
– Capital goods (including used capital goods): They acknowledged by the competent Minister as industrial facilities required for the initial test run. should be machinery, facilities, components, etc. as industrial facilities and raw materials and spare parts
– Proceeds from the stocks or equity achieved in accordance with the PA (dividends)
– Management of technologies equivalent to industrial property rights, intellectual property rights and others, and their use
– The remaining assets according to the liquidation of a foreign domestic branch of a foreign representative office
– The redemption amount against the loan for more than 5 years or other borrowings from a foreign investment company’s, overseas parent company, foreign investor, a company with capital investment relationships with a foreign parent company or a company which has capital investment relationships with a foreign investor should be acknowledged as the foreign investment.

※ The contribution in kind of loan or borrowings (in the place of a lender) is also accepted

– Domestic real estates owned by a foreigner
– Shares of foreign corporation owned and registered in the exchange of foreign country or domestic shares owned by a foreigner in accordance with the Foreign Investment Promotion Act or the Foreign Exchange Transactions Act
– Proceeds for the sale of stocks, equity or real estate which a aforeigner achieved in accordance with the Foreign Investment Promotion Act and the Foreign Exchange Transctions Act

■ Significance of tax incentives

The foreign investment business essential to strengthening the competitiveness of domestic industries may get tax reduction such as corporate tax, income tax, acquisition tax, registration tax, property tax, etc. in accordance with the Restriction of Special Taxation Act (article 9 of the Act).

■ The following businesses are deemed necessary in order to strengthen the international competitiveness of domestic industries and determined by the Minister of Strategy and Finance through the deliberation of the Foreign Investment Committee (Notification of the Ministry of Planning and Finance).

o Industrial support service business

– Businesses which have large effects on supporting development of other industries such as manufacturing support or with highly added values and considered to be necessary for enhancing the international competitiveness of the domestic industries

• Technologies relative to Information processing and computer operation related
• Technologies relative to development and production of Software (S/W)
• Automatic management system technologies using computers
• e-commerce related technologies, etc.

o Other businesses which involve high technologies

– It is a business which accompanies the technologies of which development levels are low or which are not developed and one which is deemed to be required to strengthen the international competitiveness of the domestic industries.

• Manufacturing and design of computers (more than 64 bit)

• Manufacturing of computer storage devices, input/output devices, other peripherals and their parts

• Manufacturing of broadcasting, wireless communication devices and their core components
• Manufacturing of semiconductor elements, materials, equipment, and their

The foreign investment is classified into five types and is as followings:

1) Foreign investment according to the acquisition of new shares, etc.

The participation in the establishment of a new entity (sole or joint) or in capital increase of domestic enterprises (including foreign-invested enterprises)

2) Foreign investment according to acquisition of existing shares

The acquisition of existing domestic shareholders of domestic corporations by a foreigner (or foreign-invested enterprise)

3) Foreign investment by long-term loan
When a foreign investment company’s 1) overseas parent company ii) foreign investor iii) a company with capital investment relationships with a foreign parent company iv) a company which has capital investment relationships with a foreign investor provide the loan for more than 5 years to the applicable foreign investment company, such a loan (based on the loan term specified in the first loan agreement) shall be constituted as a foreign investment.

4) Foreign investment by contribution on the non-profit corporation (enforced as of ‘07.10.28)

The contribution to the non-profit corporation in the field of science and technology, which is equipped with independent research facilities and correspond to the requirements prescribed by the Presidential Decree

• As Other areas than science and technology, the contribution to a non-profit corporation accepted by the foreign investment committee in accordance with standards prescribed by the Presidential Decree

5) Acquisition of shares due to the merger, etc.

• Where a foreign investor acquires stocks, etc. by transfer to capital from the reserve/ revaluation reserve, etc. of a foreign-invested company

• Where a foreign investor acquires stocks, etc. of a newly incorporated corporation or a surviving corporation after a merger, the all inclusive stock swap or transfer, or a company division with the stocks he/she is holding at the time of the relevant foreign-invested company’s merger, all-inclusive stock swap or transfer with another company, or a company division; Bequest • purchase • Where a foreigner has acquired stocks, etc. of a foreign-capital invested company registered in accordance with the provisions of Article 21 by means of purchase, inheritance, testamentary gift, or gift from a foreign investor;

• Where a foreign investor has acquired stocks, etc. by means of investing the proceeds from the stocks, etc. which were acquired under the laws of Korea; and
• Where a foreigner has acquired stocks, etc. using convertible bonds, exchangeable bonds, stock depositary receipts, and such other similar ones as may be converted into, available for the acceptance of, or exchanged for stocks, etc.

■ Target Business

– Manufacturing and logistics businesses which are run by the occupational companies stipulated in Act on Designation and Management of Free Trade Zones

– logistics business stipulated in the Act on Designation and Management of Free Trade Zones for Cultivation of International Logistics Base”

■ Investment requirements and size

– New plant facilities shall be installed and the foreign investment should be more than $ 10 million for manufacturing business and more than $ 5 million for logistics business.

– Corporate (Income) tax reduction: Full reduction of corporate tax equivalent to the equity of foreign investment for 3 years from the date of first income generation year (if note income is not generated within 5 years, the fiscal year of the day when 5 years are applied and 50% for the subsequent 2 years

<Previous occupied businesses in Masan and Iksan free trade zones>

The existing free export zones are considered to be designated as free trade zones (article w of Addenda of Free Trade Area Establishment Act) and are applicable to tax reduction and rents compared with complex type foreign investment districts (article 8 of Addenda of the Act).

– Accordingly, the foreign-invested company which moved into the free export zones gets the same tax reduction benefits.

O The foreign investment by acquisition of new shares, etc. means i) establishment of a new corporation either alone or as a joint venture or ii) participation in the capital increase of domestic enterprises including foreign-invested enterprises.

o Investment procedures

• A foreigner submit the report of foreign investment to a head office/ branch of a domestic bank or KOTRA (including domestic trade center or overseas 36 base trade centers) and receives a certificate of filing and
• after get a certificate of foreign currency purchase after receiving the foreign currency or get a certificate of like kind contribution completion after receiving the capital goods
• Register the incorporation to the district register through the support of a judicial scrivener or IK comprehensive administrative office
• Even before payment completion of investment object or calculation of acquisition amount for existing shares, the investment of more than 100 million won or 10%, the registration of invested company is possible (partial registration)

※ However, the foreign-invested enterprise which received the tax reduction decision before the commencement of business operations, should make an application for the business registration to the competent tax office within 30 days from the date of corporate foundation registration (It is recommended to register the business license before the customs clearance or agreement for the like kind investment or real estate acquisition)

※ Also in case of getting capital goods such as like-kind investment, etc., the application of business license should be made before the capital goods receipt and incorporation registration to get VAT deduction, and the business license may be applied to IK administrative support office.

O When the establishment of a factory is required, the license/ permit, filing and registration should be made but may be requested to the IK comprehensive administrative office.

■ The installation and the role of foreign investment promotion center

It is installed in the central administrative agencies, special cities, metropolitan cities, provinces, city, Gun and GU to encourage smooth processing of civil complaints for permission, license, approval, designation, filing, recommendation and discussion related with the foreign investment and to support foreign investment effectively by constructing the cooperative system between related authorities.

O Duties

– Encouragement and inspection of civil complaints

– Acting of preparation and submission of civil complaint documents related with the foreign investment

– Publication, attraction and support of the foreign investment

– Receipt, investigation and processing of civil complaints or suggestions of foreign investors or foreign-invested company

– Exchange of information, liaison and administrative cooperation with agencies related with the foreign investment

– Other various administrative supports related with the foreign investment

■ The installation and the role of the foreign investment attraction committee

It is installed in special cities, metropolitan cities, provinces, city, Gun and special self-governing province in order to deliberate on the following matters:

– Promotion, attraction and support plans for the foreign investment

– Discussion of processing for complaints of foreign investor or foreign-invested company

– Consultation on handling of civil affairs

– Other matters which are recognized to be necessary for the foreign investment attraction by mayors of special cities, metropolitan cities or governors of provinces special self-governing province 

O The foreign investment on non-profit corporation by contribution method is

– The contribution to a non-profit corporation which belongs to manpower/ facilities in the science and technology sectors or:

– In addition, the contribution to a non-profit corporation accepted by the foreign investment committee in accordance with article 27 of the Act as a contribution to a non-profit corporation

• The procedure is to submit the report of foreign investment to a head office/ branch of a domestic bank or KOTRA (including domestic trade center or overseas 36 base trade centers).

– Documents to be submitted

• 2 copies of the foreign investment report by the method of either acquisition of new shares or contribution
• A certificate of a foreigner’s nationality
  • In case of contribution to a non-profit corporation in short-term sectors, a document of proving independent research facilities and documents as followings:

① Employment of More than 5 dedicated research staffs with more than 3 years’ research careers with bachelor’s degrees, and with more than master’s degrees in SC sectors.
② Performance of R&D activities which accompany high technologies in accordance with article 16-1(1)2 of Enforcement Decree of the Restriction of Special Taxation Act

• In case of contribution to a non-profit corporation other than the short-term sectors, any document which the foreign investment committee accepts it belongs to following as below.

① Where a non-profit corporation established for academic, artistic, medical, and educational promotion performs the business for expert cultivation, expansion of international exchanges in the applicable area
② Where it is a regional headquarter of international organization which performs private or intergovernmental cooperative projects
– The application receipt agency should issue a certificate of filing on confirming the descriptions, omissions, enclosed, etc.

– In case of a new non-profit corporation, the license/ permit of competent administrative agency should be achieved.

– Accept getting a certificate of foreign currency purchase after getting the foreign currency capital or getting the confirmation of contribution completion in kind after getting the capital goods as like-kind:

– Register a non-profit corporation to a competent court registry through support of judicial scrivener or IK comprehensive administrative office

– The foreign-invested company registration should be made to a filing agency within 30 days from the completion date of contribution object.

PM (Project Manager) system is one which aims at supporting investment works of foreign investor or foreign-invested company and such a PM may be designated by foreign investor or foreign-invested company.

PM is the abbreviation of Project Manager for the investment advancement into Korea, who is an operator mediating between stakeholders and related agencies to implement related projects and providing solutions for problems, is an activity assistant providing materials requested by potential foreign investor and helping new or additional investment activities and performs following works.

– Collection, provision of materials or information requested by foreign investor or foreign-invested company and arrangement of meetings

– Suggestion of comments on foreign investment related support under article 9, 13, 14 and 14-2

– Acting of work support and civil complaints related foreign investment under provisions of article 15 and 17

– Matters related with life settlement support of foreign investor or officers and employees of foreign-invested company including housing lease, introduction of school entrance

– Other works related to the foreign investment

o The direct investment by acquisition of exiting shares, etc. is classified into the subject of filing or permission.

o While the acquisition of existing shares is subject to prior filing, but permit of share acquisition for the defense industry company is subject to the permit. However, in case of acquiring existing shares of listed companies or Kosdaq in accordance with the Securities Exchange Act (excluding companies of which share acquisition is restricted due to the nature of for the public corporation in accordance with article 199(2) of the Act or by individual laws), filing should be 30 days after acquisition and major procedures are as followings: made within

• A foreigner files directly or by an agent (with a power of attorney) to a head office/ branch of a domestic bank or KI and KOTRA (including domestic trade center or overseas 36 base trade centers).

– Documents to be submitted

• A copy of foreign investment report by the method of existing shares, etc.
• A document which can confirm the related party relationship between assigns when assigns are plural.
• A certificate of a foreigner’s nationality

– The application receipt agency should issue a certificate of filing on confirming the descriptions, omissions, enclosed, etc.

O In order to acquire the existing shares of defense industry, the permit of the Ministry of Knowledge and Economy should be achieved and the procedures are as followings:

– A foreigner should make an application directly or by an agent with a power of attorney to the Investment Policy Team, Ministry of Knowledge and Economy (TEL: 02-2110-5359).

– Documents to be submitted
• The application of foreign investment permission by acquisition of existing shares, etc.
• A document which can evidence the status of related party between assigns in case of plural assigns
• A certificate of nationality

– The processing period shall be 15 days (15 day extension available if unavoidable) and the Minister of Knowledge & Economy should give a notice after deciding the permission by discussion with the competent minister, the Minister of National Defense.