It is possible to receive tax benefits for high-tech businesses regardless of their location.
FAQ-Category: Investment Attraction
Investment Attraction
Can a foreign-invested company borrow a short-term loan from overseas of less than one year?
A foreign-invested companies in the general manufacturing or high-technology sectors are allowed to borrow short-term loans of less than one year within the range of a certain fixed amount. If the foreign-invested company is a general manufacturing company, it can borrow a short-term loan within 50% of the amount of foreign investment. If the foreign-invested company conducts high-technology business, it can borrow a short-term loan within 100% of the amount of foreign investment. However, if the foreign-invested company has a foreign investment ratio of less than one third, the range of the loan is 75% of the amount of foreign investment.
When foreign invested company tries to make a payment by foreign capital loan even if it reserves foreign capital as Won, is it to possible for the foreign capital loan to be exempted?
It is unreasonable that a foreign invested company that reserve investment as won tries to exchange won to foreign currency to make a payment even though it has foreign currency from loan or business activities in order to receive custom exemption, and it is impossible to examine the origin of money when invested fund and other fund are deposited and withdrew in the same account.
Therefore, even though a foreign invested company makes a payment by additional foreign capital, if the company secures initial investment invested from foreign investors and the payment is in the rage of investment from the foreign investors and it is declared within three years from the date of FDI notification under the Customs Act, it is reasonable to be exempted from duties.
If a foreign investor wants to import a car as for business purpose, is it possible to get customs duty exemption?
In case of a foreign invested company receives a car as investment in kind from a foreign investor, or imports a car with invested fund in order to use it for the business eligible for tax deduction, customs duty can be exempted.
What are the areas where foreign investment is limited or restricted?
• According to the Korea Standard Industrial Classification (KSIC), there are a total of 1,121 sectors, of which 63 sectors are FDI-restricted businesses such as in public administration, diplomatic affairs and national defense. A total of 1,058 sectors are open to FDI, of which 1,056 sectors are partially or fully open to foreign investment. This is a 99.8% liberalization rate for foreign investment, on a level comparable to that of developed member countries of the OECD.
– Fully open: 1,030 sectors;
– Partially open: 26 sectors (foreign investment is possible if certain criteria are met);
– Closed: Two sectors (radio and broadcasting as of June 2004).
Is it possible to get reduction on rental of national/government properties even for the businesses not employing high technologies?
♦ It is possible to get a reduction on rental of national or government properties even for businesses that does not employ the high-technology or industry-supporting service
♦ It is possible to receive 100% or 75% reduction, if the foreign-invested company conducts one of the following businesses on the leased land, which is located in foreign investment zones or foreign exclusive industrial complexes:
• Business conducted by the foreign-invested company in a foreign investment zone (100%);
• business subject to tax reduction and FDI of more than US$1 million (100%);
• business of the manufacturing sector and FDI of more than US $5 mil. (75%);
• business defined by the Foreign Investment Committee (75%).
♦ Foreign-invested companies leasing land located in the national industrial complexes, local industrial complexes, city high-tech industrial complexes, and agricultural technology complexes are eligible for 50% reduction.
A foreign investor has acquired all stocks from a company, but paid only partially. If the investor applies for a partial foreign-invested company, what is the investme
The amount actually paid is the investment amount and the ratio is the investment amount to the total amount.
The first year since the start of a business eligible for tax deduction brought only interest from deposited money. Profit was made in the second year. So when would be the day of reckoning for tax deduction?
The interest of the first business year is not subject to tax deduction. Only the profits made in the second year will be eligible for tax deduction.
Where to register the business, if the headquarters is in Seoul and the factory or sales office is established in the province?
According to the value-added tax law, business registration has to be conducted for each business location, that is, business registration has to be made for the headquarters, factory and sales office respectively.
A foreign investor makes an investment of over US$100 million and establishes a new factory. If the business is designated to a foreign investment zone, although it is not a high-tech business, is it possible to receive tax benefits?
It is possible to receive tax deductions even if it not a high-tech business. The conditions are that the foreign investor has to invest more than the minimum amount of investment and get the permission for designation as a foreign-investment zone from the foreign investment commission and the governor from the province or city for the establishment of the factory. If the decision is positive, then the investor can receive tax benefits.For reference, the minimum investment amount for the manufacturing sector is US$30 million, for tourism and hotels US$20 million, for distribution and logistics US$10 million and for high-tech and R&D facilities US$50 million.
