South Korea Plans Tax Incentives For Sejong City

by Mary Swire, Tax-News.com, Hong Kong

06 January 2010

The task force appointed by the South Korean government has concluded its studies for the development of Sejong City. Their recommendations include tax incentives and subsidies for businesses relocating to the new city.

When it was first proposed in 2007, Sejong City, to be situated about 130km south of Seoul, was originally designated to be a special administrative district, to which would be relocated nine ministries and four public agencies.

Last year that idea was rejected, and a subsequent plan has been formulated without the participation of public offices. It is now envisaged that companies and educational establishments will be encouraged to develop Sejong as an international science and business-based city instead.

It is proposed that companies and universities that agree to establish operations in Sejong be offered discounts on land prices, tax incentives and government subsidies.

The plan is to offer zero corporate income taxes for the first three years, and a 50% reduction for the next two years, for technology-based companies in the new city. There will also be an exemption from other taxes, such as property taxes, for 15 years.

In addition to the cheaper land prices within the new city, government subsidies for companies moving out of Seoul to Sejong could cover part of construction costs and other investment, employment and training expenses.

The task force is to present its conclusions to President Lee Myung-bak, before the final revised plan is disclosed shortly.

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