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South Korea To Expand Tax Benefits For Foreign Invested Firms

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

03 September 2007


In a statement issued on August 20, the South Korean government said that it will expand certain tax benefits for foreign invested companies operating in its economic free zones.

In an economic free zone committee meeting, presided over by Deputy Prime Minister and Minister of Finance and Economy Kwon O kyu, the government decided to extend its tax exemption period on some foreign-invested companies in the country's economic free zones to five years from the current three years, with the aim of attracting more foreign investment.

After the period expires, the companies will receive a 50% tax reduction for two more years.

The new rule will be applied to companies in the country's economic free zones that have attracted large-scale foreign investment.

Manufacturers must have attracted at least $30 million worth of foreign investment to receive the benefit, while tourism businesses should have received at least $20 million.

For logistics companies, the minimum requirement has been set at $10 million.

The government also plans to add research and development businesses as beneficiaries of the tax exemption measures, in order to attract more research centers.

In addition, the government plans to select two to three more regions as new economic free zones over the course of the year.

A comprehensive report in our Intelligence Report series looking at Tax-Effective Global Manufacturing and Financing Structures is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report8.asp

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