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Investment Support System

We introduce materials which give help to investment related to tourism investment.
Main Investment Support System Investment Support By Project Free Economic Zone

Free Economic Zone

Introduction

Free Economic Zone means a zone developed with the aim of improving the business environment for foreign-invested enterprises and living conditions for foreigners to facilitate foreign investment, strengthen national competitiveness, and seek balanced development among regions by improving the business environment for foreign-invested enterprises and living conditions under Articles 1 and 2 of the Special Act on Designation and Management of Free Economic Zone.

Free Economic Zone shall guarantee favorable tax treatment, deregulation, conviviality, and the simplification of administrative processes for the business freedom.


Free Economic Zone shall promote the agglomeration of global enterprises along with the establishment of economic and social system to satisfy global standards and a wide range of incentives.

Free Economic Zone is different from Foreign Investment Zone in terms of the following matters.

Free Economic Zone is bigger than basic local governments.

A Mayor/Governor may partially delegate or entrust his/her authority to the commissioner of a free economic zone authority, as prescribed by Presidential Decree.

The provisions on special cases concerning restriction on the establishment of foreign educational and medical institutions in the free economic zones in order to create an environment for foreigners.

Designation Criterion

Where a Mayor/Governor may request the Minister of Trade, Industry and Energy to designate a free economic zone, the Minister of Trade, Industry and Energy shall finalize the development plan for a free economic zone and designate a free economic zone after deliberation and resolution of the Free Economic Zone Committee.

Where the Minister of Trade, Industry and Energy deems it necessary to develop a free economic zone, he/she may devise a development plan for such free economic zone and designate such zone as a free economic zone after obtaining consent from the competent Mayor/Governor and undergoing deliberation and resolution of the Free Economic Zone Committee.

Requirements for Designation of Free Economic Zones

Conformity to the master plan for free economic zones

Feasibility of securing the demand of Korean or foreign enterprises to move in

Feasibility of securing or connecting to an environment for settlement of foreigners

Feasibility of securing sites and infrastructure necessary for the development of a free economic zone, such as Metropolitan transport networks, information and communications networks, water supply, electricity, etc.

Economic feasibility of the development of a free economic zone

Feasibility of a financing plan, such as financial burden borne by a local government, methods of attracting private capital, etc.

Other requirements, such as securing professionals, sustainable development, etc.

To be easy to secure professional human resources required for a plan for attracting industries under Article 6 (1) 9 of the Act, such as infrastructure for transportation and communications, and living conditions, etc.

To ensure sustainable development that does not waste resources including economy, society, environment, etc. for the future generation, or undermine conditions

To be equipped with professional human resources and organizations in charge of developing the relevant free economic zone and attracting foreign investment

Other matters publicly announced by the Minister of Trade, Industry and Energy after undergoing deliberation by the Committee.

Source : Article 5 of the Special Act on Designation and Management of Free Economic Zone; Article 4 of the Enforcement Decree of the Act

Investment Incentives

If a person who intends to invest at least 10 million USD and engage in tourism prescribed in the Tourism Promotion Act in a free economic zone, he/she shall be granted investment incentives such as tax/charges reductions or exemptions, support services, improved living conditions, etc.

Free economic zones in major distinction between investment incentives ( tax breaks , funding , improving the business environment , living environment improvement , up casino license, the licensing support) , support information , based on a table of beomryeong
Incentives Related Laws
Tax Reductions or Exemptions Committee Review Business Investor with more than 20 million dollars1) National tax2) Customs3) 100%/5 yrs.
  • Article 121-2 (1) 2, (4) and (5) and 121-3 of the Restriction of Special Taxation Act
  • Article 116-2 (3) 2 of the Enforcement Decree of the above Act
corporate tax / income tax 7 yrs. (100%/5 yrs & 50%/2 yrs.)
Local tax4) Acquisition tax / property tax 7 yrs. (100%/5 yrs & 50%/2 yrs.)
A corporate that shall move into the zones and invest at least 10 million USD National tax Customs 100%/5 yrs.
  • Article 116-2 (5) 2 of the above Act
corporate tax / income tax 5 yrs. (100%/3 yrs & 50%/2 yrs.)
Local tax Acquisition tax / property tax 5 yrs. (100%/3 yrs & 50%/2 yrs.)
An operator of a development project who shall invest at least 30 million USD or 50 percent or the total cost is at least 500 million USD National tax Customs 5 years 100%
  • Article 116-2 (6) of the above Act
corporate tax / income tax 5 yrs. (100%/3 yrs & 50%/2 yrs.)
Local tax Acquisition tax / property tax 5 yrs. (100%/3 yrs & 50%/2 yrs.)
Financial Support
  • Any local government may grant the reduction of or exemption from the rent for land, etc., installing and operating medical, educational, and research facilities, and building houses for foreigners with the aim of attracting foreign-invested enterprises.
  • The State and local governments may grant a foreign-invested enterprise located in any free economic zone the reduction of or exemption from rent for national or public property.
  • Articles 16 (2) and (4), and 18 of the Special Act on Designation and Management of Free Economic Zones
Improvement of Management Conditions
  • In order to prevent overconcentration, in the Seoul Metropolitan area, of factories, schools, etc., the Minister of Land, Transport and Maritime Affairs may set a total permissible quantity of installations and extensions, and restrict any installation or extension which exceeds such quantity. The total quantity regulations shall not apply to any foreign-invested enterprise located in a free economic zone.
  • Business proprietors’ obligation to employ persons of distinguished service to the State and persons with disabilities shall not apply to any foreign-invested enterprise located in a free economic zone.
  • A foreign-invested enterprise located in a free economic zone may provide unpaid leave to its employees.
  • The Minister of Employment and Labor may expand the work of temporary agency workers or extend their working period.
  • Article 17 of the above Act
Improvement of Living Conditions
  • A foreign educational foundation may establish a foreign educational institution in a free economic zone, including elementary school, middle school, high school, and college.
  • A foreigner may open a foreign medical institution in a free economic zone.
  • Any development project operator shall supply construction sites for houses that account for 1/100 to 10/100 of the total number of houses to be supplied in the relevant project district unit for the sites for constructing rental houses for foreigners.
  • Articles 22, 23, and 24-2 of the above Act
Permission for Casino Business
  • the Minister of Culture, Sports and Tourism may grant permission to engage in casino business if a person invests at least 500 million USD in tourism business within a free economic zone.
  • Article 23 (3) of the above Act
Approval Support
  • Where a development project operator obtains approval for an implementation plan or a modification, he/she shall be deemed to have obtained any of the following permission, authorization, designation or approval, to have held consultations, or to have reported, etc.
  • When it is necessary for implementing a development project, any development project operator may expropriate or use land, goods, or rights.
  • Articles 11 and 13 of the above Act

1) Tourist hotel, floating tourist hotel, traditional Korean hotel, specialized resort, general resort complex,
  general amusement complex, international conference facilities, tourist condominium, youth training facilities, etc.
2) Where the sum of the income tax or corporate tax reduction or exemption exceeds the sum of the following amounts, the ceiling on
  the tax reduction or exemption shall be such sum:
   a) A ceiling based on the amount of investment under the following classifications:
     (1) 70 percent of the cumulative foreign investments for corporations that move into the zone;
     (2) 50 percent of the cumulative foreign investments for operators of a development project;
   b) A ceiling based on employment which is the lesser between the following amounts:
     (1) Number of workers at ordinary times in the relevant taxable year × ten million KRW;
     (2) 20 percent of the cumulative foreign investments.
3) No customs duty, individual consumption tax, and value-added tax shall be levied on up to 15 years under Article 121-2 (3) of the Restriction of
  Special Taxation Act.
4) Some local governments grant longer reduction or exemptions periods up to 15 years by their ordinance.