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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 Foreign Investment Zone
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Foreign Investment Zone

Introduction

A foreigner investment zone is designated to facilitate foreign investment, and provides various investment incentives for moving-in companies in the zone.

It is categorized into complex-type, individual-type, R&D-type, and service-type, which vary in terms of the designation requirements, occupancy requirements and limitations and investment incentives.

The individual-type and service-type foreign investment zone allows the development of tourism business such as tourist hotel, general resort complex, etc. prescribed in the Tourism Promotion Act.


Foreigner Investment Region
Categories of Foreign Investment Zone
Categories of Foreign Investment Zone
Complex-type
  • The exclusive zone designated for the purpose of leasing or transferring land therein to foreign capital invested companies among national industrial complexes.
Individual-type
  • The zone in which investment conditions such as incentives are customized to attract large-scale foreign investment.
R&D-type
  • The exclusive zone designated to be lent or transferred to foreign-capital invested companies that carry out research and development, such as special research and development zones.
Service-type
  • The zone (including buildings) designated after consultation with the head of a relevant central administrative agency to be lent or transferred to foreign-capital invested companies that carry out service business of high added value, including tourism business prescribed in the Article 2 (1) except for casino business.

Source : The Foreign Investment Promotion Act.

Characteristics by Foreign Investment Zone
Characteristics by Foreign Investment Zone
Related Laws Location Main Business Residency
Complex-type Article 18 (1) 1 of the Foreign Investment Promotion Act In the industry complex Manufacturing Two or more investors can move into the zones, but it is allowed only to foreign companies.
Individual-type Article 18 (1) 2 of the above Act In the area an investor prefers, that will be a business. Manufacturing, tourism, distribution, etc. Only one foreign company can move into the zones.
R&D-type Article 18 (1) 3 of the above Act In the area prescribed by the Enforcement Decree of the Act R&D Two or more investors can move into the zones, but it is allowed only to foreign companies.
Service-type Article 18 (1) 4 of the above Act Designating Site Business such as finance, culture, tourism, etc. prescribed by the Enforcement Decree of the Act Two or more investors can move into the zones, regardless of domestic or foreign companies.

Source : Ministry of Trade, Industry and Energy Invest Korea (2014). Support Systems of Location and Approval/Permission for Foreign Investment

Tourism Business in Foreign Investment Zone

Tourism Business in Individual-type Foreign Investment Zone

A zone may be designated as the foreign investment zone for tourism business after undergoing deliberation by the Foreign Investment Committee.

Designation Criteria of Individual-type Foreign Investment for Tourism Business
Designation Criteria of Individual-type Foreign Investment for Tourism Business
CritRequirementserion
Tourism
  • At least 20 million USD of foreign investment
  • [Enforcement Decree of Tourism Promotion Act] Tourist hotel, floating tourist hotel, traditional Korean hotel, specialized resort, general resort complex, and general amusement complex
  • [International Conference Industry Promotion Act] International conference facilities
  • [Restriction of Special Taxation Act] Industrial support service
  • [Juvenile Activity Promotion Act] Youth training facilities
※ A person may apply for designation of an investment zone after obtaining approval for a business
  plan under the Tourism Promotion Act.

Source : Article 25 (1) of the Enforcement Decree of the Foreign In vestment Promotion Act; Ministry of Trade, Industry and Energy Invest Korea (2014). Support Systems of Location and Approval/Permission for Foreign Investment.

Tourism Business in Service-type Foreign Investment Zone

A foreign investor or a foreign-invested company that already effected the registration of a foreign-invested company shall qualify for moving in a foreign investment zone if he/she or it invested at least 100 million KRW or own at least a 30 percent stake of foreign investments.

Less than 50 percents of an entire foreign investment zone shall be occupied by domestic corporations, but they cannot apply for exemption on rental charges.

Main Tourism Businesses for Service-type Foreign Investment Zone
Main Tourism Businesses for Service-type Foreign Investment Zone
Main Businesses Related Laws
Recreational condominium, tourist hotel, floating tourist hotel, traditional Korean hotel, family hotel, hostel, specialized resort, general resort complex, general amusement complex, tourist excursion ship, international conference facilities, youth training facilities Article 25 (3), (4), and (5) of the Enforcement Decree of the Foreign Investment Promotion Act

Investment Incentives

A investor who invests in tourism business in a foreign investment zone shall have various incentives such as favorable location, tax/rental charges reductions or exemptions, etc.

Incentives for Individual-type Foreign Investment Zone
Incentives for Individual-type Foreign Investment Zone
Incentives Related Laws
Purchase of Land Where the State is requested to provide funds for the purchase of land to be leased to any foreign-invested company, it shall pay 40 percent of the purchase price (local government: 60%) for the purchase of land in the capital area, while paying 75 percent (local government: 25%) for the purchase of land outside the capital area.
  • Article 14 (1) of the Foreign Investment Promotion Act
Tax Reductions or Exemptions
National tax Customs1) 100%/3 yrs.
Corporate tax / income tax 7 yrs. (100%/5 yrs. & 50%/2 yrs.)
Local tax2) Acquisition tax / property tax 7 yrs. (100%/5 yrs. & 50%/2 yrs.)
  • Article 9 of the Foreign Investment Promotion Act
  • Article 121-2 and 121-3 of the Restriction of Special Taxation Act
  • Article 116-2 of the Enforcement Decree of the Restriction of Special Taxation Act
Rental Charges for State and Public-owned Land
  • 100 percent of rental charges for land owned by the State or a local government shall be exempted up to 50 years.
  • The types of businesses eligible for reduction of or exemption from the rental charges for land owned by a local government and the reduction or exemption rate shall be determined by ordinance of a local government, and the period of reduction or exemption shall be up to 50 years.
  • Article 13 of the Foreign Investment Promotion Act
  • Article 19 of the Enforcement Decree of the above Act
Support for Infrastructure
  • With respect to providing support for infrastructure, such as harbors, roads, water-supply facilities, railways, communications, and electric facilities.
  • Article 19 of the Foreign Investment Promotion Act
Charges Exemptions
  • With respect to the construction of facilities, etc. in a foreign investment zone, the traffic generation charge shall be exempted.
  • Article 19 (2) of the Foreign Investment Promotion Act
Support for Foreign Investment Promotion Activities
  • Where a local government requests the State to provide funds necessary for the formation of a foreign investment zone, loan for the purchase of land to be leased to any foreign-invested company, reduction or exemption of the rental payments of land, reduction of lot prices, payment of various kinds of subsidies, such as the education and training subsidy, and other foreign investment inducement projects, the State shall provide such funds to the maximum extent possible.
  • Article 14 of the above Act
  • Article 20-2 of the Enforcement Decree of the above Act

1) Imported capital goods
2) Some local governments grant longer reduction or exemptions periods up to 15 years by their ordinance.

Incentives for Service-type Foreign Investment Zone
Incentives for Service-type Foreign Investment Zone
Incentives Related Laws
Rental Charges for Land The rental charges for land shall be the amount computed by multiplying the value of land by the rate of at least 10/1,000, but at least 50/1,000 in case of failure to meet residency requirements.
  • Article 13 of the Foreign Investment Promotion Act
Rental Charges for Building Where buildings in a foreign investment zone are not owned by the State or publicly owned pourparty, 50 percent of rental charges for the relevant building shall be funded.
  • Article 19 of the Enforcement Decree of the above Act
Financial Support With respect to the rent of land or buildings to be leased to any foreign-invested company, 50 percent of rental charges shall be funded, and the State shall pay 40 percent of the rental charges (local government: 60%) for the rent of land or buildings in the capital area, while paying 75 percent (local government: 25%) for the rent of land or buildings outside the capital area.