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Comparison with Domestic Programs

Description Free Economic Zone Foreign Investment Zone Free Trade Zone
Complex Type Individual Type Industrial Complex Type Airport, Seaport, Logistic Type
Legal Basis Article 4 of Special Act on Designation and operation of Free Economic Zone Article 18 of Foreign Investment Promotion Act Article 14 of Act on Designation and Operation of Free Trade Zone
Purpose of Designation Foreign investment attraction, reinforcement of national competitiveness, balanced regional development Foreign investment attraction, advanced technology transfer, job creatino Foreign investment attraction, trade promotion, regional development Foreign investment attraction, international logistic base fostering
Designated Location Regions around international airport, seaport Within industrial complex No restriction Regions around the seaport and airport, industrial complex Seaport, airport, logistic complex, cargo terminal, etc
Regional characteristics Special administrative district (combined with autonomous organization)* 20 -60 million pyeong Rental complex operation basis Designate the individual business site unit Duty-free area
Authority Ministry of Industry, Trade and Resources Major, provincial governor
* Review of foreign investment council
Ministry of Industry, Trade and Resources
Eligibility •Foreign investment company
• Manufacturing, logistic medical institution, educational institution, foreign broadcasting organization, financial institution, etc
• Foreign investment equity of 30% or more
• Foreign investment amount of 0.1 billion won or more
• Foreign investment equity of 10% or more
• Foreign investment amount of 0.1 billion won or more
• Export-oriented domestic and foreign companies
• Foreign investment company
• Export- import-oriented wholesale business
• Businesses related to complex logistic
Requirement for tax reduction • Manufacturing, tourism: $10 million or more
• Logistic, medical institution: $5 million or more
• Manufacturing: $10 million or more
• Logistic business: $5 million or more
• Manufacturing: $30 million or more
• tourism: $20 million or more
• Logistic business: $10 million or more
• R&D : $2 million or more(3 years, master drgree, 10 persons)
Same as complex type foregin investment zone
Tax subject to reduction • Corporation tax, income tax: 5 years(When meeting the individual type of foreign investment condition: 7 years)
• Local tax: Within 15 years
• Corporation tax, income tax: 5 years
• Local tax: Within 15 years
• Corporation tax, income tax: 7 years
• Local tax: Within 15 years
• Corporation tax, income tax: 5-years: (100% for 3 years, 50% for 2 years)
• Local tax: Adjustble within 15 years by the ordinance
Incase of industry support service business and the business accompanied with advanced technology, regardless of region
Reduce corporation tax and income tax for 7 years (100% for 5 years, 50% for 2 years)
Duty Reduction Capital goods: Exonerate for 5 years Capital goods: Exonerate for 5 years Retain the duty
Rent 1% level of land price(Determined by administration office) 1% level of land price(to be announced by Ministry of Knowledge Economy) Reduced 100% in case of government owned land 1% level of land price(Determined by the suthority after discussing with Ministry of Strategy and Finance)
Rent Reduction Determined by the administration office according to the ordinance, etc. (50% ~ 100%) • Advanced technology and more than $1 million: 100%
• General manufacturing and more than %5 million: 75%
For foreign investment and more than $10 million, for 30% of foreign investment and more than $1 million, for advanced technology and more than $400,000: 100% of land rent
Distribution of support Sharing rate: to be determined • Capital region: National 40%, local government 60%
• Non-capital region: national 75%, local government 25%
Sharing rate of the land purchase shall be determined in the stage of designation
Distribution of support Sharing rate: to be determined • Capital region: National 40%, local government 60%
• Non-capital region: national 75%, local government
Sharing rate of the land purchase shall be determined in the stage of designation
Distribution of support Sharing rate: to be determined • Capital region: National 40%, local government 60%
• Non-capital region: national 75%, local government 25%
Sharing rate of the land purchase shall be determined in the stage of designation
Remark Additional Designation (May 06, 2008) • Unified (Dec 31, 2004)
• Amended Foreign Investment Promotion Act
• ※ Before the unification, the complex type was 「Exclusive complex for foreign companies」by Act on Vitalization of Industrial Cluster and factory Foundation
• Unified (Jun 23, 2004)
• Amended Act on Designation and Operation of Free Trade Zone (Mar 22, 2004)
Designation Status Total 8 zonesIncheon, Busan (Jinhae), Gwangyang, Jeonbuk (Saemangeum, Gunsan), Daegu-Gyeongbuk (Gumi, Gyeongsan, Youngcheon,Hwanghae(Pyeongtaek, Dangjin),Gangwon(April, 2013),Chungbuk (May, 2013) • Complex Type(18): Cheonan, Ohchang, ZInju, Gumi1·2,Pyeongdong, Daebul, JIsa, Jangan1, 2, Dangdong, Sacheon, Osong, Dalseong, Oseong, Pohang, Changwon, Mieum
• Individual Type (60) : S-LCD, Asahi, Choja, etc
• Industrial complex type(8): Masan, Gunsan, Daebul, Iksan, Donghae, Yulchon, Ulsan, Gimje
• Airport (1) : Incheon International Airport
• Seaport (5): Incheon, Busan, Gwangyang, Pohang, Dangjin

Major Special Districts Overseas

해외주요특구
Section FEZ Singapore Pudong, Shanghai, China Shenzhen, China Hong Kong Dubai
Operation Incheon, Busan Jinhae, Gwangyang, Saemangeum, Daegu-Gyeongbuk, Yellow Sea Nationwide
(No separate special zone)
Nationwide
(No separate special zone)
Shenzhen Special Zone
(Designated in '79)
Nationwide
(No separate special zone)
Free trade zone
Tenant Requirements Does not discriminate between domestic and foreign Does not discriminate between domestic and foreign Does not discriminate between domestic and foreign Does not discriminate between domestic and foreign Does not discriminate between domestic and foreign Does not discriminate between domestic and foreign
Corporate Tax Rate 22%
(25% in '09→22% in '10)
18%
(20% in '07→18% in '08)
25% 16.5% 0%
Tax Cuts When investing over a certain amount, corporate tax cut by 100% for 3 years and 50% for 2 years
* Large-scale investments: 7 year tax cut
Depending on case, determine tax cut period and rate flexibly
(corporate and income tax exemption for up to 15 years)
Advanced technology industries: 15%
Within special zone: 2 years 100%,
3 years 50%
- No import customs
No corporate taxes
Subject to Tax Cuts Foreign invested companies Foreign invested companies Domestic and foreign companies   Domestic and foreign companies Domestic and foreign companies
Businesses subject to Tax Cuts Manufacturing, Tourism, Logistics, Medical Advanced Technologies, R&D, Finance, Multi-national company operations base Advanced technology businesses   - All businesses
Remarks - Domestic companies: Diverse financial support Transition period preference policies for companies that received tax cuts before 2007: gradually adjust tax rates until 2012 Preference policies per sector: Advanced technology new company financial support, etc -