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South Korea in bid to increase its Free Economic Zones

South Korea in bid to increase its Free Economic Zones

SEOUL: The Ministry of Energy, Trade and Industry has disclosed that South Korea is involved in a push to increase by using their tax and tariff exemptions, the attractiveness of its eight free economic zones (FEZs) for foreign direct investment (FDI).

Possible extensions of those exemption periods may also be granted. Foreign investments in FEZs are able to receive such incentives as 100 percent national corporate tax and local property tax exemptions for three years from the generation of operating revenues, and 50 percent for two more years thereafter and a 100 percent tariff exemption for five years on imported capital goods.

Foreign employees and executives working in those investments will be given tax benefits. They may elect to receive either a 30 percent tax exemption on total salary income or a fixed 17 percent income tax rate.

Further it has been indicated that the FEZs will be further deregulated, and will, in the future, operate on the basis of a negative list of investments for FDI purposes.

As part of an official aim to promote South Korea as a Northeast Asian business hub, it is hoped to counteract the new economic zones being established in Taiwan and China. The objective of the Government’s action is to provide companies with an optimal environment to engage in global business activities from the FEZs.