- 2010-09-09
UK Pre-Budget Report To Be Scrapped - 2010-09-08
EUR25bn In French Tax Breaks May Go - 2010-09-09
Europe Agrees Regulatory Reforms, But Not Taxes - 2010-09-07
Increased Case Load Challenges US Taxpayer Advocate - 2010-09-06
German Cabinet Agrees 'Future Package' - 2010-09-03
South Africa Rejects Mining Tax - 2010-09-06
Report Casts Doubt On Jersey Fiscal Strategy - 2010-09-06
Switzerland Adopts Administrative Assistance Ordinance - 2010-09-08
UK Launches National Insurance Holiday - 2010-09-08
Tax Credits Boosting Employment, Says US Govt - 2010-09-03
METI Sets Out Japanese Tax Reform Proposals - 2010-09-03
DIFC Announces Strong Growth In 2010 - 2010-09-08
Caribbean Intensifies Lobbying Against UK Air Tax - 2010-09-09
Panama Expands Tax Agreement Network - 2010-09-07
EU Business Slams China's Business Tax - 2010-09-06
Pakistan Looks At 'Flood' Taxes - 2010-09-07
S. Korea Improves Free Zone Incentives - 2010-09-03
Obama's Tax Reform Panel Issues Report
Tax News 17 : 2010-09-07
S. Korea Improves Free Zone Incentives
The South Korean government has decided to provide additional incentives to companies establishing operations in the country’s free economic zones (FEZs), as a final attempt to encourage investment there from foreign investors.
FEZs have been established in South Korea since 2003 as areas specially designated to provide companies with an optimal environment to engage in global business activities. They were established as part of an official aim to promote South Korea as a North-east Asian business hub.
Amongst their other benefits, tax incentives have been offered to foreign investments of at least USD10m in the manufacturing and tourism sectors; USD5m in logistics and medical services; and USD30m in research and development.
In addition, foreign investors are 100% exempt from corporate taxation, as well as acquisition, registration and property tax, for five years, and 50% for the next two years. There is also a three-year exemption from tariffs on imported capital goods, and a 30% reduction in income tax, or a flat rate of 17%, for foreign workers and executives.
However, it is reported that the country’s six FEZs, the last three of which were set up in 2008, have seen total foreign investments, so far, of little more than USD2.7bn, although the government is said to have spent tens of bilions of dollars on their establishment. The FEZs have therefore only attracted 3.7% of foreign investments made in South Korea between 2004 and the first half of 2010.
While there will be new incentives to improve that situation, the government is only prepared to provide benefits to each FEZ for a further three years, unless substantial progress is shown in attracting investments. Public support for each FEZ thereafter will be provided in proportion to the success it has demonstrated.
Foreign investors will, in the future, be able to lease up to 10% of the land in each FEZ for up to 50 years, with reduced rentals being available, the extent of which will depend on the level of investment made. The tax benefits will now also be available to foreign engineering and IT businesses.