• target group		tax type				period/rate		requirements (investment amount, etc.)
  Industrial-supporting service & high-tech industries		National tax		tariff, special consumption tax, value added tax 100% for the first 3 years imported capital goods used for projects eligible for corporate & income tax reduction		100% for the first 3 years		imported capital goods used for projects eligible for corporate & income tax reduction
  				corporate tax income tax		100% for the first 5 years & 50% for the next 2 years (for a transferred business, 100% for the first 3 years & 30% for the next 2 years)		No requirement of investment amount
  		Regional tax		acquisition tax registration tax and property tax		100% for the first 10 years & 50% for the next 3 years (for a transferred business, 100% for the first 7 years & 30% for the next 3 years)
  Tenant companies in the Foreigners Investment Area		National tax		tariff special consumption tax value added tax		100% for the first 3 years		imported capital goods used for projects eligible for corporate & income tax reduction
  				corporate tax income tax		100% for the first 5 years & 50% for the next 2 years		Manufacturing : USD 30 million or more Tourism : USD 20 million or more Logistics / SOC : USD 10 million or more R&D facilities :USD 5 million (with 10 or more researchers with masters degree)
  		Regional tax		Acquisition tax registration tax and property tax		100% for the first 10 years & 50% for the next 3 years
  Tenant companies in the Free Economic Zone		National tax		tariff special consumption tax value added tax		100% for the first 3 years		imported capital goods used for projects eligible for corporate & income tax reduction
  				corporate tax income tax		100% for the first 5 years & 50% for the next 2 years		Manufacturing : USD 10 million or more Tourism : USD 10 million or more Logistics / SOC : USD 5 million or more
  		Regional tax		acquisition tax registration tax and property tax		100% for the first 10 years & 50% for the next 3 years
  Project developer in the Free Econominc Zone (developer on the tum-key base)		National tax		tariff special consumption tax value added tax		100% for the first 3 years		Project worth USD 30 million or more or a project of tofal development cost at USD 500 million or more
  				corporate tax income tax		100% for the first 5 years & 50% for the next 2 years
  		Regional tax		acquisition tax registration tax and property tax		100% for the first 10 years & 50% for the next 3 years
  Free Trade Zone(at Incheon In'tl Airport (incheon international airport)		National tax		tariff special consumption tax value added tax		100% for the first 3 years		imported capital goods used for projects eligible for corporate & income tax reduction
  				corporate tax income tax		5 years & 50% for the next 2 years		Manufacturing : USD 10 million or more Logistics / SOC : USD 5 million or more
  		Regional tax		acquisition tax registration tax and property tax		100% for the first 10 years & 50% for the next 3 years

support for technology introduction

• Classification		Major Facts
  Tax reduction on royalties		- Corporate or income tax exemption is provided for the royalties that the licensor is paid when a Korean national introduces technology in the high-tech industries form a foreign country on a license contract
  Tariff reduction		- Tariff reduction applies to capital goods directly used for a project which is eligible for corporate or income tax reduction and imported according to the notifecation of the investment by acquiring newly issued stock - Specifically, tariff, special excise tax, and/or value-added tax are exempted.

Tax Incentives for Dividends ofForeign Investors

• Eligible Business		Tax for Reduction				Remarks
  1. Industrial-supporting service and high- tech industries 2. Industrial-supporting service and high- tech industries (investment by business transfer method) 3. Business operated by foreign investment company entered into separately-specified foreign investment area 4. Business operated by foreign investment company located iin free economic zone 5. Business operated by foreign investment company that is free economic zone contractor of development ptoject 6. Business of companies located in free trade area (incheon international airport)		National tax		Tax Preference for Earned Incheon of Foreign Workers		Reduction applies to a foreign- invested company in proportion to the share of income earned by conducting a business eligible for corporate and income tax reduction The period and rate of corporate and income tax reduction on dividends is the same as those applied to the foreign-invested company conducting an eligible business

Tax Preference for Earned Incheon of Foreign Workers

• Eligibility				Tax Preference		Beneficiary		Requirement for Tax Reduction
  Taxation on a foreign worker's earned income(1. applies in principle, but 2. canalso be applied upon application)		1.Tax-exemption foreign workers (Clause 1, Restriction of Tax Reduction and Exemption Act)		Tax exemption on 30% of earned income		Foreign executives/ employees (part-time workers are excluded)		Calculated tax amount =[earned income -(earned income X 30%) - tax free pay deductions] X basic tax rate (8~35%)
  		2.Special taxation for tax amount of foreign workers(Clause 2, Restriction of Tax Reduction and Exemption Act)		separate taxtation on 15% of earned income upon application of aflat tax rate		Foreign executives/ employees (part-time workers are excluded)		Calculated tax amount = earned income X 15% It excludes tax reduction/exemption by the Income Tax Act and the Restriction of Tax Reduction and Exemption Act. Including tax-free earned income

Taxation on Income of Foreigners

• Eligibility for Tax Reduction				Reduction Period/Rate or Tax Preference		Requirement for Reduction		Remarks
  Tax preference under the Restriction of Tax Reduction and Exemption Act (Article 18)		Qualified foreign workers		Exemption for 5 years from the first day of work (applies until Dec. 31, 2006)		Scope of foreign workers: Article 16, Enforcement Decree of the Restriction of Tax Reduction and Exemption ACT Income eligible for exemption: - Earned income (Class A & B) - Bonus from surplus disposal - Disposed constructive bonus by the Corporate Tax Act - Excludes retirement income		Bonus on which a resolution is made after the period of reduction is excluded from the benefit
  		Foreign workers by a technology introduction agreement under the FIPA		Exemption for 5 years form the date of issuance of the certificate of the notification on technology introduction		Income eligible for exemption: - Earned income (Class A & B) - Bonus from surplus disposal - Disposed constructive bonus by the Corporate Tax Act - Excludes retirement income		Applies only to cases where income and corporate taxes are exempted for compensation for technology introduction
  Special Taxation by International Conventions				Exemption		- Foreign faculty members or empolyees of a foreign govemment - Earned income		- Most tax agreements dictate tax exemption
  Tax preference under the Income Tax Act (Article 13)		Tax exemption on earned income		Exemption		Employees of a foreign government or international organization Non-Korean nationals Compensation for conducting business of such jobs as above		Principle of reciprocity
  		Reduction of Income tax		Reduction		Earned income of foreigners dispatched according to inter-governmental agreement Business income from overseas business of airlines or vessels by non-residents (principle of reciprocity)		Reduced Tax Amount=tax base for global income X exiting tax rate X (income eligible for tax reduction / amount of global income) * Tax base for global income = amount of global income X total income deductions