Comparison with Domestic Programs
Comparison with Domestic Programs
| Section | EFEZ | Free Trade Zone | Foreign Investment Region | ||
|---|---|---|---|---|---|
| Industrial Complex Type | Airport, Port Logistics Type | Complex | Individual | ||
| Legal Grounds | Special Act on Designation and Operation of Free Economic Zones | Act on Designation and Operation of Free Trade Zone | Act on Promoting Foreigner Investments | ||
| Designated Purpose | Attract foreign investments, strengthen national competitiveness, balanced regional development | Attract foreign investments, promote trade, balanced regional development | Attract foreign investments, foster international logistics base | Foster foreigner investments | |
| Designated Location | Near international airports and ports | Areas around ports and airports, and industrial complexes | Ports, airports, distribution complexes, cargo terminals, etc | Within industrial complex | No restrictions |
| Regional Features | Special administrative zones (autonomous group combination) | Tax free area | Based on principle of operation of leased complexes | Designate individual business places | |
| Designator | Minister of Trade, Industry and Energy * FEZ Committee screening |
Minister of Trade, Industry and Energy *FEZ Committee |
Screening | Mayor, Governor * Foreigner investment committee |
Screening |
| Administrator | FEZ Office | Minister of Trade, Industry and Energy (industry complex) | Minister of Trade, Industry and Energy (Port) | National industrial complex: Industrial complex management authority | Others: Mayor, governor |
| Designated Areas | 6 + 2 : Incheon, Busan, Jinhae Gwangyang Port, Yellow Sea, Gunsan, Saemangeum, Daegu, Gyeongbuk, Donghae, Chungbuk | 6 industrial complexes : Masan, Iksan, Gunsa, Daebul, Donghae, Yulchon | 1 airport : Incheon Airport 3 port types : Busan, Gwangyang, Incheon |
12 : Cheonan, Ochang, Inju, Gumi, Pyeongdong, Daebul, Jinsa, Geumi, Dangdong, Jisa | 29 : individual business places |
| Tenant Qualifications | •Foreign invested companies •Manufacturing, Logistics, Medical, Education, Institute, Foreign broadcast, Financial institutes, etc |
•Foreign invested companies, domestic companies •Manufacturing - Domestic companies focusing on exports - Foreigner invested companies •Logistics, trade, etc |
•Foreign invested companies Logistics, trade, etc (Foreign investments of 30% or more) |
•Foreign invested companies •Manufacturing : 30 million $ or more Tourism industry : 20 million $ or more Logistics : 10 million $ or more R&D: 2 million $ or more |
|
| Tax Cut Conditions | •Manufacturing: 10 million $ or more •Tourism: 10 million $ or more •Logistics: 5 million $ or more |
•Manufacturing: 10 million $ or more •Logistics: 5 million $ or more |
•Manufacturing: 10 million $ or more •Logistics: 5 million $ or more |
•Manufacturing: 10 million $ or more •Logistics: 5 million $ or more |
Same as designation conditions |
| Tax Cuts | •Corporate tax, income tax: 5 years (3 years 100%, 2 years 50%) * Corporate tax rate: under 100 million 13%, over 100 million 25% •Provincial tax: 8~15 years |
•Corporate tax, income tax: 5 years (3 years 100%, 2 years 50%) * Corporate tax rate: under 100 million 13%, over 100 million 25% •Provincial tax: 8~15 years |
(Ordinance: max 15 years 100%) | •Corporate tax, income tax: 5 years (3 years 100%, 2 years 50%) * Corporate tax rate: under 100 million 13%, over 100 million 25% •Provincial tax: 8~15 years |
•Corporate tax, income tax: 7 years (5 years 100%, 2 years 50%) * Corporate tax rate: under 100 million 13%, over 100 million 25% •Provincial tax: 8~15 years |
| Customs Duties | Capital goods exempt for 5 years | Customs deferred (imported goods, capital goods) | Capital goods exempt for 3 years | ||
| Lease | Parceling (Lease available as well: 10/1,000 of land price) | 10/1,000 of land price | 10/1,000 of land price | 10/1,000 of land price or higher | |
| Lease Reductions | Reduction rate not determined (to be determined by administration office) | •Advanced technologies: 100% (1 million $ or more) •General manufacturing: 100% (10 million $ or more) |
•Advanced technologies: 100% (1 million $ or more •General manufacturing: 75% (5 million $ or more) |
100% exemption | |
| Support Division | Division rate not determined | Determine land purchase bearing rate in designation stage (Maximum national funding 75%) | •Seoul: national funding 40% •Non-Seoul area: national funding 75% |
||
| Administrative support | •Install administrative organ under the mayor or governor - FEZ office - Carry out work delegated by central government and city or provincial operations |
•Install branch - Levy and collect customs and taxes, immigration control - Work related to mail, communications, quarantine, labor affairs |
•Industrial complexes (7) management •Local government (3) management |
||
| Remarks | •Integrate customs free zones into free trade zones (Jun 23, ‘04) | •Integrate exclusive complexes for foreign companies into foreign investment zones (Dec 31, ‘04) | |||
Major Special Districts Overseas
| Section | FEZ (Current) | 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 | - | |
