TITLE : FAQ ON FDI IN KOREA 2023 (Q101~Q105)
페이지 정보
작성일
2023
2023-12-18
본문
■ FAQ on FDI in Korea 2023 (Q101~Q105)
Taxation and Accounting
Q101 | hould a foreign-invested company that moves into an individual-type Foreign Investment Zone (FIZ) designated and publicly announced by the provincial governor make a separate application for tax reduction and exemption? |
A101 | Even if an FIZ is designated and publicly announced as an individual-type FIZ, companies in the FIZ shall make a separate application for tax reduction and exemption to the Minister of Economy and Finance. Tax reduction will not be granted without such an application. |
- Required documents when applying for tax reduction and exemption (forsubmission to the International Economic Affairs Division of the Ministryof Economy and Finance)
- The tax reduction and exemption application form
- Notification of foreign investment by acquisition of stocks or contribution
- Documents that prove the FIZ has been designated as an individualtype FIZ (e.g., an official announcement of the local government)
- Documents demonstrating the business sector (e.g., project plan)
- Documents proving the installation of new production facilities
Q102 | If a foreign-invested company operates both a business eligible for tax reduction and exemption and a business which is not eligible, how is the tax reduction amount calculated for the company? |
A102 | Such a foreign-invested company should keep the accounting records for the business eligible for tax reduction separately from the business that is not. The tax reduction amount is calculated by multiplying the assessed corporate tax amount by a ratio of the tax base from the eligible business to the total corporate tax base and then by the reduction rate. |
- The calculation formula is as follows:
- Tax reduction amount = Assessed corporate tax amount × (Tax basefrom the business eligible for tax reduction ÷ Total corporate tax base) × Reduction rate
- Reduction rate = Ratio of foreign investment × reduction rate (100%, 50%)
Q103 | Can a foreign-invested company receive tax reduction or exemption for foreign investment under Article 121-2 of the Restriction on Special Taxation Act as well as the tax reduction or exemption applicable to startup small and medium-sized enterprises under Article 6 of the same Act? |
A103 | When a foreign-invested company is eligible for taxreduction or exemption for both foreign investment andstartup small and medium-sized enterprises, the companymay choose only one advantageous reduction or exemption. |
- However, if the company keeps the book for its business eligible forforeign investment tax reduction or exemption completely independentfrom the other operations and their income sources can be separated,tax reduction or exemption for foreign investment and tax credit and taxreduction or exemption for other businesses can both apply.
Q104 | When is the deadline for a foreign-invested company to apply for tax reduction or exemption? If the company submits the application past the deadline, can the company still receive tax reduction or exemption? |
A104 | The deadline for applying for tax reduction is the last day ofthe taxable year in which the foreign-invested company'sbusiness was commenced. If a foreign-invested companyapplies for and is granted tax reduction or exemption afterthe deadline, the company can receive a tax reduction orexemption for the tax year in which the application wassubmitted and for the remaining reduction or exemptionperiod. However, the tax paid before the tax reduction orexemption decision will not be refunded. |
Q105 | Once the Ministry of Economy and Finance approves the tax reduction or exemption application of a foreign-invested company, will that company be granted reduction or exemption of registration tax when acquiring real estate? |
A105 | Registration tax was repealed and integrated into acquisitiontax when the Local Tax Act was revised on March 31, 2010(enforced on January 1, 2011). Registration tax is effectivelyreduced or exempted since it has become a part ofacquisition tax, which is reduced or exempted. However, it istechnically incorrect to say that registration tax is exemptedor reduced as such a tax no longer exists, and it is advised torefrain from mentioning the registration tax. |