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  • Incentives

  • Home > Investing in Innopolis > Support systems > Incentives

  • Foreign Direct Investment Support System

  • 1. Definition of Foreign Direct Investment (Non-Profit Corporation)
    • A non-profit corporation dealing in science and technology as defined under the Act on Promotion of Foreign Direct Investment, falling under one of the following:
      • A corporation equipped with independent research facilities and employing five or more permanent research personnel holding either a bachelor's degree and three or more years research experience or a master's degree in science or technology; or
      • A corporation equipped with independent research facilities and performing research and development activities accompanying highly advanced technologies.
  • 2. Requirements for Individual Foreign Investment Zones
    • When a research facility is newly installed or extended to carry out industrial support service or R&D activities accompanying highly advanced technologies:
      • A corporation that invests US$2,000,000 or more and employs 10 or more permanent research personnel holding a master degree in discipline related to the corporation's business and three or more years' research experience is designed by the mayor as through review by Foreign Investment Committee
  • 3. Various Support Systems
    • Tax Abated
    • Tax Abated
    Eligible for tax abatement Method of Tax Abatement Relevant Statutes
    Applicable Tax Abated Period Requirements for Abatement
    ° Business accompanying highly advanced technologies or industrial support service business
    ° Individual type foreign investment zone     		° State taxes
    - Corporate income tax
    - Personal income tax
    ° Municipal taxes
    - Acquisition tax
    - Registration tax
    - Property tax     		° State taxes
    - 100% for five years
    - 50% for next two years
    ° Municipal taxes
    - 100% for 15 years     		° Advanced technology: None
    ° Foreign Investment Zone
    - Manufacturing: US$30 million
    - Tourism: US$20 million
    - Distribution: US$10 million
    - R&D facility: US$2 million (10 or more master-degree holding research personnel)     		Article 121-2 of Act on Restricting Exceptional Taxation,
    Article 116-2 Enforcement Decree of the said Act

    Article 27 of Ordinance on Municipal Tax Abatement
    ° Complex Type Foreign Investment Zone ° State taxes
    - 100% for three years
    - 50% for next two years
    ° Municipal taxes
    - 100% for 15 years    		 ° Manufacturing business investing US$10 million or more
    ° Physical distribution business investing US$5 million

     

    • Financial Support under Act on Promotion of Foreign Direct Investment

      • Financial Support under Act on Promotion of Foreign Direct Investment
      Classification Support Details Relevant Statutes
      Eligibility ° When foreign direct investment represents 30% or more of paid-in capital or the largest shareholder is a foreign investor
      		 Article 14 paragraph 2 of Act on Promoting Foreign Direct Investment,
      Article 20 paragraph 1 of Enforcement Decree of the said Act

      Foreign Investment Committee enacted criteria for paying state financial support to municipal government activities for inducing foreign direct investment
      Lease land Land purchased ° Land designated as foreign investment zone or lease land purchased
      - Purchase price shared: Seoul region (State 40%, municipal government 60%)
      Other regions (State 75%, municipal government 25%)
      Rental abated (state property) Eligibility Abatement details
      ° Individual type foreign direct investment zone
      		 100% abated
      ° Highly advanced technology business or US$1 million or more invested
      		Complex-type foreign direct investment zone 100%
      Industrial complex 50%
      ° General manufacturing business or US$5 million or more invested
      		Complex-type foreign direct investment zone 75%
      Industrial complex 50%
      Land price difference ° When land owned by the state, municipal government, government-invested entities or by private owners is sold below cost, the difference is subsidized.
      Rental ° When land owned by the state, municipal government, government-invested entities or by private owners is leased to foreign invested businesses at a discounted rental rate, the difference is subsidized.
      Education and training subsidy ° Subsidized up to 100,000 ~ 500,000 per newly hired employee per month proportionate to the amount paid by the municipal government when 20 or more employees are newly hired.
      Support limit ° New installation investment: Up to 50% of foreign direct investment
      ° Extension investment: Select between i) 50% of foreign direct investment and ii) 25% of foreign direct investment and profit surplus (In case of ii) foreign direct investment should represent 25% or more)

    • Cash Support

      • Cash Support
      Classification Support Details Relevant Statutes
      Eligibility ° 30% or more by foreign direct investment
      ° Businesses with US$10 million foreign direct investment accompanying highly advanced technologies or providing industrial support service
      ° Businesses with US$10 million foreign direct investment for manufacturing parts or materials
      ° R&D business: Business employing 10 or more research personnel holding a bachelor degree and three or more years experience or a master degree
      		Article 14-2 of Act on Promoting Foreign Direct Investment,
      Article 20-2 and 20-3 paragraph 1 of Enforcement Decree of the said Act
      Usage ° For purchase of land, building construction, equipment purchase, employment or training subsidy, or installation of infrastructure facilities
      Assessed factors ° Technology transfer effect, job creation scale, location in less-developed area, and conflict with domestic investment
      Support amount ° A certain of foreign direct invested amount is subsidized through negotiation with investors (Minimum 5% or more)
      Others ° Investor/applicant should select either the financial support (mainly subsidy for factory/facility construction) or cash support as both cannot be offered.
      ※ Cash support would be preferred by businesses accompanying highly advanced technologies but does not require a wide site while financial support would be preferred by businesses that required a wide site.

    • Support under Municipal Ordinance

      • Support under Municipal Ordinance
      Classification Support Details Relevant Statutes
      Eligibility ° 30% or more of paid-in capital invested by foreign director investors or a foreign direct investor is the largest shareholder
      ° A business the mayor deems necessary to provide support to in order to boost the local economy among businesses that accompany highly advanced technologies, provide industrial support service, or occupies a zone designated for foreign direct investment
      		Article 7 paragraph 1 of Ordinance on Inducing Foreign Direct Investment
      Support items Site support ° Purchase of site or lease rental abatement within available budget
      		Article 2
      Equipment subsidy ° Support up to 5% of the amount exceeding two billion won required for new construction or extension of manufacturing facilities or equipment
      		Article 5
      Training subsidy ° 500,000 won or less subsidized per person for up to six months for hiring 20 or more residents
      		Article 4
      Subsidy to large scale investment ° Businesses falling under Article 25 paragraph 3 of the Act on Promoting Foreign Direct Investment (manufacturing businesses that invest US$30 million, tourist service businesses that invest US$20 million or more, physical distribution service businesses that investment US$10 million, or R&D businesses that invest US$5 million or more): Special subsidy granted with consent by municipal assembly
      		Article 6
      Support limit ° No limit on subsidy for facility investment
      ° Up to 200 million won employment or training subsidy per beneficiary business
      		Article 5 paragraph 2
      Article 3 paragraph 2
      Article 4 paragraph 2
    •  
    • ※ Incentive subsidies are paid by the municipal government within the limitations provided under the Act on Promoting Foreign Direct Investment and the Act on Restricting Exceptional Taxation. Therefore, the incentive subsidy payable by the central government is all identical regardless the municipality where the foreign direct investment is made. The ordinances concerning incentive subsidies payable by individual municipal governments are all enacted under the limitations under the above-mentioned Acts. Further, the incentive subsidies provided by municipal governments are quite similar as they benchmark each other's systems. In particular, both Gyeonggi-do and Daejeon City provides 100% abatement of their municipal taxes for 15 years.

  • Innopolis Incentive (limited to foreign direct investment in Daedeok Innopolis)

  • Support Programs for Inducing Foreign R&D Businesses
    • Support amount: 300 million won paid for promoting inducement of foreign R&D businesses
    • Eligibility: Government-invested research institutes, private research institutes, universities, and business-annexed research institutes or highly advanced technology business
    • Subsidy paid to government research institutes, university-annex or business-annexed research institutes or highly advanced technology business for their activities for inducement of outstanding foreign research institutes or joint research centers into Daedeok Innopolis.
  • Operation of Daedeok Innopolis Venture Capital Fund (Innopolis Fund)
    • Association size and composition : 80 billion won, Plans to operate 100 billion won fund by inducing 20 billion won additional investment
    • Investment targets : 50% or more in Daedeok Innopolis, 70% or more in Daejeon Metropolitan City
  • Tax Abatement for Highly Advanced Technology Businesses
    • Details: Tax abated for businesses which are highly technology intensive, produces products with short life cycle, and has great economic spillover effects
    • State taxes abated: 100% of corporate income tax, personal income tax for initial three years, and 50% for next two years
    • Municipal taxes abated: 100% of property tax for initial seven years, 50% for next three years
    • Application is filed with Daedeok Innopolis Headquarters and approval is notified after approval by the Ministry of Knowledge Economy
  • Living Conditions
    • Daedeok Innopolis Ombudsman System
      Supports resolution of business management and life difficulties of foreign invested businesses and investors' family Prepares improvement means and makes recommendations to concerned government offices
    • Daejeon International School
      School status: Recognized to have best curriculum next to only Seoul International School
  • Daedeok Innopolis Hub Business Center
    • 11-story office building with rental space for businesses, including various convenience facilities
    • Business service support providers will be located in the building, including law, accounting, and business consulting companies
    • One story or more space will be assigned to foreign invested businesses
    • Space will be available for joint research with foreign R&D institutes

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