Why KFEZ?

KFEZ Incentive

The KFEZs offer great incentives such as tax benefit, business support, deregulation,
administration support and one-stop services for your successful business.

Tax benefits

The KFEZs offer exemptions or reductions in corporate tax, income tax, tariffs, acquisition tax and property tax for foreign-invested resident firms and developers, based on Special Act on Designation and Management of FEZs and Restriction of Special Taxation Act.

Foreign-invested companies in an KFEZs
Category Benefits Investment Requirements
National tax Tariff 100% exemption for 5 years Imported capital goods only
Local tax Acquisition tax 100% tax exemption for up to
15 years in accordance with local ordinances
Property tax Tax reductions for up to
15 years in accordance with local ordinances
Developer
Category Benefits Investment Requirements
National tax tariff 100% exemption for 5 years Imported capital goods only
Local tax Acquisition tax 100% tax exemption for up to 15 years in accordance with local ordinances Foreign investment of over $30 million or a foreign investment ratio of over 50 %, and a total development project cost of over $500 million development
Property tax Tax reductions for up to
15 years in accordance with local ordinances
Foreign investment of over $30 million or a foreign investment ratio of over 50 %, and a total development project cost of over $500 million development
Application Procedures

File Application for Preliminary Review for Tax Exemption and Reduction

확인신청
1
  • Agency in charge of application: Ministry of Strategy and Finance(Department for Overall Foreign Economic Affairs 02-2150-7622)
  • Review to confirm eligibility for tax exemption and reduction

File Report of Foreign Investment(new or additional investment)

투자신고
2
  • New investment: may be filed until the end of the taxable fiscal year in which the business commenced
  • Additional investment: same as above
  • Change in investment: within 2 years from the occurrence of cause

File a Formal Request for Tax Exemption and Reduction

조세감면
신청
3
  • May be filed simultaneously with the report of foreign investment
  • Should be filed even in case of confirmation in the preliminary review

Decision and Notification on the Request for Tax Exemption and Reduction

결정 / 통보
4
  • Process Period: 20 days from filing of the formal request for tax exemption and reduction
  • Notified parties: Applicant, Director of national Tax office, Director of Customs Office, Head of the relevant Local Government

Business Support

The KFEZs offer various financial and site support for cash grants, infrastructure and rent, based on Special Act on Designation and Management of FEZs, Foreign Investment Promotion Act and local ordinances.

Cash grants The minimum cash grants is 5% of the FDI, and the actual amount shall be decided through negotiation
  • Foreign-invested companies with a foreign-investment ratio of 30% or higher
Support for infrastructure Support for infrastructure including roads, railways, airports, ports, water and sewage, waste treatment facilities
  • 50% of the infrastructure construction costs is covered by government budget.
  • If the Free Economic Zone Committee approves it, 100% of the cost will be covered
Support for education and research facilities Financial support for the establishment, operation and construction of education and research facilities
  • Certain conditions as reputation and contribution to national development should be met
Support for rent Government or publicly owned land can be leased for up to 50 years The rent shall be around 10/1,000 of the land price
  • Foreign-invested companies
Lease fee exemption and reduction 50-100% tax reductions in accordance with local ordinances
  • Foreign-invested companies

Deregulation

The KFEZs support foreign-invested firms’ activities by relaxing regulations.

Relief from control on labor affairs
  • Not obliged to fill vacant job positions with persons of national merit, the disabled, or the elderly
  • Unpaid leave is permitted
  • May expand the type of work and terms of dispatched worker assignments
Exemption from Seoul regulations in metropolitan area
Any foreign-invested firm in an FEZ shall be relieved from the application of provision in Seoul Metropolitan Area Readjustment Planning Act(Article 7: Restricted actions in the overcrowding control area, Article 8: Restricted actions in the growth management area, Article 12: Imposition and collection of the overcrowding charges, Article 18: Quota system management for crowd-inducing facilities, Article 19: Control on the mega-scale project development)
Easier foreign payment
A foreign-invested firm may directly engage in foreign currency transfer to clear a business transaction, up to a limit of $10,000

Admin Support

The KFEZs have enabled swift and efficient decision-making by streamlining administrative procedures for business

Presumption of Designation and Approval of Plan
When a free economic zone is designated, the designation, establishment, approval, or alteration of various areas stipulated in 11 relevant laws including the Urban Development Act and Housing Site Development Promotion Act and their plans will be presumed to have been made according to the details of the development plan for the free economic zone
  • Designation of an area for urban development and establishment of an urban development plan
  • Designation of housing development districts and approval of its development plan
  • Designation of national industrial complexes, general industrial complexes, and advanced urban industrial complexes
  • Designation of tourist destination and tourist complexes
  • Designation of logistic clusters
  • Establishment, alteration, confirmation, or approval of a basic urban plan
  • Alteration of a basic plan for reclamation
  • Alteration of a plan for integrated coastal management and a plan for coastal management areas
  • Alteration of a basic river plan
  • Alteration of a basic plan for waterworks installation and management
  • Alteration of a basic plan for sewage management
Presumption of Permission
In the event that any development project operator obtains approval for an implementation plan or its modification, the operator is deemed to have obtained permission according to 40 relevant laws including Grassland Act and Management of Mountainous Districts Act

One-stop Service

Each FEZ designates individual project managers who support all investment procedures from preliminary review for investment to follow-up management. The project managers not only provide business consulting for new investment opportunities and prospective investment partners,
but also administrative support for legal affairs, accounting and tax management. This will help investors make swift business decisions.

    • 1
      Business consulting
    • Help discover new investment opportunities
    • Find prospective investment partners
    • Evaluate investment location
    • 2
      Provision of infomation and ConsultationProvision of infomation  and Consultation
    • Provision of information and consultation
    • Offer legal, accounting, tax advice
    • Provide investment information about KFEZs
    • 3
      Administrative supportAdministrative support
    • Carry out agency business for foreign investor affairs
    • Coordinate work with related authorities
    • Provide constant assistance to solve difficulties