Korean Tax Newsletter

1. Introduction

The Korean government held a Ministers鈥� Meeting (involving 18 ministries, including the Ministry of Economy and Finance, the Ministry of Science and ICT, and the Ministry of Trade, Industry, and Energy) and announced the "2025 Economic Policy Direction" on January 2, 2025.

One of the key measures includes strengthening financial (including cash grants) and tax support to promote foreign investment.

 

Financial Support

• The maximum cash grant limit, previously set at 30%鈥�50% of the investment amount, will be permanently increased to 40%鈥�50%. For investments made in 2025, this ratio will be further increased to 50%鈥�75%.
• Additionally, the government plans to fully execute a cash support budget of KRW 2 trillion in the first half of 2025 to actively encourage foreign investment.
• Areas eligible for up to 75% cash grants in 2025 include:
  -  Regional Headquarters of Global Enterprises (currently 30%)
  -  R&D Centers in National Advanced Strategic Industries (currently 50%).
• Areas eligible for up to 60% cash grants include:
  -  R&D Centers in Other Industries (currently 50%)
  -  National Advanced Technologies (currently 50%)

 

Tax Support

• The tax relief period for the importation of capital goods for foreign investments (including exemptions for customs duties, individual consumption tax, and value-added tax) will be extended from the current maximum of 6 years to 7 years.
• Foreign investment companies that establish corporations or additional business sites in non-metropolitan areas designated as 鈥淥pportunity Development Zones鈥� by local governments will be eligible for corporate tax, acquisition tax, and property tax exemptions.

 

 

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