Guide to foreign investment
Foreigner Investment Guide Foreigner Investment Guide
Foreign Investment System
Definition of FDI
FDI (Foreign Direct Investment) refers to an investment made by a foreigner for the purpose of establishing a continued economic relationship with a Korean corporation or a business owned by a Korean citizen, and is based on the FIPA (Foreign Investment Promotion Act) and other related laws.
Foreign Investment Promotion and Protection
- Unless otherwise stipulated by law, a foreigner may carry out foreign investment activities in Korea without restrictions.
- Protection of Foreign Investment.
- Guarantee of outgoing transfers.
- Exceptions on safeguards against foreign exchange transactions.
- Ensuring national treatment.
- Ensuring no discrimination against tax reduction and exemption
Foreign Investment Procedure
- Acquisition of Shares or Equity of a Domestic Business
This refers to possession of shares or equity of corporation of the Republic of Korea or a business owned by a Korean citizen for the purpose of establishing a continued economic relationship with the relevant corporation or business (including those being established) through participation in managerial activities.
- Long-term Loans
An investment is recognized as FDI if the foreign parent company of the foreign-invested company, a foreign investor, or a business under a capital investment relationship with the relevant foreign parent company and the foreign investor provides a loan with a maturity of 5 years or more for the relevant foreign-invested company.
- Contribution of a Non-profit Organization (NPO)
A contribution to an NPO is recognized as a foreign investment when the NPO has independent research facilities in the field of science and technology, and meets one of the following conditions:
- Having 5 or more regular employees with 3 or more years of research experience and a bachelor's degree in the field of science and technology or with an advanced degree (master's/Ph.D) in a science and technology field; or,
- Performing R&D for projects attended with high level technologies according to the Tax Exemptions and Exceptions Act.
Registration of foreign-invested company
A foreign investor (or its agent) or a foreign-invested company must register the foreign-invested company at the entrusted agency within 30 days of the occurrence of the causes as follows:
- Completion of payment for the investment object (new share acquisition);
- Acquisition of existing shares (existing share acquisition);
- Acquisition of shares through mergers, etc. (new acquisition of CB conversion, spin-off, etc.); and
- Completion of a contribution to a non-profit corporation (new acquisition through stock contribution).
- Land-lease support at low cost (complex-type FIZ).
- Tax reduction and exemption (standalone-type or complex-type FIZ).
- Financial support (after an objective evaluation and consultation on high-tech businesses, large sized investments, etc.).
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