I. Legal basis

• Foreign Investment Promotion Act (“FIPA”)
• Act on the Prevention of Divulgence and Protection of Industrial Technology (“ITA”)
• Act on Special Measures to Strengthen and Protect the Competitiveness of National High-Tech Strategic Industries (“NHTSIA”)

II. Policy Context

Amid increasingly intense global competition for foreign direct investment (FDI), the South Korean Government has announced a comprehensive incentive package for foreign investors in 2025 aimed at enhancing the country’s investment attractiveness, promoting the development of high-technology, manufacturing, and strategic service sectors, and creating employment opportunities. The measures include direct financial support, tax incentives, and improvements to the legal and regulatory environment to safeguard the rights and interests of foreign investors, while strengthening South Korea’s competitiveness in attracting FDI. These policy orientations are reflected in the “2025 Economic Policy Directions” issued by the Ministry of Economy and Finance of South Korea.

III. Key Incentives under the 2025 Policy Package

3.1. Direct Financial Support and Expansion of Support Scale

The Government has expanded direct financial support in the form of cash grants for foreign investors’ investment projects to up to 75% of total investment costs in 2025, particularly in priority sectors such as research and development (R&D), regional headquarters of multinational corporations, strategic technologies, and large-scale job-creating projects. This level of support exceeds the standard policy framework and is applied on an exceptional basis in 2025 in order to attract high-quality investment projects.

Such measures are intended to encourage foreign investors to bring advanced technologies and substantial resources into South Korea, while being accompanied by requirements related to job creation and linkages with strategic industries.

3.2. Expansion of Tax Incentives for Foreign Investors

a) Extension of Import Duty Exemptions for Capital Equipment

For foreign enterprises investing in South Korea, the existing tax exemption regime for imported capital equipment—including customs duties, individual consumption tax, and value-added tax—has been extended from six (6) years to seven (7) years. This extension helps reduce capital costs for foreign investors when establishing factories or production facilities.

b) Tax Exemptions and Reductions for Investments in “Opportunity Development Zones”

Exemptions and reductions in corporate income tax, capital gains tax, and property tax are granted to foreign enterprises investing in non-urban areas or in areas designated as “Opportunity Development Zones” by local governments. These measures are intended to promote a more balanced allocation of foreign direct investment (FDI) toward regions in need of economic development. 

Such incentives not only reduce the tax burden on foreign investors but also support the objective of balanced regional development, while attracting FDI into high-technology industries and high value-added sectors.

3.3. Improvement of Financial Conditions and Risk Mitigation for Investment Capital

The Korean Government has expanded access to concessional loans, credit guarantees, and other financial instruments to help foreign investors mitigate financial risks when implementing projects in Korea. Institutions such as the Korea Credit Guarantee Fund (KODIT) provide credit guarantees and loans at preferential interest rates to support enterprises in expanding their operations.

These financial support measures enable foreign investors to access capital more easily, reduce capital costs and market risks, and create stronger incentives to invest in large-scale and complex projects with significant economic impact.

3.4. Enhanced tax exemptions, reductions, and investment tax credits

The 2025 incentive package also strengthens investment tax credits and tax exemptions for priority sectors such as high technology, renewable energy, artificial intelligence (AI), future mobility, and smart logistics. These measures form part of Korea’s national strategy to promote investment in strategic industries.

3.5. Relaxation of administrative procedures and enhancement of the legal environment

In addition to financial incentives, Korea continues to simplify investment procedures, including:

• Faster and more transparent investment approval processes; 
• One-stop investment support services for foreign-invested enterprises; 
• Expanded legal protections relating to intellectual property rights, profit remittance, and reinvestment.

The reduction of administrative barriers contributes to an improved investment climate, aligned with international standards on transparency, investor protection, and the balanced interests of the State and enterprises.

3.6. Policy Objectives and Significance

a) Policy Objectives and Significance

The incentive schemes and financial support measures are designed to attract multinational corporations and strategic projects, particularly in high-technology sectors and high value-added manufacturing industries.

b) Balanced regional allocation of FDI

Tax incentives offered in designated “Opportunity Development Zones” aim to channel investment into non-metropolitan areas, thereby contributing to local economic development and reducing regional disparities.

c) Strengthening Korea’s position as an attractive FDI destination
These measures demonstrate the Government’s strong commitment to competing for foreign investment, enhancing the labor market, promoting innovation, and creating employment opportunities.

IV. Conclusion

The 2025 package of incentives and regulatory relaxations for foreign investment in Korea represents a strategic step forward in strengthening the FDI environment toward greater attractiveness, flexibility, and fairness. By combining tax incentives, financial support, and administrative reforms, the policy seeks to attract high-quality investment flows, foster technological development, and ensure an efficient allocation of investment across the country. This approach not only enhances Korea’s global competitiveness, but also creates a stable, transparent, and appealing investment environment for foreign enterprises in general, including Vietnamese companies planning to expand their business operations in the Korean market.

V. About NYLA – Korean Legal Office

■ NYLA – Your Trusted Legal Partner in Korea

At NYLA, we understand that the success of foreign businesses in Korea requires not only a solid business strategy but also reliable legal support. With a team of experienced Korean attorneys and legal professionals, NYLA provides tailored legal services for companies, investors, and individuals operating or planning to establish a presence in Korea.

We support our clients throughout the entire business journey with comprehensive services, including:

• Legal consultation on company establishment, taxation, and immigration;
• Advice on commercial real estate, franchising, and product distribution;
• Support in human resources, marketing, and business strategy.

In addition to legal advisory, NYLA also represents clients in civil litigation cases related to business, labor, marriage, family, and inheritance to ensure their rights and interests are fully protected.

■ Contact NYLA

If you’re a foreign business or individual looking for a reliable legal partner in Korea, NYLA is here to help. We are committed to delivering effective, practical, and personalized legal solutions for every client.

With a proven track record of assisting hundreds of international clients, our team is equipped to help you navigate complex legal challenges—whether it’s commercial disputes, contract issues, or foreign investment guidance.

Don’t let legal matters hold you back. Let NYLA be your trusted guide in the Korean market.

■ Get in touch with NYLA for expert legal support

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