Trade zones are designated locations to attract manufacturing companies in industrial complexes, ports, airports, etc. Depending on the type and scale of business industry, the state will apply appropriate tax reduction or exemption. In addition, for foreign goods and domestic goods imported into the free trade zone, tariffs will be reserved and a zero value-added tax rate will apply. Therefore, companies that have intention to export products containing raw materials imported from abroad will not have to go through a complicated tax refund process.
Requirements for Occupancy
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- Manufacturing companies whose primary purpose is exporting (including Korean offshore companies in repatriation)
- Wholesale companies whose primary purposes are export and import transactions
- Knowledge-based service companies
- Foreign-invested companies engaged in manufacturing and knowledge-based services
- Logistics companies dealing in cargo handling, transport, storage, and exhibition
- Companies assisting occupying companies in finance, customs, and data processing, etc.
Advantages
– Tax Deductions or Exemptions: 100% of local taxes (acquisition tax, registration tax) for up to 15 years
– Tariff Benefits:
+ No tariffs when importing goods from overseas in order to use and consume inside free trade zones as facility materials, raw materials, building materials, or other business purposes;
+ Tariffs exempted or refunded for domestic goods imported into free trade zones and reported
– Zero-Tax Rate of Value-Added Tax:
+ Domestic goods imported into free trade zones and reported
+ Foreign goods or services supplied or offered among companies located in free trade zones
– Rental Fee Reductions or Exemptions: Foreign-invested companies whose foreign investment ratio is at least 30%, or whose largest stakeholder is a foreigner, and that meet the following requirements are exempted from rental fees for 10 years:
+ 100% for business dealing technologies for new growth engine industries whose new investment amount is at least USD 1 million
+ 100% for parts and materials businesses whose new investment amount is at least USD 5 million
+ 75% for manufacturing businesses whose new investment amount is at least USD 5 million
