Tax attorney, are tax reductions for foreign-invested companies still possible?

Hello. This is a tax attorney from Daeryun Law Firm (LLC).

The tax reduction system related to foreign investment has been operated mainly under the "Restriction of Special Taxation Act," and support has been provided across various tax categories such as corporate tax, income tax, acquisition tax, property tax, and tariffs to promote investment attraction and technology transfer.

However, the application of tax reductions is clearly distinguished according to the application timing and business type.

First, the corporate tax or income tax reduction on income of foreign-invested companies applies only to those who applied for tax reduction by December 31, 2018, and is in principle excluded for applications filed from January 1, 2019 onward.

However, companies that lawfully completed tax reduction applications in the past can receive corporate or income tax reductions if they engage in businesses involving new growth-engine or original technologies, or businesses operating in foreign investment zones or free economic zones.

In this case, the reduction period is up to 7 years, with 100% of the calculated tax fully reduced for the first 5 years, and 50% of the calculated tax gradually reduced for the following 2 years.

Acquisition tax and property tax reductions also apply on the premise of foreign-invested companies that applied for tax reduction by the end of 2019, so review for current new investments is only possible to a limited extent.

Foreign investment tax reductions do not apply solely based on the fact of investment; comprehensive review of business type, location, and application timing is essential.

It is advisable to determine actual applicability through a tax attorney's review.