Foreigners will receive tax incentives and rent discounts when they invest in entertainment facilities like gyms, museums and musical theatres in Korea in a move to draw foreign capital into the country amid economic slowdown.
The Ministry of Trade, Industry and Energy on Tuesday enacted and notified changes in the country’s law related to foreign investment zone by expanding target to include stage, museums, and sports facilities. The amendment focuses on expanding foreign investment zone target to include not only industrial sites but also entertainment facilities.
South Korea has designated foreign investment zones for foreign investors with advanced technology to boost their domestic spending. Investors are offered cheap rent fee. The zones are usually located inside designated state industrial sites.
Under amended rule, foreigners investing in entertainment facilities that have been newly designated as foreign investment zone will be offered 50 percent state support. The discount will be 40 percent for facilities in zones in Seoul and surrounding areas. The government will also offer basic infrastructures such as access road.
All foreigners investing in specially designated investment zones will be offered full discount on corporate tax and income tax for the next 7 years and then 50 percent for another three years. They will also receive various local tax exemption benefits such as of acquisition tax, registration tax, property tax, and composite land tax for 8 to 15 years. Foreign investors will also be able to make divided payment of purchase price of state-owned land or extend payment by up to one year.
The Korean government’s move to expand designation comes as part of efforts to boost foreign investment in the country that has been on a downhill.
Korea’s foreign direct investment reached $3.08 billion in 2015, $7.4 billion in 2016, $12.7 billion in 2017, and $13.3 billion in 2018. Last year, however, the amount plunged 20.6 percent on-year to $10.57 billion. Foreign direct investment is expected to drop further this year due to slow business activity amid coronavirus pandemic.
An unnamed official from the trade ministry said that the amendment reflects appeal from foreign investment zones that proposed for more moves to encourage foreign investment.
There are also concerns, meanwhile, that the move could invite only entertainment facilities with state support than factories and plants that help enhance industrial competitiveness.
By Oh Chan-jong and Lee Eun-joo
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]