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 on Overseas Remittance, Exceptions to the Safeguard Clause on Foreign Currency Trade
- · National Treatment, Equal Application of Tax Reduction Regulation, etc.
Foreign Investment Procedure
○ Investment Procedure
○ Investment Type
- 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.
Foreign-invested Company Registration
○ A foreign investor (or its agent) or a foreign-invested company must register the foreign-invested company at the entrustment authority 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 (exiting share acquisition);
- - Acquisition of shares through mergers, etc. (new acquisition of CB conversion, spin-off, etc.); and
- - Completion of a contribution to an NPI (new acquisition through stock contribution)
○ Land-lease support with low cost (complex-type FIZ)
○ Tax reduction (individual or complex-type FIZ)
○ Cash grant (after consultation with the standard evaluation on high-tech business, large amount of investment, etc.)
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