Korea's tax incentives for foreign investment have changed substantially in recent years. The "up to 7 years of corporate tax reduction" and "local tax reduction" found in older materials cannot be newly applied for as of 2026. This article separates the programs that have ended from those still in force as of 2026.
2026 at a glance
| Program | Status | Key point |
|---|---|---|
| Corporate / income tax reduction | Ended | Applies only to applications filed by Dec. 31, 2018 |
| Acquisition / property tax reduction | Ended | Applies only to applications filed by Dec. 31, 2025 |
| Customs duty exemption, etc. | Current | Capital goods for an eligible business, new-share investment, exemption application |
| Cash grants | Current | Amount set through negotiation and Foreign Investment Committee review |
| State/public property lease and rent reduction | Current | Lease by private contract, term of up to 50 years |
Ended: Corporate/income tax and local tax reductions
The foreign investment corporate and income tax reduction under the Restriction of Special Taxation Act applies only to foreign-invested companies that applied by December 31, 2018. The acquisition and property tax reduction under the Restriction of Special Local Taxation Act applies only where a reduction application was filed by December 31, 2025 and a reduction decision was granted. A company making a new investment in 2026 cannot apply for either.
Current ①: Exemption from customs duties, etc.
The customs duty exemption under the Restriction of Special Taxation Act remains in force with no application deadline in its text.
- Eligible businesses: businesses involving technology in new growth engine industries, and businesses located in Foreign Investment Zones, Free Economic Zones or the Saemangeum project area, among others designated by the Restriction of Special Taxation Act
- Eligible goods: capital goods needed for that business (machinery, equipment, facilities and similar industrial assets) as specified by Presidential Decree
- Type of investment: the investment must be a foreign investment in which the foreign investor acquires newly issued shares or equity, and the goods must be imported as stated in the notification filed under the Foreign Investment Promotion Act. Buying existing shares does not qualify.
- Taxes exempted: for some businesses, such as those involving new growth engine technology, customs duty, individual consumption tax and VAT; for others, such as businesses in Free Economic Zones or the Saemangeum area, customs duty
- Application: the exemption is not automatic — an exemption application must be filed as prescribed by Ministry of Finance and Economy ordinance
The statute does not set an exemption period (a number of years). You should also know the grounds on which exempted taxes are recovered.
Exempted taxes are recovered if, after the exemption, the company's foreign investment registration is cancelled, the contributed goods are used for a purpose other than the one notified or are disposed of, the foreign investor transfers shares to a Korean national or Korean company, the business closes, or the notified contribution or employment falls short of the required standard.
Current ②: Cash grants and site support
- Lease of state/public property: land, factories and other property owned by the state, local governments or public institutions may be leased to foreign-invested companies by private contract, for a term of up to 50 years. As a rule, a minimum foreign investment ratio must be met and maintained.
- Rent reduction: rent may be reduced for state-owned land in Foreign Investment Zones, national industrial complexes, general/urban high-tech industrial complexes and agro-industrial complexes, and for land owned by local governments.
- Cash grants: the state and local governments may provide cash support for qualifying foreign investments, such as building or expanding factory facilities for new growth engine technology, high-tech products, or materials, parts and equipment, or creating new jobs above a set threshold. The amount is not a fixed percentage; it is set through negotiation and review by the Foreign Investment Committee.
- Local government subsidies: local governments may pay employment subsidies and similar support to foreign-invested companies under their ordinances.
The law says these measures "may" be provided, so they are discretionary. Meeting the requirements does not by itself mean support will be given; the relevant authorities review each case.
What to check before investing
- Eligible business: whether your planned business qualifies for the customs exemption or cash grants
- Investment method: whether you will acquire newly issued shares or buy existing shares
- Foreign investment notification: notify in advance under the Foreign Investment Promotion Act (some methods may be notified within 60 days after acquisition)
- Capital goods plan: make sure the imported capital goods match the notification, then file the exemption application
Consultation
The requirements of each program depend on the business, the investment method and the location. A-One Administrative Agency prepares foreign investment notification and the incorporation of foreign-invested companies together with you.
- Phone: 02-309-3107
- KakaoTalk: alexkorea
- Address: 43, Cheonho-daero 101-gil, Gwangjin-gu, Seoul
Fees vary by case and will be explained in detail during a free initial consultation.