GUIDELINES FOR OPERATION OF FOREIGN INVESTMENT ZONES
Wholly Amended by Public Announcement No. 2011377, Jul. 25, 2011
Amended by Public Announcement No. 2012447, Sep. 18, 2012
Public Announcement No. 2012515, Nov. 14, 2012
Public Announcement No. 201345, Apr. 17, 2013
Public Announcement No. 2013275, Sep. 26, 2013
Public Announcement No. 2014417, Aug. 22, 2014
Public Announcement No. 2015008, Dec. 31, 2014
Public Announcement No. 2015200, Mar. 27, 2015
Public Announcement No. 2015371, jun. 30, 2015
Public Announcement No. 2016376, Jul. 18, 2016
Public Announcement No. 201842, Jan. 23, 2018
Public Announcement No. 2018359, jun. 25, 2018
SECTION 1 General Provisions
The purpose of this Guideline is to prescribe matters delegated by the Foreign Investment Promotion Act, which provides for the designation, development, management, and cancellation of designation of foreign investment zones (hereinafter referred to as the "Act"), and the Enforcement Decree of the same Act (hereinafter referred to as the "Decree"), and matters necessary for the enforcement thereof.
The terms used in this Guideline shall be defined as follows:
| 1. | The term "complex foreign investment zone" means a zone designated to lease or transfer land therein exclusively to foreign-capital invested companies under Article 18 (1) 1 of the Act; |
| 2. | The term "individual foreign investment zone" means a zone designated to meet the demand of a foreign investor who intends to make an investment therein under Article 18 (1) 2 of the Act; |
| 3. | The term "services-based foreign investment zone" means a zone designated to lease or transfer land therein to foreign-capital invested companies engaged in a service business under Article 18 (1) 3 and 4 of the Act; |
| 4. | The term "management agency" means a Mayor/Do Governor, etc. who manges a foreign investment zone under Article 18 (5) of the Act; |
| 5. | The term "project plan" in Article 20 means the amount of foreign investment and the area for construction of a factory, compared with the limit on occupancy prescribed in Article 15; |
| 6. | For the purpose of calculating the "amount of foreign investment", in cases of a foreign corporation, the stocks or equity investment of which are directly or indirectly owned by a national of the Republic of Korea (excluding those falling under Article 3 of the Decree) or a Korean corporation, part of stockholding ratio computed by the calculation methods prescribed in Article 116-2 (11) and (12) of the Enforcement Decree of the Restriction of Special Taxation Act, shall not be included in the amount of foreign investment. |
| Article 3 (Purchase and Registration of Site) |
| (1) | The site for a foreign investment zone shall be purchased jointly by the State and a local government, and the ratio of sharing the purchase price shall be governed by provisions of the Guidelines for Subsidization of Financial Funds by the State for the Foreign Investment Inducement Activities of Local Governments. |
| (2) | A down payment for the purchase of land in a foreign investment zone shall be shared 50:50 between the State and a local government, and the remaining balance of the land purchase price shall be paid pro rata to the result of the occupancy of foreign-capital invested companies, in cases of a complex foreign investment zone, or paid based upon the agreed date in cases of an individual foreign investment zone. The State may pay its share through a local government. |
| (3) | The State and a local government shall enter their ownership shares in the cadastral record or registration ledger according to the share ratio of the land purchase price. |
| Article 4 (Eviction of Leased Site and Buildings) |
| (1) | Where a lease contract for a site is terminated due to the expiration of lease period, termination of the contract or other reasons, the relocated company shall donate the buildings and other facilities constructed on the leased site to the State or a local government or return the leased site and buildings after reinstating them, within the deadline determined by the management agency. |
| (2) | No relocated company shall claim compensation for any damage, etc. consequential to the termination of the contract under any pretext whatever, nor any expenses incurred in returning to the original state under paragraph (1), relocation expenses, and all other expenses. |
| Article 5 (Foreign Investment Support Center) |
A Foreign Investment Support Center (hereinafter referred to as the "Investment Support Center") shall be established in the Korea Industrial Complex Corporation (hereinafter referred to as the "Industrial Complex Corporation") in order to conduct efficient management of the present conditions of state property, public property, etc., as prescribed in the following subparagraphs, and the Investment Support Center shall be responsible to manage the status of all the foreign investment zones. A local government shall report the status of management to the Investment Support Center by the end of February each year and enter the details thereof in the Foreign Investment Zone Management System (FIMS), and the Industrial Complex Corporation shall report the comprehensive management status to the Minister of Trade, Industry and Energy by the end of March each year:
| 1. | The Industrial Complex Corporation shall establish a plan for the operation of the Investment Support Center (including the operation of budget and human resources) and obtain approval from the Minister of Trade, Industry and Energy, by not later than the end of each fiscal year; |
| 2. | The operation period of the Investment Support Center shall be until March 31, 2021, and the Industrial Complex Corporation shall conduct comprehensive evaluation of the performance results of the Investment Support Center and determine on the termination or extension of the period not later than three months before the expiration of the operation period and obtain approval from the Minister of Trade, Industry and Energy. |
SECTION 2 Designation and Management of Complex Foreign Investment Zones
| Article 6 (Procedures for Designation of Complex Foreign Investment Zones) |
| (2) | The Minister of Trade, Industry and Energy shall examine whether the requirements for designation prescribed in Article 7 are fulfilled and other relevant matters on the basis of a designation plan submitted by a Mayor/Do Governor and submit the designation plan to the Foreign Investment Working Committee as an agenda. |
| Article 7 (Requirements for Designation of Complex Foreign Investment Zones) |
| (1) | In designating a complex foreign investment zone (hereinafter referred to as "complex investment zone"), the principle of equity among zones of Cities/Dos shall be taken into consideration and the following requirements shall be fulfilled: |
| 1. | Development of a complex shall have been completed for immediate occupancy in the zone to be newly designated, and the demand of foreign-capital invested companies for the occupancy specified in their reports on investment shall be at least 60/100 of the area of the complex, and the minimum size of the designation shall be at least 80,000 square meters: Provided, That if the occupancy rate of a foreign investment zone existing in the same metropolitan municipality is less than 80/100, new designation or alteration of designation shall be restricted; and in an area other than the Seoul Metropolitan area defined in subparagraph 1 of Article 2 of the Seoul Metropolitan Area Readjustment Planning Act (hereinafter referred to as "area other than Seoul Metropolitan area") a foreign investment zone may be designated, if the demand of foreign-capital invested companies for the occupancy specified in their reports on investment is at least 30/100 and the express demand for occupancy is at least 50/100 of the size of the complex; |
| 2. | In order to expand an existing zone, at least 80 percent of the existing designated zone has been contracted for the occupancy, and a complex for expansion shall have been developed for the immediate occupancy and the demand of foreign-capital invested companies for the occupancy specified in their reports on investment shall not be less than 60/100 of the area of the complex: Provided, That the same shall not apply to cases where there is explicit large-scale demand for sites exceeding the remaining area. |
| (2) | When submitting a plan for new designation or expanded designation of a complex investment zone in the region, a Mayor/Do Governor shall append a report on the examination of the validity thereof taking into comprehensive consideration the viability of foreign investment to be induced, effects on regional development, effects on national economy such as increased employment, effects of subsidization of financial funds, etc. |
| Article 8 (Entrustment of Management of Complex Investment Zone) |
| (1) | In principle, management shall be performed by a management agency: Provided, That where necessary for the specialization and efficiency of the management of a complex investment zone, management thereof may be entrusted to the Industrial Complex Corporation established under Article 45-9 of the Industrial Cluster Development and Factory Establishment Act (hereinafter referred to as the "Industrial Cluster Act"), and where a management agency has consulted with the Minister of Trade, Industry and Energy, it may be entrusted to an agency other than the Industrial Complex Corporation. |
| (2) | The head of an agency entrusted with management shall formulate and apply detailed guidelines for operation to facilitate performance of the affairs prescribed in Article 9. |
| (3) | In order to evaluate important matters for the management of foreign investment zones, a management agency may establish and operate an evaluation committee comprised of not exceeding ten related specialists (hereinafter referred to as the "Evaluation Committee"); and where there is any separate committee related to the inducement of investment, it may act on behalf of the evaluation committee. |
| Article 9 (Management of State and Public Property in Complex Investment Zones) |
| (1) | Where a management agency has entrusted management of a complex investment zone under Article 8, the Minister of Trade, Industry and Energy or a Mayor/Do Governor shall entrust the entrusted agency with the following affairs among the affairs related to the management of the State and public property in the relevant investment zone, pursuant to Article 29 of the State Property Act and Article 104 (3) of the Local Autonomy Act: |
| 1. | Selection of companies that intend to take occupancy in the complex investment zone; |
| 2. | Affairs related to the conclusion of occupancy contracts (including lease contracts in cases of a complex for lease; hereinafter the same shall apply) with relocating companies; |
| 3. | Imposition and collection of rents and rental security deposits of relocating companies, and decision on reduction or exemption thereof; |
| 4. | Management of property in the complex investment zone; |
| 5. | Other affairs incidental to the lease and operation of the complex investment zone. |
| (2) | An entrusted agency shall establish and manage separate accounts for the management of State and public property, and its revenue shall be an aggregate amount of the income accrued from the management of the State and public property, such as rents collected from relocated companies, while its expenditure shall be entrustment fees payable for the entrustment (which shall be apportioned according to the ratios of entrusted property). |
| (3) | Entrustment fee under paragraph (2) shall be appropriated preferentially for the expenses to be incurred for the appropriate management of State and public property: Provided, That in the case of the Industrial Complex Corporation, the use shall be governed by a separate contract. |
| (4) | An entrusted agency shall report the annual management status of State and public property to the Minister of Trade, Industry and Energy and the head of a local government who have entrusted the management of the relevant property, by the end of January of the following year. |
| (5) | An agency entrusted with State and public property shall settle accounts on a fiscal-year basis; and where the revenue referred to in paragraph (2) exceeds the expenditure, it shall be made to pay the difference, and where the expenditure exceeds the revenue, the difference shall be paid to the entrusted agency. |
| Article 10 (Establishment of Master Plans for Management of Complex Investment Zones) |
| (1) | A management agency shall establish a master plan for the management of complex investment zones specifying the following matters (hereinafter referred to as "master plan") under Article 33 of the Industrial Cluster Act and manage it after obtaining approval from the Minister of Trade, Industry and Energy: |
| 1. | Matters concerning the sizes of the complex investment zones to be managed; |
| 2. | Matters concerning the zones by each use of land; |
| 3. | Matters concerning the arrangement of factories by category of business; |
| 4. | Matters concerning the categories of business eligible for occupancy under Article 11; |
| 5. | Matters concerning the qualifications for, and priority order of, occupancy under Article 12; |
| 6. | Matters concerning the limit on occupancy under Article 15; |
| 7. | Matters concerning the reduction or exemption of rents under Article 18 (methods of applying reduction or exemption rate of each complex according to the shares owned by the State and the local government); |
| 8. | Other matters necessary for the management of complex investment zones. |
| (2) | Upon granting approval under paragraph (1), the Minister of Trade, Industry and Energy shall publicly announce such fact: Provided, That where the management agency is a Mayor/Do Governor, such public announcement shall be made by the Mayor/Do Governor. |
| Article 11 (Categories of Business Eligible for Occupancy) |
Categories of business eligible to take occupancy in a complex investment zone shall be as follows; and categories of business eligible to take occupancy in each zone shall be specified in a master plan for management referred to in Article 10: | 5. | Other categories of business that a management agency determines, taking account of the industrial characteristics of the relevant region. |
| Article 12 (Qualifications for and Priority Order of Occupancy) |
| (1) | A foreign-capital invested company that meets the following requirements shall be eligible to take occupancy in a complex investment zone: |
| 1. | A company invested solely by foreigners, or a joint venture company in which the share of a foreign-capital invested company is at least 30 percent (10 percent, in cases of typical-type factories of Daebul Foreign Investment Zone; and 50 percent, in cases of business falling under subparagraph 4 of Article 11) of the total number of voting stocks or total amount of contribution and the amount of foreign investment therein is at least 100 million won; |
| 3. | The relevant case shall fall under Article 23 (3) 1 and 2; |
| 4. | No existing foreign-capital invested factory shall be relocated: Provided, That in either of the following cases, such factory may be relocated with approval from the person having the authority to manage the relevant foreign investment zone in an industrial complex: |
| (a) | Where it relocates between foreign investment zones; |
| (b) | Where a foreign-capital invested company increases the foreign investment by at least 30% of the total number of voting stocks or total amount of contribution. |
| (2) | Priority order to take occupancy in a complex investment zone shall be as follows: |
| 1. | Business prescribed in the subparagraphs of Article 11, the priority order of which is prescribed in the same Article; |
| 2. | A company that employs above the industrial average; |
| 3. | In cases falling under the same category of business, a company whose amount of foreign investment is higher; |
| 4. | Where the above conditions are met equally, the company which has the higher ratio of foreign investment. |
| Article 13 (Occupancy Contracts) |
| (1) | A person who intends to run a business in a complex investment zone shall conclude a occupancy contract with the management agency under Article 38 (1) through (3) of the Industrial Cluster Act. Even when the details of the project plan submitted as at the time of concluding the occupancy contract is amended, the payment of modified investment amount, the construction of a factory in the modified area for construction thereof, etc. shall be completed within the original period for fulfillment prescribed in Article 20 (2). |
| (2) | If a company that intends to take occupancy in a complex investment zone requests to conclude a occupancy contract, the management agency shall hear the project manager's opinion on review under Article 21-2 of the Enforcement Decree of the Foreign Investment Promotion Act (applicable only where the amount of foreign investment is at least three million U.S. dollars), determine whether the requested matter conforms to the provisions of Articles 11 and 12; seek counsel from external specialists, if necessary; and determine whether to enter into a occupancy contract. |
| (3) | Contracts for taking occupancy in a complex for lease, referred to in paragraph (1), shall include lease contracts. |
| (4) | When the change of ownership of a relocated company is expected due to an auction, etc., the management agency may impose a restriction on the modification of its project plan (including new extension of a building). |
| Article 14 (Termination, etc. of Occupancy Contracts) |
| (1) | Where a relocated company falls under any of the following cases, the management agency may terminate the occupancy contract: |
| 2. | Where it becomes disqualified for occupancy prescribed in Article 12 (1) or fails to meet the limit on occupancy prescribed in Article 15; |
| 3. | When it uses the site in violation of Article 16 (3) and (4); |
| 4. | When it disposes of the leased site or buildings at its own discretion, or it is impracticable to operate its business due to an auction or under other Acts; |
| 5. | Where a request for the commencement of company reorganization procedures or a petition for declaring bankruptcy is filed under the Debtor Rehabilitation and Bankruptcy Act against the relocated company; |
| 6. | Where it closes down its business or fails to perform business activities for at least one year; |
| 7. | Where it fails to perform its duties specified in the contract or fails to pay rent for at least one year; |
| 8. | Other cases where it fails to fulfill the contract or violates any Act or subordinate statute, municipal ordinance, etc. |
| (2) | Where it is intended to terminate a occupancy contract with a relocated company in accordance with the criteria prescribed in the subparagraphs of paragraph (1), the management agency shall issue a corrective order, fixing a period not exceeding six months under Article 54 of the Enforcement Decree of the Industrial Cluster Act, and may terminate the occupancy contract if it fails to comply with such order: Provided, That in cases falling under any of paragraph (1) 3 through 5 and 8, the occupancy contract may be terminated immediately. |
| (3) | A management agency that intends to terminate a occupancy contract under paragraph (1), shall hold a hearing. |
| Article 15 (Limit on Occupancy) |
Limit on sale in lots and lease of a complex investment zone shall be as follows:
| 1. | The area for construction of a factory with which a relocating company should comply shall be the area of a site calculated by applying the standard area ratio of a factory of the relevant category of manufacturing business (in cases of a category of business whose standard area ratio of a factory is less than 12 percent, the area ratio of 12 percent shall apply); and where it is intended to relocate the factory into a site smaller than the area for construction of a factory falling under the standard area ratio of a factory, it may be allowed to take occupancy in a site, the size of which is calculated pursuant to the same formula. In such cases, the land corresponding to the ratio that exceeds area ratio allowed for the occupancy compared with the area ratio for construction of a factory, shall be subject to the imposition of the rent under Article 17 (3) from the time of the occupancy; |
| 2. | The limit on lease area for each company in a complex investment zone shall be determined by a master plan for management referred to in Article 10, taking into consideration the characteristics of each complex within an area not exceeding the value corresponding to 100/100 of the amount of foreign investment made in the relocated company; |
| 3. | In examining a occupancy contract, a management agency shall calculate an optimum site area so that it may not rent an excessive area. |
| (1) | A management agency may conclude a occupancy contract with a company that moves in to a complex for lease for a total period of up to 50 years. In such cases, a renewal contract shall be concluded every ten years, and the amount of foreign investment, area for construction of a factory, etc. among the terms and conditions of the renewal contract, shall mean the amount and area as at the time of concluding the initial occupancy contract. |
| (2) | A relocated company that intends to conclude a renewal contract under paragraph (1) shall request the management agency to conclude a renewal contract, by not later than three months before the expiration of the occupancy contract, and the management agency shall examine whether the relocated company has fulfilled its project plan, and conclude the extension of the contract unless any special reason exists. |
| (3) | A relocated company shall neither use the site for purposes other than those prescribed in the occupancy contract nor conduct any act of disposition, such as the sale, lease, and exchange of a building, without written consent of the management agency. |
| (4) | If requested by a relocated company, the management agency may conduct the following acts with the consent of the Minister of Trade, Industry and Energy: |
| 1. | Any act causing alteration of a right, such as the sublease and transfer of the leased site; |
| 2. | Any act altering the form, quality, etc. of the leased site. |
| Article 17 (Rents, Rental Security Deposits, etc.) |
| (1) | Annual rent in a complex investment zone shall be determined by the Minister of Trade, Industry and Energy, following consultation with the Minister of Strategy and Finance and a Mayor/Do Governor, in an amount calculated by multiplying the acquisition value (referring to the publicly announced individual land price, where a publicly announced individual land price under the Act on the Public Announcement of Real Estate Values exceeds the acquisition value; hereinafter the same shall apply) of the relevant complex investment zone each year by a rate of at least 10/1,000. |
| (2) | A rental security deposit shall be an amount calculated by multiplying the acquisition value of the relevant complex investment zone by 50/1,000 of the acquisition value or a higher rate, and the payment of rental security deposit may be replaced by submission of a guarantee insurance policies, if requested by a company that takes occupancy therein. |
| (3) | The rents for a relocated company that has failed to fulfill the amount of foreign investment and the area for construction of a factory applied when determining the limit on occupancy under Article 15, a relocated company that has failed to meet the qualifications for the occupancy prescribed in Article 12 (1), and a relocated company that falls under any ground for termination of the occupancy contract prescribed in Article 14, shall be determined by the Minister of Trade, Industry and Energy, following consultation with the Minister of Strategy and Finance and a Mayor/Do Governor, in an amount calculated by multiplying the acquisition value by the rate of at least 50/1,000 of the acquisition value. |
| (4) | A relocating company shall pay rent for the year in which it has relocated in an amount calculated by the month (if the number of days of use is less than a month, it shall be calculated by the day) from the time the contract is concluded to the year end and pay the rental security deposit in an amount prescribed in paragraph (2). When concluding a renewal contract, the rental security deposit already paid shall be settled by applying the rental security deposit prescribed in paragraph (2), as at the time the renewal contract is concluded. The rent for the following year shall be paid by December 31 of the preceding year, and the management agency shall issue a notice for payment of the rent by not later than November 30 of the preceding year. |
| (6) | Where any article on the ground of a foreign investment zone is acquired through an auction or under any other Act, no rent shall be imposed on the person who has acquired the real rights thereover during the period for concluding a occupancy contract prescribed in Article 40 (1) of the Enforcement Rule of the Industrial Cluster Act and the period for the transfer prescribed in Article 40 (2) of the same Enforcement Rule: Provided, That where a person who conducts such act as the possession and use of a real rights over an article on the ground shall be subject to the imposition of rent under Article 17 (3). |
| Article 18 (Reduction or Exemption of Rents) |
| (1) | The rent payable by a relocated company may be reduced or exempted under Article 13 (7) and (9) of the Act. In applying a rate of reduction or exemption in such cases, the investment amount that has been paid in full to invest in the relevant factory, etc. shall be construed as the amount of foreign investment, and the time that falls one month before the issuance of payment notice of the rent, shall be construed as the date of occurrence of the legal ground for calculation of the number of workers ordinarily employed under Article 7-2 of the Enforcement Decree of the Labor Standards Act, and the companies subject to the application of rents under Article 17 (3) shall be excluded from the companies eligible for the reduction or exemption of rents. |
| (2) | A management agency shall formulate criteria for the reduction and exemption of rents of each complex as prescribed in paragraph (1) and reflect them in a master plan for management referred to in Article 10. |
| (3) | A relocated company that intends to have its rent reduced or exempted under paragraph (1) shall file an application with the management agency, appending documents substantiating the ground therefor, and the reduction or exemption of the rent shall apply starting from the month in which the decision on reduction or exemption is made. |
| (4) | Even if a management agency decides to reduce or exempt rent under paragraph (1), a relocated company shall pay such rent fixed before the reduction or exemption is granted until the completion of the construction of its factory, and the management agency shall return the reduced or exempted rent to the relocated company after confirming the completion of the construction of the factory of the relevant company. |
| (5) | The relevant management agency shall ascertain whether the leased site with its contract expired pursuant to Article 4 (1) has been reinstated and whether rents have been fully paid and then shall return the rental security deposit collected under Article 17 (2) with interest thereon. |
| (6) | Reduction or exemption of the rent for a project for which the decision on tax reduction or exemption has been received under the provisions of the Restriction of Special Taxation Act out of the reduction or exemption of the rent under the forepart of paragraph (1) shall be limited to a place of business that operates a business (technology) eligible for tax reduction or exemption, and the period of reduction or exemption shall be ten years. The subsequent rate of reduction or exemption shall be subject to the application of Article 13 (7) and (9) of the Act depending on the amount of foreign investment and the number of persons employed. |
| (7) | Where a business (technology) eligible for tax reduction or exemption and a business other than that are operated together at a place of business that operates a business (technology) eligible for tax reduction or exemption referred to in the middle part of paragraph (6), the rents shall apply respectively. In such cases, the ratio of the business (technology) eligible for tax reduction or exemption and the business other than that shall be calculated by the Evaluation Committee taking into consideration the amount of investment of each business. |
| Article 19 (Redemption of Reduced or Exempted Rents) |
Any of the following relocated companies shall be subject to redemption of rents reduced or exempted under Article 18: | 1. | Where the decision on reduction or exemption has been received by substantiating a false fact, the reduced or exempted rent shall be redeemed retroactively from the date the reduced or exempted rent began to apply; |
| 2. | Where a company fails to meet the criteria for the reduction or exemption of the rent after the decision on the reduction or exemption of the rent has been made, or where it becomes subject to imposition of rent under Article 17 (3), it shall be redeemed retroactively from the date on which the grounds therefor has occurred. |
| Article 20 (Fulfillment of Project Plans) |
| (1) | A company that moves into a complex investment zone shall faithfully comply with the limit on occupancy prescribed in Article 15. |
| (2) | The period for fulfillment of the project plan of a relocating company shall be five years from the date the occupancy contract is concluded, and whether it is fulfilled shall be judged by the remaining amount of foreign investment and building area as at the time five years pass or thereafter. |
| (3) | No relocated company shall dispose of the land purchased with a subsidy provided by the State or a local government within five years after the conclusion of the contract for sale in lots; and where it is disposed of within ten years after the conclusion of such contract, an amount equivalent to the rate of subsidy granted by the State or a local government out of the price of sale, shall be redeemed. |
| (4) | Where a relocated company that has rented any land in a complex investment zone, fails to comply with the amount of foreign investment during the period for fulfillment prescribed in paragraph (2), the management agency shall apply rent prescribed in Article 17 (3) retroactively from the date the amount of foreign investment falls short of the limit on occupancy and shall not apply a rate of reduction of exemption prescribed in Article 18: Provided, That in extenuating circumstances, the company may be allowed, following consultation with the Minister of Trade, Industry and Energy, to comply with the amount of foreign investment, fixing a period not exceeding one year from the expiration date of the period for fulfillment, and the rent prescribed in Article 17 (3) shall apply for such period for the excessive area retroactively from the date such reason occurs. |
| (5) | Where a relocated company fails to comply with the area for construction of a factory, the management agency shall apply the rent prescribed in Article 17 (3) retroactively from the date of occurrence of the cause for falling short of the area for construction of a factory compared with the limit on occupancy and shall not apply a rate of reduction of exemption prescribed in Article 18: Provided, That in extenuating circumstances, it may be allowed, following consultation with the Minister of Trade, Industry and Energy, to comply with the area for construction of a factory, fixing a period not exceeding one year from the expiration date of the period for fulfillment, and the rent prescribed in Article 17 (3), shall apply for such period for the excessive area retroactively from the date of occurrence of such reason. |
| (6) | Where a relocated company fails to perform a project plan under paragraph (2) and returns the industrial land within five years, it shall be subject to pay a rent prescribed in Article 17 (3) by the day retroactively from the conclusion date of the occupancy contract until the date of termination thereof for the part which has not been complied with, and the whole amount of the rent reduced or exempted under Article 18 shall be redeemed. |
| (7) | Where any site is rent with the long-term loan as part of the amount of foreign investment by calculating the limit on occupancy prescribed in Article 15, if the company fails to meet the limit on occupancy by repaying the long-term loan, the rent prescribed in Article 17 (3) shall apply. |
| (8) | A management agency shall regularly check and verify the fulfillment of the project plan referred to in paragraph (1), and compile and include the result thereof when reporting the status of management under Article 5. |
| (9) | Where a company fails to fulfill the limit on occupancy within the period prescribed in paragraph (4) or (5), the management agency shall terminate the occupancy contract as prescribed in Article 14: Provided, That even if it fails to meet the limit on occupancy due to the withdrawal, etc. of foreign investment, if the management agency deems it necessary to retain the relocated company continuously, for such reasons as development of the regional economy, impossibility of redemption of the site or building, etc., the company shall be allowed to continuously occupy and use the same, but subject to the imposition of the rent prescribed in Article 17 (3), and the rate of reduction or exemption under Article 18 shall not apply. |
| Article 21 (Maintenance of Qualifications for Occupancy) |
| (1) | Where a relocated company fails to meet any of the qualifications for occupancy in extenuating circumstances, such as the withdrawal of a foreign share, after it has moved into a complex investment zone, the management agency may allow it, following consultation with the Minister of Trade, Industry and Energy, to meet the qualifications for occupancy, fixing a period not exceeding two years. In such cases, the relocated company shall be subject to the application of the rent prescribed in Article 17 (3) for the excessive area from the time it fails to meet the qualifications for occupancy, and the rate of reduction or exemption under Article 18 shall not apply: Provided, That if the relocated company fails to meet any of the qualifications for occupancy by increasing only its domestic capital to install factory facilities or machinery, installations or equipment, without reducing the amount of foreign investment (limited to where the amount of foreign investment is at least ten percent of the total number of stocks or total amount of contribution referred to in Article 12 (1) 1) after the fulfilling the project plan under Article 20 (1), it shall be subject to the continuous application of the rate of reduction or exemption under Article 18. |
| (2) | Where a relocated company fails to meet the qualifications for occupancy during the period prescribed in paragraph (1), the management agency shall terminate the occupancy contract under Article 14: Provided, That the relocated company that is in operation falls under any of the following cases, it shall be allowed to continuously occupy and use but subject to the application of the rent prescribed in Article 17 (3), and the rate of reduction or exemption under Article 18 shall not apply: |
| 1. | Where a relocated company fails to fulfill any of the requirements for occupancy due to withdrawal of the share of foreign investment, if the management agency deems it necessary to retain the relocated company continuously for such reasons as the development of regional economy, impossibility of redemption of the site or building, etc.; |
| 2. | Where the share of foreign investment is at least 500 thousand U.S. dollars even if the share has changed, due to capital increase, etc., to less than the share rate of foreign investment prescribed in Article 12 as the qualifications for occupancy. |
| (3) | In cases of a relocated company that has purchased land at a price not exceeding the cost of development (or purchase price, etc.), the amount prescribed in Article 20 (3) shall be redeemed. |
| Article 22 (Occupancy System for Subcontractors) |
| (1) | Where a relocated company (referring to a company in which the share of foreign investment is at least 30%) requests to allow its subcontractor, in which there is no share of foreign investment, to use part of a factory of the relevant relocated company to shorten the process or to save cost, etc., the management agency may allow the occupancy with the consent of the Minister of Trade, Industry and Energy under Article 16 (4), following evaluation of the Evaluation Committee. |
| (2) | A management agency may conclude a occupancy contract with a subcontractor allowed for the occupancy under paragraph (1), within the remaining period of the lease of the relocated company at the request of the relevant relocated company, and shall conclude a renewal contract every five years. |
| (3) | The area allowed for a subcontractor to move in shall not exceed 30 percent of the total building area of the factory of the relevant relocated company, and the rent shall be imposed on the subcontractor within the limit of the area of the site corresponding to the ratio of the total building area of the factory to be used. |
| (4) | A subcontractor shall be subject to the application of the rent prescribed in Article 17 (3). |
| Article 22-2 (Conclusion of Renewal Contracts) |
Where a relocated company that intends to conclude a renewal contract under Article 16 (1) for continuous occupancy and use in a complex investment zone, the renewal contract shall be concluded with the management agency applying the matters prescribed in the Act, Decree, Guidelines, etc. valid as at the time of the conclusion thereof.
| Article 22-3 (Cancellation of Designation of Complex Foreign Investment Zones) |
| (1) | Where a complex foreign investment zone fulfills the following requirements, a Mayor/Do Governor may request the Foreign Investment Committee to deliberate on the cancellation of the designation: |
| 1. | at least 15 years (where the complex has been expanded several times, this period shall be reckoned from the date on which at least 2/3 of the total area was designated) shall have lapsed since it was designated as a complex foreign investment zone; |
| 2. | The occupancy rate (referring to the rate of area occupied by relocated companies compared with the designated area) of the complex foreign investment zone shall be at least 90/100; |
| 3. | All of the relocated companies in the complex foreign investment zone shall have consented to the cancellation of the designation of the relevant complex foreign investment zone. |
| (2) | In requesting the cancellation of designation of a complex foreign investment zone, a Mayor/Do Governor shall comprehensively analyze the effect on the inducement of foreign investment, regional economy, etc., and formulate the measures therefor. |
| (3) | Where the Foreign Investment Committee adopts a resolution for the cancellation of the designation of a complex foreign investment zone, a Mayor/Do Governor shall cancel the designation within 15 days from the date of resolution of the Foreign Investment Committee. |
| (4) | Upon cancelling designation of a complex foreign investment zone under paragraph (3), a Mayor/Do Governor shall publicly announce such fact in the Official Gazette or an official report and notify the Minister of Trade, Industry and Energy, the Commissioner of the National Tax Administration, the Commissioner of the Korea Customs Service, and the head of the relevant Si/Gun/Gu thereof within ten days from the cancellation date. |
| (5) | A complex foreign investment zone developed as a general industrial complex, etc. under Article 18 (6) of the Act shall be deemed continuously designated as a general industrial complex, etc. even after the cancellation of the designation as a foreign investment zone. |
| (6) | Upon cancellation of designation of a complex foreign investment zone, the qualifications as a company relocated in a complex foreign investment zone fulfilling the requirements for the reduction and exemption of rent and tax prescribed respectively in the Act, the Decree, and Chapter V of the Restriction of Special Taxation Act shall be deemed lost. |
| Article 22-4 (Occupancy System for Entities Engaged in Solar Energy Power Generation Business) |
| (1) | Where any relocated company requests the management agency to allow an entity engaged in electricity generation business under subparagraph 3 of Article 2 of the Electric Utility Act (including relocated companies) by using new or renewable energy under Article 2 of the Act on the Promotion of the Development, Use and Diffusion of New and Renewable Energy to use part of the site, factory, etc. of the relocated company, the management agency may allow such entity to take occupancy with consent from the Minister of Trade, Industry and Energy under Article 16 (4), following evaluation of the Evaluation Committee. In such cases, the relocated company shall conclude a contract for the modification of terms and conditions of occupancy with the management agency and shall not conduct any act of acquiring or transferring the electric business permit, change of the place of business, zone, etc. |
| (2) | A management agency may conclude a occupancy contract with the entity engaged in electricity generation business which is allowed for occupancy under paragraph (1) for a period not exceeding the remaining lease period of the relocated company at the request of the relevant relocated company. |
| (3) | Where a relocated company that intends to install a solar-power generation facility for in-house purpose at its factory, building, etc. (excluding land), it may install it only at the relevant place of business, without undergoing evaluation process and obtaining consent from the Minister of Trade, Industry and Energy referred to in paragraph (1). |
| (4) | The area that an entity engaged in electricity generation business may be allowed to occupy under paragraph (1) shall not exceed 30 percent of the building area of the factory, and the rent under Article 17 (3) shall be paid within the limit of the area of the site equivalent to the ratio of the building area of the factory to be used by the entity: Provided, That the area allowable for occupancy and the rent shall not apply to an entity engaged in solar power generation business by utilizing external walls, etc. of an existing factory. |
| Article 22-5 (Additional Use of Unleased Sites, etc.) |
| (1) | Where a relocated company that has concluded a renewal contract under Article 22-2, files a request for additional use of any unleased site, etc. located in the same complex without investing an amount equivalent to 100/100 of the amount of foreign investment, the management agency may allow the additional use thereof for the remaining lease period of the relocate company after consulting with the Minister of Trade, Industry and Energy, following evaluation of the Evaluation Committee. |
| (2) | Where a management agency intends to allow additional use of any unleased site, etc. under paragraph (1), it may allow it after examining whether matters prescribed in guidelines, etc., such as the qualifications for occupancy under Article 12 and limit on occupancy under Article 15, are fulfilled; and taking into consideration the extension of existing facilities, effects of the investment in a new business, effects on the increase of employment, development of regional economy, etc. |
| (3) | For an additionally used site, a management agency shall apply a rent prescribed in Article 17 (3) and the rate of reduction or exemption under Article 18 shall not apply: Provided, That where foreign investment is induced in an amount corresponding to the value of the additionally used site, it shall impose rent prescribed in Article 17 (1) and may apply a rate of reduction or exemption under Article 18. The additional site, too, shall be subject to the fulfillment of the criteria for the area for construction of a factory prescribed in subparagraph 1 of Article 15 (minimum ratio of area: 12 percent). |
| Article 22-6 (Establishment of Complex Zones) |
| (1) | Where a relocated company that has fulfilled the qualifications and limit on occupancy prescribed in Articles 12 and 15 requests to establish a complex zone under Article 33 (6) of the Industrial Complex Act, the management agency may establish it with consent from the Minister of Trade, Industry and Energy, following evaluation of the Evaluation Committee. |
| (2) | In conducting evaluation by the Evaluation Committee under paragraph (1), the management agency shall examine and evaluate the purpose of the establishment of the complex zone, products of a foreign corporation in equity investment relationship with the relevant foreign-capital invested company, whether the products are produced by the relevant foreign-capital invested company, etc. |
| (3) | The area to be allowed to establish a complex zone shall be less than ten percent of the total floor area of the factory of the relevant relocated company; and the rent shall be five percent of the acquisition value thereof; and the rate of reduction of exemption under Article 18 shall not apply: Provided, That in calculating the rent, the acquisition value shall be the higher amount between the average value of the sites in the relevant industrial facility zone and that in the support facility zone. |
| (4) | A management agency may conclude a occupancy contract for facilities in the complex zone allowed to be established under paragraph (1) at the request of the relevant relocated company for a period not exceeding the remaining lease period of the relocated company, and shall conclude a renewal contract every five years. |
| (5) | Where a management agency allows a complex zone under paragraph (1), it shall reflect matters concerning the complex zone in the master plan for management. |
SECTION 3 Individual Foreign Investment Zones
| Article 23 (Criteria for Designation of Individual Foreign Investment Zones) |
| (1) | The amount of foreign investment prescribed in the subparagraphs of Article 25 (1) of the Decree means the amount of foreign investment defined in Article 2 (1) 4 of the Act: Provided, That the amount of foreign investment paid in full before filing an application for the designation an individual foreign investment zone (hereinafter referred to as "individual investment zone") shall be excluded therefrom. |
| (2) | Notwithstanding the proviso to paragraph (1), the amount of foreign investment paid in full shall be included in the amount of foreign investment, if it is acknowledged to have been used for the purpose of obtaining designation of a foreign investment zone, such as the purchase of real estates in the area desired to be designated as an individual investment zone. |
| (3) | "Where new factory facilities are installed" or "where new facilities are installed" in Article 25 (1) 1, 2 and 3 respectively, means any of the following cases: |
| 1. | Where any factory facilities (referring to a place of business, in cases of business other than manufacturing business categorized in the Korean Standard Industrial Classification; hereinafter the same shall apply) are newly installed or where any machinery or installations, equipment are newly installed in an existing building; |
| 2. | Where the same corporation installs any factory facilities, or any machinery, installations or equipment, the accounting of which can be installed separately from the existing factory facilities; |
| 3. | Where any business activities are conducted after obtaining a use permit of a building under Article 22 of the Building Act after acquiring a building the construction of which is incomplete: Provided, That the Foreign Investment Committee may choose not to acknowledge it depending on the stage of progress of the construction work. |
| (4) | "Number of full-time employees" in Article 25 (1) 4 (c) of the Decree means the number of employees who have paid income tax on earned income under the Income Tax Act each month. The criteria for the application of the number of full-time employees hereinafter shall be the same. |
| (5) | Where at least two foreign investors intend to obtain designation of an individual investment zone from a Mayor/Do Governor under Article 18 (2) of the Act, the relevant foreign investors shall conclude a contract for the implementation of the investment plan and the duties for fulfillment thereof between or among themselves. |
| (6) | The Foreign Investment Committee shall, by a resolution, verify as to whether the requirements prescribed in the subparagraphs of Article 25 (1) of the Decree are fulfilled. |
| (7) | Where the criteria for designation are not complied with due to the redemption of a long-term loan from the amount of foreign investment that has met the criteria for designation prescribed in the subparagraphs of Article 25 (1) of the Decree, the cancellation of the designation of an individual foreign investment zone shall be requested to the Foreign Investment Committee: Provided, That where the foreign investment fulfilling the criteria for designation is made within six months, the designation shall remain in effect. |
| Article 24 (Procedures for Designation) |
| (2) | Article 11 of the Enforcement Decree of the Industrial Sites and Development Act shall apply mutatis mutandis to the procedures for hearing opinions under Article 25 (8) of the Decree: Provided, That it shall be deemed to have heard opinions, if the procedures for hearing opinions have already been finished as at the time the industrial complex is designated and developed and a foreign-capital invested company moves in according to the relevant development plan. |
| (3) | A hearing of opinions shall be held before a designation plan is submitted to the Minister of Trade, Industry and Energy. |
| (4) | The Minister of Trade, Industry and Energy shall prepare an evaluation report taking into comprehensive consideration the viability of foreign investment to be induced, effects on regional development, effects on national economy such as the increased employment, effects of subsidization of financial funds, etc. based on the designation plan submitted by a Mayor/Do Governor and submit it together with the designation plan, to the working committee of the Foreign Investment Committee (hereinafter referred to as the "Working Committee") as an agenda. |
| (5) | Where necessary, the Minister of Trade, Industry and Energy may request a Mayor/Do Governor to supplement his/her designation plan and request data necessary for the preparation of an evaluation report on the designation plan from the relevant Mayor/Do Governor or foreign investor. |
| (6) | The Foreign Investment Inducement Subcommittee established under Article 35 (4) of the Decree may provide support for the necessary matters such as prior consultation with the Ministries related to the application for designation of an individual investment zone. |
| (7) | Where the Foreign Investment Committee adopts a resolution on the necessity for designation of an individual investment zone following the deliberation made under Article 25 (9) of the Decree, a Mayor/Do Governor shall publicly announce such fact in an Official Gazette or official report under Article 18 (3) of the Act and send copies of related documents to the head of the relevant Si/Gun/Gu. |
| (8) | Where the Foreign Investment Committee rejects the designation as a result of the deliberation conducted under Article 25 (9) of the Decree, a Mayor/Do Governor shall notify the grounds therefor to the relevant foreign investor. |
| (9) | Where a Mayor/Do Governor intends to lent a site after the designation and public announcement of an individual investment zone, he/she shall conclude a contract for lease of land (occupancy contract) reflecting the matters resolved upon by the Foreign Investment Committee and send one copy of the contract to the Minister of Trade, Industry and Energy. |
| Article 25 (Designation and Development of Individual Investment Zones in Areas other than Industrial Complexes) |
| (2) | Where a Mayor/Do Governor intends to designate a place of business or facility set forth in Article 25 (1) 2 (b) of the Decree as an individual investment zone, he/she may do so after obtaining approval of a business plan under Article 15 of the Tourism Promotion Act. |
| (1) | A foreign-capital invested company relocated in an individual investment zone, shall file a report with the competent Mayor/Do Governor on the status of the amount of foreign investment made in the immediately preceding year by the end of February each year in attached Form 4. |
| (2) | A foreign-capital invested company whose place of business or factory has been designated as an individual investment zone due to the number of full-time employees shall file a report with the competent Mayor/Do Governor on details of full-time employment during the immediately preceding year, by the end of February of each year in attached Form 5. |
| (3) | A Mayor/Do Governor having jurisdiction over an individual investment zone shall check and confirm whether the foreign investment has been made according to the designation plan, compile and submit the result thereof to the Industrial Complex Corporation by not later than March 15 each year, and the Industrial Complex Corporation shall report thereon to the Minister of Trade, Industry and Energy by the end of March. |
| (4) | Where a relocated company fails to perform any of its obligations under Article 25 (11) of the Decree, a Mayor/Do Governor having jurisdiction over an individual investment zone shall report such fact to the Minister of Trade, Industry and Energy within ten days from the relevant date. |
| (5) | Where a foreign-capital invested company relocated in an individual investment zone, fails to meet any of the criteria for designation prescribed in Article 25 (1) and (5) of the Decree after fulfilling the designation plan, due to a change of the circumstances, it shall report such fact to the Mayor/Do Governor within ten days from the date it fails to meet the criteria for designation; and the Mayor/Do Governor shall report thereon immediately to the Minister of Trade, Industry and Energy. |
| (6) | Except as provided for in the Act, the Decree, and this Guideline, Articles 30 through 45-2 of the Industrial Cluster Act shall apply mutatis mutandis to the management of an individual investment zone. |
| (7) | Where any site designated as an individual investment zone is lent to a foreign-capital investment company, a Mayor/Do Governor shall apply the provisions applicable to a company relocated in a complex investment zone under Section 2 where there is any matter not separately prescribed in a contract concluded under Article 24 (9). |
Rents of an individual investment zone under Article 19 (7) of the Decree may be determined by the Foreign Investment Committee taking into consideration the effects on the national economy, etc.
| Article 26-3 (Limit on Move-In) |
Notwithstanding Article 26 (7), the limit on the area for relocation in an individual investment zone shall be an area not exceeding the value corresponding to 50/100 of the amount of foreign investment made by the relocating company.
| Article 27 (Cancellation of Designation) |
| (1) | Where the Foreign Investment Committee adopts a resolution to cancel the designation of an individual investment zone, a Mayor/Do Governor shall cancel the designation within 15 days from the date the Foreign Investment Committee adopts the resolution. |
| (2) | Upon cancellation of an individual investment zone under paragraph (1), a Mayor/Do Governor shall publicly announce such fact in the Official Gazette or official report and notify the Minister of Trade, Industry and Energy, the Commissioner of the National Tax Administration, the Commissioner of the Korea Customs Service, and the head of the relevant Si/Gun/Gu thereof within ten days from the cancellation date. |
| (3) | An individual investment zone developed as a general industrial complex, etc. under Article 18 (6) of the Act shall be deemed continuously designated as a general industrial complex, etc. even after the cancellation of the designation of an individual investment zone. |
| (4) | Where the designation of an individual investment zone to be developed as a general industrial complex, etc. under Article 18 (6) of the Act is cancelled before the commencement of the development as a general industrial complex, etc., the relevant Mayor/Do Governor shall promptly determine whether to cancel the designation of a general industrial complex, etc. or to develop it, taking into consideration the necessity to develop the general industrial complex, etc., possibility of sale in lots, etc. |
| (5) | Where a foreign-capital invested company relocated in an individual investment zone under Article 18 (1) 2 and (2) of the Act fails to meet the criteria for designation under Article 25 (1) or (5) of the Decree, the criteria for designation may be met by inducing a new foreign-capital investment company. |
| (6) | Where it is intended to meet the criteria for designation under paragraph (5), the designation plan shall be subject to prior deliberation by the Foreign Investment Committee. |
| (8) | Upon withdrawal of the designation of an individual investment zone, the qualifications as a company relocated in an individual investment zone fulfilling the requirements for the reduction and exemption of rent and tax prescribed respectively in the Act, the Decree, and Chapter V of the Restriction of Special Taxation Act, shall be deemed lost. |
SECTION 4 Designation and Management of Services-based Foreign Investment Zones
| Article 28 (Procedures for Designation of Services-based Foreign Investment Zones) |
| (1) | A plan for designation of a services-based foreign investment zone (hereinafter referred to as "services-based investment zone") under Article 18 (1) 3 and 4 of the Act shall be prepared in attached Form 3. |
| (2) | The Minister of Trade, Industry and Energy shall examine a designation plan submitted by a Mayor/Do Governor about whether the requirements for designation prescribed in Article 29 are fulfilled and submit the designation plan to the Foreign Investment Working Committee as an agenda item. |
| Article 29 (Requirements for Designation of Services-based Foreign Investment Zones) |
| (1) | In designating a services-based investment zone, the principle of equity among zones of Cities/Dos shall be taken into consideration and the requirements prescribed in paragraph (2), shall be fulfilled: |
| (2) | A newly or additionally designated zone (site) or building shall be available for immediate occupancy, and the demand of foreign-capital invested companies for the occupancy shall be explicitly specified in their reports on investment: Provided, That in designating a certain space of state or public property (including a building) beforehand, the demand for the occupancy specified in their reports on investment, shall be secured at a rate of at least 30 percent of the designated size. |
| (3) | When submitting a plan for new designation or expanded designation of a services-based investment zone in the region, a Mayor/Do Governor shall append a report on examination of the validity thereof taking into comprehensive consideration the viability of foreign investment to be induced, effects on regional development, effects on the national economy such as the increase of employment, effects of subsidization of financial funds, etc. |
| Article 30 (Management of Services-based Investment Zones) |
| (1) | Where a relocated foreign-capital invested company fails to meet qualifications for the criteria for occupancy under Article 34 or the criteria for the fulfillment of the project plan under Article 44 after the relocation due to a change of circumstances, a Mayor/Do Governor shall report such fact to the Minister of Trade, Industry and Energy within ten days from the date on which it fails to meet such criteria. |
| (2) | Where any site designated as a services-based investment zone is lent to a foreign-capital investment company, a Mayor/Do Governor shall apply the provisions applicable to a company relocated in a complex investment zone under Section 2 or 3, to any matter not separately prescribed in the contract concluded under Article 35. |
| Article 31 (Entrustment of Management of Services-based Investments Zones) |
| (1) | In principle, management shall be performed by a Mayor/Do Governor who is a management agency: Provided, That where necessary for the specialization and the efficiency of the management of a services-based investment zone, management thereof may be entrusted to an agency having abundant capacity for and experience in the management of the relevant zone. |
| (2) | The head of an agency entrusted with management shall formulate and apply detailed guidelines for operation to facilitate performance of the affairs prescribed in Article 32. |
| Article 32 (Management of State and Public Property in Services-based Investment Zones) |
| 1. | Evaluation related to the selection of companies that intend to take occupancy in the services-based investment zone; |
| 2. | Affairs related to the conclusion of occupancy contracts (including lease contracts in cases of a complex for lease; hereinafter the same shall apply) with relocating companies; |
| 3. | Imposition and collection of rents and rental security deposits of relocated companies, and decision on reduction or exemption thereof; |
| 4. | Management of property in the services-based investment zone; |
| 5. | Other affairs incidental to the lease and operation of the services-based investment zone. |
| (2) | An entrusted agency shall establish and manage separate accounts for the management of State and public property; and its revenue shall be the aggregate of the income accrued from the management of State and public property, such as rents collected from the companies that have moved in, while its expenditure shall be entrustment fees payable for the entrustment (which shall be shared according to the ratios of entrusted property). |
| (3) | The entrustment fee under paragraph (2) shall be used preferentially for the expenses to be incurred in the appropriate management of State and public property. |
| (4) | An entrusted agency shall file a report with the Minister of Trade, Industry and Energy or a Mayor/Do Governor who has entrusted the management of State and public property, by the end of February the following year, appending the annual status of the management of the relevant property and an audit report of an external specialized agency. |
| (5) | An agency entrusted with state property and public property shall settle accounts on a fiscal-year basis; and where the revenue referred to in paragraph (2) exceeds the expenditure, it shall be required to pay the difference, and where the expenditure exceeds the revenue, the difference shall be paid to the entrusted agency. |
| Article 33 (Categories of Business Eligible to Take Occupancy in Services-based Investment Zones) |
The scope of categories of business eligible to take occupancy in a services-based investment zone shall be as follows:
| 1. | The scope of research and development service business under Article 18 (1) 3 and 4 of the Act, shall be the business categorized as the Research and Experimental Development on Natural Sciences and Engineering (Class No. 7011, 7012) under the Korean Standard Industrial Classification; |
| 2. | Business prescribed in Article 25 (3) 1 through 3 of the Decree; |
| 3. | The scope of cultural industries under Article 25 (3) 4 of the Decree shall be the industries specified in attached Table 1; |
| 4. | The scope of tourism business under Article 25 (3) 5 of the Decree shall be the industries specified in attached Table 2. |
| Article 34 (Qualifications for and Priority Order of Occupancy) |
| (1) | A foreign-capital invested company that meets each of the following requirements, shall be eligible to take occupancy in a complex investment zone: |
| 1. | A company invested solely by foreigners, or a joint venture company in which the share of a foreign-capital invested company is at least 30 percent of the total number of voting stocks or total amount of contribution and its amount of foreign investment is at least 100 million won; |
| 2. | It must be registered as a foreign-capital invested company under Article 21 of the Act by the time the occupancy contract is concluded under Article 35 (1); |
| 3. | Its place of business shall be newly constructed, or established separately from the existing one, to enable separate accounting by the same corporation: Provided, That the existing place of business shall not be relocated, except for the case where it moves to another services-based investment zone within a services-based investment zone. |
| (2) | The minimum number of persons to be employed by each industry as a requirement for taking occupancy in a services-based investment zone, shall be as specified in attached Table 3. |
| (3) | A Mayor/Do Governor may establish a separate guidelines for the designation of services-based investment zones and the evaluation and selection of relocating companies; and may establish an evaluation committee to conduct selection based on the regional characteristics. |
| (4) | In cases of a foreign investment zone designated under Article 29 (1) 2, the priority for occupancy shall be given in the order of a company which employs more persons, a company in which the amount of foreign investment is higher, and a company in which the ratio of foreign investment is higher. |
| Article 35 (Occupancy Contracts) |
| (1) | A person who intends to operate a business in a services-based investment zone shall conclude a occupancy contract with the management agency. Even when any of the details of the project plan submitted as at the time of concluding the occupancy contract are amended, the payment of modified investment amount shall be completed and modified employment status etc. shall be fulfilled within the original period for fulfillment prescribed in Article 44 (2). |
| (2) | If a company requests to conclude a occupancy contract to take occupancy in a services-based investment zone, the management agency shall determine whether to allow the occupancy, following internal deliberation. |
| (3) | A occupancy contract referred to in paragraph (1) shall be deemed to include a contract for lease of a site and buildings, in cases of state or public property. |
| (4) | When any change of ownership of a relocated company is expected due to business suspension, auction, etc., the management agency may impose a restriction on the modification of its project plan. |
| Article 36 (Termination, etc. of Occupancy Contracts) |
| (1) | Where a relocated company falls under any of the following cases, the management agency may terminate the occupancy contract: |
| 1. | Where any building (or part thereof) has been leased, if it fails to commence business without any reasonable ground; or where any site has been leased, if it fails to commence construction works within one year; |
| 2. | Where it becomes disqualified for occupancy prescribed in Article 34 (1) and (2); |
| 3. | Where it uses a site in violation of Article 38 (2) and (3); |
| 4. | When it disposes of the leased land or buildings at its own discretion, or it is impracticable to operate its business due to a public sale, auction, etc.; |
| 5. | Where a request for the commencement of company reorganization procedures or a petition for declaring bankruptcy is filed under the Debtor Rehabilitation and Bankruptcy Act against the relocated company; |
| 6. | Where it closes its business or fails to perform business activities for at least six months; |
| 7. | Where it fails to perform its duties specified in the contract or fails to pay rent for at least six months; |
| 8. | Other cases where it fails to comply with the contract or violates any Act or subordinate statutes, municipal ordinance, etc. |
| (2) | Where it is intended to terminate a occupancy contract with a relocated company in accordance with the criteria prescribed in the subparagraphs of paragraph (1), the management agency shall issue a corrective order fixing a period not exceeding six months: Provided, That in cases falling under any of paragraph (1) 3, 4 and 7, the occupancy contract may be terminated immediately. |
| (3) | A management agency that intends to terminate a occupancy contract under paragraph (1), shall hold a hearing. |
| Article 37 (Limit on Occupancy) |
The limit on lease of a site and buildings in a services-based investment zone shall be as follows:
| 1. | The area for construction of buildings that a company that moves in should comply with, shall be the area of a site calculated by applying 40% which is the standard ratio of construction area for categories of business other than manufacturing business pursuant to Article 5 of the Guidelines for Management of Industrial Complexes under Article 12 of the Industrial Cluster Development and Factory Establishment Act; and where it is intended to take occupancy in a site the size of which does not exceed such ratio, it may be allowed to take occupancy in a site the size of which is calculated pursuant to the same formula. In such cases, the land corresponding to the ratio that exceeds area ratio allowed for the occupancy compared with the area ratio for construction, shall be subject to the imposition of the rent under Article 39 (2) from the time of the occupancy; |
| 2. | A company that moves into a services-based investment zone shall meet each of the criteria for the amount of foreign investment by lease area of each category of business specified in attached Table 4; |
| 3. | In examining a occupancy contract, a management agency shall calculate an optimum lease area so that it may not rent an excessive area; |
| 4. | Notwithstanding paragraph 2, subsidy for the rent for buildings shall be granted only when an amount of foreign investment is reached, at at least 100/100 of the total amount of subsidy. |
| (1) | Where a services-based investment zone is a site for lease, a Mayor/Do Governor may conclude a occupancy contract for a period not exceeding ten years in total, and the period for research and development service business shall be 50 years exceptionally, which is the same as that for manufacturing business. Where a services-based investment zone is any building for lease, a occupancy contract may be concluded with a foreign-capital invested company that intends to move in, for a period not exceeding five years in total: Provided, That in cases of a services-based investment zone, a occupancy contract may be renewed only once for a period not exceeding the former lease period. |
| (2) | No relocated company shall use the site for any purpose other than those prescribed in the occupancy contract nor conduct any act of disposition, such as the sale, lease (or sublease), and exchange of a site or a building, without a written consent of a Mayor/Do Governor. |
| (3) | If requested by a relocated company, a Mayor/Do Governor may engage in any of the following activities with the consent of the Minister of Trade, Industry and Energy: |
| 1. | Altering a right, such as subleasing or transferring the leased site or building; |
| 2. | Altering the form and/or quality of the leased site, or the structure, purpose of use, etc. of a building. |
| Article 39 (Rents for Sites) |
| (1) | Article 17 (1) shall apply mutatis mutandis to the rent and rental security deposit, where a services-based investment zone is a site for lease. |
| (2) | Notwithstanding Article 44 (2), the rent for any of the following relocated companies shall be determined by the Minister of Trade, Industry and Energy, following consultation with the Minister of Strategy and Finance and a Mayor/Do Governor, in an amount calculated by multiplying the acquisition value (referring to the publicly announced individual land price, where a publicly announced individual land price under the Act on the Public Announcement of Real Estate Values exceeds the acquisition value; hereinafter the same shall apply) of the relevant complex investment zone each year by a rate of at least 50/1,000: |
| 1. | A relocated company that has failed to fulfill the amount of foreign investment and the area for construction applied at the time of determining the limit on occupancy under Article 37; |
| 2. | A relocated company that has failed to meet the requirements for occupancy prescribed in Article 34; |
| 3. | A relocated company that falls under any ground for termination of the occupancy contract under Article 36. |
| (3) | In order to rent a site which is the state or public property, a relocating company shall pay rent for the year in which it moves in, in an amount calculated by the month (if the number of days of use ie less than a month, it shall be calculated by the day) and the rental security deposit in an amount prescribed in paragraph (1) by the time the contract is concluded, and pay the rent for the following year until December 31 of the preceding year. For such purpose a Mayor/Do Governor shall issue a payment notice of the rent by not later than November 30 of the preceding year. |
| (5) | Where any article on the ground of a services-based investment zone is acquired through an auction or public sale, no rent shall be imposed to the person who has acquired the real rights thereover during the period for concluding a occupancy contract and the period for the transfer: Provided, That where a person who engages in such activity as the possession, use, etc. of a real rights over an article on the ground shall be subject to the imposition of the rent under paragraph (2). |
| Article 40 (Reduction or Exemption of Rents for Sites) |
| (1) | The rent to be paid by a relocated company may be reduced or exempted under Article 13 (7) and (9) of the Act. In applying a rate of reduction or exemption in such cases, the investment amount completely paid to invest in the relevant place of business shall be construed as the amount of foreign investment, and the companies subject to the application of rents under Article 39 (2) shall be excluded from the companies eligible for the reduction or exemption of rents. |
| (2) | A relocated company that intends to have its rent reduced or exempted under paragraph (1) shall file an application with the management agency, appending documents substantiating the ground therefor, and the reduction or exemption of the rent, shall apply starting from the month in which the decision on reduction or exemption is made. |
| (3) | Even if a management agency decides to reduce or exempt a rent under paragraph (1), a relocated company shall pay the rent fixed before reduction or exemption is granted until the commencement of its business, and the management agency shall return the reduced or exempted rent to the relocated company after verifying the commencement of the business of the relevant company. |
| (4) | A rental security deposit collected under Article 39 (1) shall be returned by a management agency after confirming that the leased site and buildings, the contract for which has been terminated under Article 4 (1), is reinstated. |
| (5) | Reduction or exemption of a rent for a project for which the decision on tax reduction or exemption has been received under the provisions of the Restriction of Special Taxation Act out of the reduction or exemption of a rent under the forepart of paragraph (1) shall be limited to the relevant place of business subject to the decision on tax reduction or exemption. |
| Article 41 (Redemption of Reduced or Exempted Rents) |
Any of the following relocated companies shall be entitled to the redemption of rents reduced or exempted under Article 40: | 1. | Where a decision on the reduction or exemption has been obtained by substantiating a false fact, the reduced or exempted rent shall be redeemed retroactively from the date on which the reduced or exempted rent began to apply; |
| 2. | Where a company fails to meet the criteria for reduction or exemption of a rent after the decision on the reduction or exemption of the rent is made, or where it becomes subject to the application of the rent under Article 39 (2), it shall be redeemed retroactively from the date the grounds therefor occurred. |
| Article 42 (Subsidization of Rents for Buildings) |
| (1) | The State or a local government may subsidize the rent for buildings in a services-based investment zone. In such cases, the State or a local government may subsidize an amount not exceeding 50/100 of the standard rent referred to in paragraph (2): Provided, That the standard rent shall not include a rental security deposit. |
| (2) | The amount of standard rent shall be the arithmetic means of the values appraised by at least two appraisal corporations among the appraisal corporations defined in the Act on Appraisal and Certified Appraiser: Provided, That where there is any existing standard rent for a state or public building or a building owned by a public institution, it may be applied after judging the propriety of the calculation details. |
| (3) | Subsidy for the rent for buildings shall be paid by the year applying a concept of ex-post settlement, and the subsidy for the relevant year shall be paid in the following year: Provided, That the period for subsidization of rent for buildings shall be the period of occupancy contract prescribed in Article 38 (1) and shall not exceed five years. |
| (4) | A relocated company that intends to be granted a subsidy for the rent for buildings under paragraph (1) shall file an application for the subsidy with the management agency appending the documents substantiating the grounds therefor, such as the evidentiary documents of the payment of the rent, and the amount of subsidy to be provided shall be calculated starting from when the occupancy contract is concluded by the relocated company. |
| (5) | In making a claim for the payment of the part paid at the expense of the State out of the expenses subsidized for the rent for buildings, a Mayor/Do Governor shall append a written resolution on subsidization and the documents substantiating the payment of the rent by the relocated company. |
| (6) | In any of the following cases, subsidy for the rent for buildings shall be excluded from the period of payment of the subsidy, from the date such grounds occur: |
| 1. | A relocated company that has failed to fulfill the amount of foreign investment and the area for construction applied at the time of determining the limit on occupancy under Article 37; |
| 2. | A relocated company that has failed to meet the qualifications for occupancy prescribed in Article 34; |
| 3. | A relocated company that falls under any ground for termination of the occupancy contract under Article 36. |
| Article 43 (Redemption of Subsidized Rents for Buildings) |
In any of the following cases, a relocated company shall pay the subsidy received under Article 42, the amount of which shall be calculated by the day retroactively from the date the ground therefor occurred: | 1. | Where the decision to grant a subsidy is received by substantiating a false fact; |
| 2. | Where it fails to meet the criteria for subsidization of the rent for buildings after making a decision to grant it. |
| Article 44 (Fulfillment of Project Plans) |
| (1) | A company that moves into a services-based investment zone shall conscientiously comply with the limit on occupancy prescribed in Article 37. |
| (2) | The period for fulfillment of the project plan (amount of foreign investment, area for construction of buildings, and minimum number of persons to be employed) of a relocating company shall be three years from the date the occupancy contract is concluded. |
| (3) | Where a relocated company that has rented any land in a services-based investment zone fails to fulfill the amount of foreign investment during the period for fulfillment prescribed in paragraph (2), the management agency shall apply the following matters: |
| 1. | Regarding the site, the rent prescribed in Article 39 (2) shall apply, and the rate of reduction of exemption under Article 40 shall not apply: Provided, That if in extenuating circumstances, the company may be allowed, following consultation with the Minister of Trade, Industry and Energy, to fulfill the amount of foreign investment, fixing a period not exceeding six months from the expiration date of the period for fulfillment, and the rent prescribed in Article 39 (2), shall apply for such period for the area which is excessive compared with the amount of foreign investment prescribed in subparagraph 1 of Article 37; |
| 2. | Regarding the site, the rent under Article 39 (2) shall be paid retroactively, and the whole amount of rent reduced or exempted under Article 40 shall be redeemed; |
| 3. | As regards the buildings, the whole amount of subsidy for rent provided to the company under Article 42 shall be redeemed. |
| (4) | Regarding the site, where a relocated company fails to use all of the area for construction, the rent prescribed in Article 39 (2) shall apply only to the area of land exceeding 40% which is the standard ratio of construction area referred to in subparagraph 1 of Article 37. |
| (5) | Regarding the site, where it is leased with the long-term loan by calculating the limit on occupancy prescribed in Article 37 as part of the amount of foreign investment, if the company fails to meet the limit on occupancy by repaying the long-term loan, the rent prescribed in Article 39 (2) shall apply. |
| Article 45 (Maintenance of Qualifications for Occupancy) |
| (1) | Where a relocated company fails to meet the qualifications for occupancy prescribed in Article 34 (1) and (2) due to any extenuating circumstances, such as withdrawal of a foreign share, after it has moved into the services-based investment zone, the management agency may allow it, following consultation with the Minister of Trade, Industry and Energy, to meet the qualifications for occupancy, fixing a period not exceeding six months. |
| (2) | As regards the site, the rent prescribed in Article 39 (2) shall apply from the time that it fails to meet the qualifications for occupancy prescribed in Article 34, and the rate of reduction or exemption under Article 40 shall not apply. |
| (3) | As regards buildings, the subsidization of rent under Article 42 shall cease to apply from the time it fails to meet the qualifications for occupancy. |
| (4) | If a relocated company fails to meet the qualifications for occupancy by increasing only its domestic capital to increase domestic investment, without reducing the amount of foreign investment (limited to cases where the amount of foreign investment is at least ten percent of the total number of stocks or total amount of contribution referred to in Article 34 (1) 1) after fulfilling the project plan referred to in Article 44 (2), it shall be deemed to remain qualified for occupancy. |
| Article 46 (Occupancy of Companies other than Foreign-Capital Invested Companies) |
| (1) | In any of the following cases, a Mayor/Do Governor may allow a company other than a foreign-capital invested company to take occupancy in a services-based investment zone designated under the proviso to the middle part of Article 29 (2) within the limit of 50% of the designated size: |
| 1. | Where it falls under a category of business eligible to take occupancy in a services-based investment zone prescribed in Article 33; |
| 2. | Where it is a subcontractor of an existing relocated foreign-capital invested company and its relocation is necessary to save costs and to establish a collaboration system. |
| (2) | A Mayor/Do Governor may conclude a occupancy contract with a company allowed to move in under paragraph (1) at the request of the relevant relocated company for a period not exceeding the remaining lease period of the relocated company. |
| (3) | As regards buildings, no rent shall be subsidized under Article 42, but the standard rate of rent referred to in Article 42 (2) shall apply, and as regards the site, the rent prescribed in Article 39 (2) shall apply. |
| (4) | In allowing occupancy under paragraph (1), a Mayor/Do Governor shall consult with the Minister of Trade, Industry and Energy, following evaluation of the Evaluation Committee. |
SECTION 5 Supplementary Provisions
| Article 47 (Time Limit for Reexamination) |
ADDENDA
Article 1 (Enforcement Date)
This Guideline shall enter into force on the date they are resolved upon by the Foreign Investment Committee.
Articles 2 (Transitional Measures)
| (1) | Where a foreign-capital invested company relocated in a complex investment zone fails to fulfill the amount of investment specified in the original occupancy contract as at the time a renewal contract is concluded with the management agency, it shall be subject to the application of the rate of reduction or exemption under Article 18 only if it has invested an amount of at least the limit on occupancy prescribed in Article 15. |
| (2) | Where a company relocated in a foreign investment zone falls under Article 20 (5) although it has fulfilled the planned amount of foreign investment during the period for fulfillment prescribed in Article 20 (2), it shall be entitled to the rate of reduction or exemption under Article 18 for a limited period until December 31, 2011. |
ADDENDUM <Public Announcement of the Ministry of Trade, Industry and Energy No. 2012-447, Sep. 18, 2012>
This Guideline shall enter into force on the date they are resolved upon by the Foreign Investment Committee.
ADDENDUM <Public Announcement of the Ministry of Trade, Industry and Energy No. 2012-515, Nov. 14, 2012>
This Guideline shall enter into force on the date they are resolved upon by the Foreign Investment Committee.
ADDENDUM <Public Announcement of the Ministry of Trade, Industry and Energy No. 2013-45, Apr. 17, 2013>
This Guideline shall enter into force on the date they are resolved upon by the Foreign Investment Committee.
ADDENDUM <Public Announcement of the Ministry of Trade, Industry and Energy No. 2013-275, Sep. 26, 2013>
This Guideline shall enter into force on the date they are resolved upon by the Foreign Investment Committee.
ADDENDA <Public Announcement of the Ministry of Trade, Industry and Energy No. 2014-417, Aug. 22, 2014>
Article 1 (Enforcement Date)
This Guideline shall enter into force on the date they are resolved upon by the Foreign Investment Committee.
Articles 2 (Special Provisions on Application)
The limit on occupancy for a company relocated in a complex investment zone on or before August ___, 2014 shall apply from January 1, 2015, and the grounds for termination of a occupancy contract prescribed in Article 14 and the fulfillment of a project plan under Article 20, shall be governed by the former provisions. Articles 3 (Transitional Measures)
| (1) | The limit on, and qualifications for, occupancy for a company relocated in a complex investment zone as at August 30, 2014 shall be governed by the former provisions. |
| (2) | The limit on, and qualifications for, occupancy for a company relocated in the Daebul Foreign Investment Zone or Woljeon (Formerly Pyeongdong) Foreign Investment Zone on or before April 23, 2007 shall be governed by the former provisions. |
ADDENDA <Public Announcement of the Ministry of Trade, Industry and Energy No. 2015-8, Dec. 31, 2014>
Article 1 (Enforcement Date)
This Guideline shall enter into force on the date they are resolved upon by the Foreign Investment Committee.
Articles 2 (Transitional Measures)
| (1) | The qualifications for occupancy under Article 12 (1) shall be governed by the Guidelines in effect as at the time of occupancy. |
| (2) | Subparagraphs 1 and 2 of Article 15 shall not apply, where there were no provisions on the limit on occupancy in the Guidelines in effect as at the time of occupancy. |
Article 3 (Relationship with Former Addenda)
ADDENDUM <Public Announcement of the Ministry of Trade, Industry and Energy No. 2015-200, Mar. 27, 2015>
This Guideline shall enter into force on the date they are resolved upon by the Foreign Investment Committee.
ADDENDUM <Public Announcement of the Ministry of Trade, Industry and Energy No. 2015-371, Jun. 30, 2015>
This Guideline shall enter into force on the date they are resolved upon by the Foreign Investment Committee.
ADDENDA <Public Announcement of the Ministry of Trade, Industry and Energy No. 2016-376 , Jul. 19, 2016>
Article 1 (Enforcement Date)
This Guideline shall enter into force on the date they are resolved upon by the Foreign Investment Committee.
Articles 2 (Applicability to Imposition of Rents on Business Eligible for Tax Reduction or Exemption)
| (1) | The period of reduction or exemption of rent for a place of business, at which a business (technology) being run is eligible for tax reduction or exemption under Article 18 (6), shall apply to companies that conclude occupancy contracts on and after the date this Guideline enter into force. |
| (2) | The imposition of rent for a business (technology) eligible for tax reduction or exemption and a business other than that under Article 18 (7), shall apply from January 1, 2017. |
ADDENDUM <Public Announcement of the Ministry of Trade, Industry and Energy No. 2018-42, Jan. 23, 2018>
This Guideline shall enter into force on the date they are resolved upon by the Foreign Investment Committee.
ADDENDUM <Public Announcement of the Ministry of Trade, Industry and Energy No. 2018-359, Jun. 25, 2018>
This Guideline shall enter into force on the date they are resolved upon by the Foreign Investment Committee.