Cash support for foreign investment
Requirements for cash support- When a foreign investment falls under any of the following subparagraphs with the ratio of foreign investment of at least 30%, the State and the local government may provide certain funds in cash to the foreigner in consideration of whether the foreign investment is accompanied by advanced technology, the effect of technology transfer, the scale of job creation, whether it overlaps with domestic investment, the appropriateness of the location, etc (refer to Article 14-2 (1) of the Foreign Investment Promotion Act and Article 20-2 (1) of the Enforcement Rules of the Foreign Investment Promotion Act).
1. Where a new factory facility (referring to a place of business, if it is not a manufacturing business) is newly installed or expanded to operate a business under Subparagraph 1 of Article 121-2 (1) of the Act On Restriction Of Special Taxation
2. Where a new factory facility (referring to a place of business, if it is not a manufacturing business) is newly installed or expanded to operate high tech and advanced products under Article 5 of the Industrial Development Act
3. Where factory facilities are newly installed or expanded to produce materials and components as materials, components, and equipment under Article 2 of the Enforcement Decree of the Act on Special Measures for the Promotion of Specialized Enterprises, etc. for Materials and Components under Subparagraphs 1 and 2 of Article 2 of the Act on Special Measures for the Competitiveness Enhancement of Materials and Components Industry
4. Where new employment is created in excess of the number of full-time employees under the Enforcement Decree of the Foreign Investment Promotion Act, and where a new factory facility (referring to a place of business, if it is not a manufacturing business) is newly installed or expanded.
5. There shall be at least five full-time researchers with at least a master’s degree or who have at least three years of research experience in the field related to the business under Subparagraph 1 of Article 121-2 (1) of the Act On Restriction Of Special Taxation, the business of high tech and advanced products under Article 5 of the Industrial Development Act, or the business of materials and components under Subparagraph 1 of Article 2 of Act on Special Measures for the Competitiveness Enhancement of Materials and Components Industry. One of the following conditions shall be satisfied.
A. Where new research facilities are installed or expanded for research and development activities for projects
B. Where a nonprofit corporation that has received a contribution under Item C of Subparagraph 4 of Article 2 (1) of the Foreign Investment Promotion Act newly establishes or expands research facilities
6. Where the Foreign Investment Committee deems it necessary to provide support because he/she is a foreign investor who has a greater effect on the domestic economy compared to the amount of investment and meets the requirements under Article 20-2 (5) of the Enforcement Decree of the Foreign Investment Promotion Act
Purpose of the cash grant- Cash support for foreign investment can be received for any of the following purposes (Article 14-2 (1) of the Foreign Investment Promotion Act and Article 20-2 (2) of the Enforcement Decree of the Foreign Investment Promotion Act).
1. Purchase or rent of land or buildings for the installation of factory facilities or research facilities
2. Construction costs of factory facilities or research facilities
3. Expenses incurred in purchasing capital goods and research equipment to be used for business or research at factory facilities or research facilities
4. Expenses incurred in installing infrastructures, such as telecommunications facilities, necessary for the construction of new factory facilities or research facilities
5. Employment subsidy and education and training subsidy
Payment of cash grant- A cash grant may be paid in a lump sum within 1 year from the date when the cash support decision is made or in up to 10 installments within 5 years (Article 20-3 (3) of the Enforcement Decree of the Foreign Investment Promotion Act).
- If the cash grant is paid in installments, considering the change in the investment plan or the performance of cash grant paid in installments, the amount of cash grant paid in installments or the timing of support may be adjusted (Article 20-3 (4) of the Enforcement Decree of the Foreign Investment Promotion Act).
Cancelation, withdrawal, reduction, and refund of cash support for foreign investment- If any of the following grounds arises, such as when the requester applies for cash support under Article 14-2 (1) of the Foreign Investment Promotion Act through false and other wrongful methods, the state and local governments must cancel, withdraw, reduce, or refund the support grant after a deliberation by the Foreign Investment Committee (Article 14-2 (5) of the Foreign Investment Promotion Act and Article 20-4 (1) of the Enforcement Decree of the Foreign Investment Promotion Act).
1. Where a grant is requested through false and other wrongful methods
2. Where an obligation under the cash support contract is not performed
3. When the project concerned can no longer be continued because of the company’s bankruptcy and cessation of business during the contract period