Gyeongsangbuk-do Province , Ministry of Industry
Foreign Investment Promotion Act
• Background: Foreign-invested company A, a manufacturer of secondary battery separator, recently changed the company name and it became unclear whether the company can still benefit from tax breaks.
• Major issues: Company A has moved into individual-type foreign investment zone and is subject to tariff reduction. By Apr 19, the company had a plan to introduce capital goods worth about KRW 10 billion.
Under the Foreign Investment Promotion Act, changing the name of foreign-invested company or foreign investment zone should go through the deliberation of the foreign investment committee in advance. The foreign investment committee was to be held on Apr 30, which caused Company A’s grievance. If Company A cannot benefit from tax breaks, about KRW 800 million would be additionally imposed to the company.
• Requested matter: Requested that the notification on the changes in the designation of individual-type foreign investment zone announced by Gyeongbuk province be enforced before Apr 19, the date when the capital goods are scheduled to arrive, so that the company can benefit from tax breaks for introducing capital goods.
Resoultion and Results
‣ Gyeongbuk province : Change in the name of foreign investment zone following the changes in the company name is in fact a “minor alteration” under the Foreign Investment Promotion Act. Moreover, Gyeongbuk province has announced the notification on the changes in the designation of individual-type foreign investment zone twice in prior consultation with MOTIE without deliberation of the foreign investment committee.
‣Result: This time also, Gyeongbuk province had a prior consultation with MOTIE for the announcement of the notification on the changes so that Company A can benefit from tax breaks.