-
Organization :
Ministry A
-
Regulation :
Restriction of Special Taxation Act, Foreign Investment Promotion Act
Grievance
- The filing company moved into “complex-type foreign investment zone” in region A.
- In order to expand the factory, the filing company is planning to lease about 10,000 pyeong in addition to the existing factory and re-investment will require additional USD 50 million.
- Among USD 50 million, USD 10 million will be invested from the company’s capital and the company is considering to take out a long-term loan for the remaining USD 40 million.
- As for the long term loan, the filing company is reviewing to convert it into capital after a certain period. Therefore, the filing company would like to know whether the customs duties on the capital can be reduced.
Resoultion and Results
ㅇ June 17, 2015: Submission of official inquiry to Ministry A
ㅇ January 7, 2016: Received an official reply (administrative interpretation) from Ministry A
- Summary of the reply from Ministry A :
If foreign investor’s long-term loan is converted into capital in accordance with Article 2-1(4)b of the Foreign Investment Promotion Act, the converted capital is considered as “the capital goods imported by a foreign-invested enterprise within the extent of the means of foreign payment or domestic payment that has been invested by a foreign investor” under Article 116-5(3) of Enforcement Decree of the Restriction of Special Taxation Act.
