Tax Exemptions for Foreign Investors in SOC Projects

The government is positively considering cutting taxes in the event that foreign groups invest into Social Overhead Capital(SOC) or infrastructure facilities.
The Ministry of Commerce, Industry and Energy released on May 2 that it reached a rough agreement with the Ministry of Finance and Economy on revising tax-reduction articles, covering income tax, local tax, and customs in order to attract foreign capital at 'The Second Committee for Attracting Foreign Capital'. The decision will ultimately be settled after working-level talks.
According to the current law, tax exemptions for foreign corporations are applied only in high-tech industries or for companies residing in foreign investment areas.
Taejon's city expressway being constructed beside the Taejon River, which Taejon's city government recently applied to the central government for a tax reduction, is likely to be the first case.
The city of Taejon had signed a memorandom of understanding(MOU) with an Austrailian company and a Singaporean corporation supposed to attract 240 million dollars but the contract was delayed because of the firms' request for tax exemptions needed to secure an adequate investment-profit ratio.
The Ministry explained, 'We decided to propel this support plan because, so far, there has not been any foreign investment in SOC areas, and without incentives, the success of such ventures is obscure due to the financial limitations of the central and provincial governments.'
Jooan Kang : jooan@joongang.co.kr