Ministry details plan to lure R&D centers, HQsThe government will actively work to attract multinational businesses to build headquarters and R&D centers in Korea by easing regulations and increasing incentives this year, the Ministry of Trade, Industry and Energy announced yesterday.
The announcement comes after President Park Geun-hye met with members of the foreign business community yesterday at the Blue House.
Compared to Japan, Hong Kong and Singapore, the government believes the eight headquarters of global businesses currently in the country is not enough. They include BASF Korea, EBay, Volvo Korea and Dow Korea.
A handful of sunset provisions in income tax law for foreigners, which are slated to end this year, will be extended for employees of foreign companies’ headquarters, the ministry said.
A single tax rate of 17 percent, regardless of income, will be maintained permanently for such workers. Applying a single rate to income taxation of foreigners was supposed to expire at the end of this year.
The headquarters of a foreign business should have more than 20 professional management employees living in Korea, more than $ 1 million in investments in the country, more than three subsidiaries and should be one of 1,000 top companies worldwide.
Employees of those headquarters will be able to stay in Korea for up to five years on a D8 visa, compared to the current three years.
A 50 percent deduction in income tax for foreign technicians at R&D centers of multinational companies also will be maintained until 2018.
For each local worker, foreign companies will receive a maximum 20 million won ($18,800) corporate income tax deduction, the ministry said. The current upper cap is 10 million won.
In terms of land rent, the larger the number of local workers, the greater the deductions, according to the plan.
Until now, deductions were based only on the amount of investment.
“The government will focus on bringing in headquarters of big global companies that have high added values and high-quality job creation to become one of the top 10 investment powerhouses,” said Minister of Trade, Industry and Energy Yoon Sang-jick.
The amount of foreign direct investment reported to the government in 2013 dropped 4 percent to $10.75 billion compared to the previous year, when Korea received the largest-ever investment of $16.3 billion.
BY SONG SU-HYUN [email@example.com]