Cutting edge industry domestic corporations to take advantage in free trade zone rent fee
[ Park Byung Rib riby@ ] | 2017-09-29 10:33:16
The Korean government is pursuing plans to provide domestic companies with advanced new industries such as futures, artificial intelligence, bio-health, robotics, space and aeronautics to provide rent reduction or exemption benefits in free trade zones that were given only to foreign companies.
Currently, domestic companies in the Free Trade Zone are paying 1% of the land costs for annual rent, while foreign-invested companies are offering 75% or less of the rent.
Meanwhile, the government is offering high-tech new industries the same benefits as foreign companies. This will be interpreted as a way to increase the number of high-quality jobs that will induce high-tech new industries to invest in the domestic market instead of transferring or investing in overseas facilities and fostering high value-added industries. Besides, it is interpreted as a way to prevent the outflow of high-tech industrial technology beforehand and to induce domestic U-turn of high-tech new industrial enterprises that went abroad.
According to Korean government officials on September 28, the Ministry of Commerce, Industry and Energy (MOCIE) is pushing for a bill to amend the law on the designation and operation of free trade zones. The amendment contains a free trade zone rent reduction or exemption benefit for a new industry (New Growth Power Industry regulated by the Tax Exemption Restriction Act). The new growth engine industry established by the Restriction of Tax Exemptions Act is a new type of automobile industry that has been transformed into a future automobile, intelligence information (artificial intelligence), next generation software security, content next generation electronic information device, next generation broadcasting communication, bio health, energy new industry, fold. The government will positively review the amendment of the bill so that companies in this field can get discounts or exemptions when they move into free trade zones such as industrial complexes (7 places), harbor houses (5 places), and airport type houses (1 place) .
Especially, the government plans to expand the scope of new industries. Ministry of Industry, Ministry of Maritime Affairs and Fisheries, and Ministry of Land, Transport and Maritime Affairs will discuss the areas to be added to the new industry and discuss them in the Presidential Decree.
So far, there has been a need to provide benefits such as the reduction of rents in free trade zones in order to prevent the hollowing-out of the domestic manufacturing industry and foster new industries through domestic return of overseas companies, and to attract excellent logistics companies.
An official from the Ministry of Industry said, "It will be possible to eliminate the fear of technology leakage due to the advancement of domestic companies with world-class technology as the investment environment in the free trade area improves, and at the same time create domestic jobs. With the expansion of the field, the number of free-trade zone-occupying industries will also increase, and return companies will increase, and Korea will be able to become the investment hub of Far East Asia."
The current industrial park type free trade zone occupancy rate is 80.7% and the port-type free airport type free trade zone occupancy rate is 88.9%.
Besides, the amendment included the possibility of re-exporting items subject to the VAT free zone in order to attract global shipping companies. If a foreign corporation imports domestic goods into a free trade zone, it is subject to the VAT rate when it is used for consumption, storage, etc., but the goods subject to the zero rate are prohibited to be exported to the country. The government has decided to review ways to allow re-exporting to Korea if it goes through procedures such as import declaration and payment of customs duties. It also decided to streamline the re-export clearance process in order to expand the global shipping function of the Free Trade Zone.
By Park Byung Rib riby@
[ copyright ⓒ The Digitaltimes ]
Currently, domestic companies in the Free Trade Zone are paying 1% of the land costs for annual rent, while foreign-invested companies are offering 75% or less of the rent.
Meanwhile, the government is offering high-tech new industries the same benefits as foreign companies. This will be interpreted as a way to increase the number of high-quality jobs that will induce high-tech new industries to invest in the domestic market instead of transferring or investing in overseas facilities and fostering high value-added industries. Besides, it is interpreted as a way to prevent the outflow of high-tech industrial technology beforehand and to induce domestic U-turn of high-tech new industrial enterprises that went abroad.
According to Korean government officials on September 28, the Ministry of Commerce, Industry and Energy (MOCIE) is pushing for a bill to amend the law on the designation and operation of free trade zones. The amendment contains a free trade zone rent reduction or exemption benefit for a new industry (New Growth Power Industry regulated by the Tax Exemption Restriction Act). The new growth engine industry established by the Restriction of Tax Exemptions Act is a new type of automobile industry that has been transformed into a future automobile, intelligence information (artificial intelligence), next generation software security, content next generation electronic information device, next generation broadcasting communication, bio health, energy new industry, fold. The government will positively review the amendment of the bill so that companies in this field can get discounts or exemptions when they move into free trade zones such as industrial complexes (7 places), harbor houses (5 places), and airport type houses (1 place) .
Especially, the government plans to expand the scope of new industries. Ministry of Industry, Ministry of Maritime Affairs and Fisheries, and Ministry of Land, Transport and Maritime Affairs will discuss the areas to be added to the new industry and discuss them in the Presidential Decree.
So far, there has been a need to provide benefits such as the reduction of rents in free trade zones in order to prevent the hollowing-out of the domestic manufacturing industry and foster new industries through domestic return of overseas companies, and to attract excellent logistics companies.
An official from the Ministry of Industry said, "It will be possible to eliminate the fear of technology leakage due to the advancement of domestic companies with world-class technology as the investment environment in the free trade area improves, and at the same time create domestic jobs. With the expansion of the field, the number of free-trade zone-occupying industries will also increase, and return companies will increase, and Korea will be able to become the investment hub of Far East Asia."
The current industrial park type free trade zone occupancy rate is 80.7% and the port-type free airport type free trade zone occupancy rate is 88.9%.
Besides, the amendment included the possibility of re-exporting items subject to the VAT free zone in order to attract global shipping companies. If a foreign corporation imports domestic goods into a free trade zone, it is subject to the VAT rate when it is used for consumption, storage, etc., but the goods subject to the zero rate are prohibited to be exported to the country. The government has decided to review ways to allow re-exporting to Korea if it goes through procedures such as import declaration and payment of customs duties. It also decided to streamline the re-export clearance process in order to expand the global shipping function of the Free Trade Zone.
By Park Byung Rib riby@