[Tax benefit]Tax Benefits Available to SMEs (Small and Medium Enterprises) - Part 4 (Tax Benefit for Corporations Relocating Their Head offices Outside the Seoul Metropolitan Area )

SMEs in Korea may be eligible for special tax credits and tax reductions under the 'Act on Restriction on Special Cases Concerning Taxation.'

Today's post is about tax redemption clauses, which can cut your company's tax by 100% for 6 years.(50% for additional 3years)

 

 

1.Corporations wishing to obtain the tax redemption must meet the following conditions

1. The corporation must have been operating a business in the Seoul Metropolitan Area for over 3 consecutive years with its headquarters located in the Seoul metropolitan area.
2. The corporation must either sell the headquarters in the Seoul metropolitan area within 2 years or change its use.
3. The corporation's investment amounts or number of employees must meet the criteria specified in the law.
4. Corporations engaged in the following industries are not eligible for this tax redemption: real estate rental, real estate brokerage, real estate sales, construction, consumptive service businesses, etc.
5. The corporation must operate in the same industry as its operations in the Seoul metropolitan area.

 

2.How much taxes can get reduced for this tax redemption?

These tax redemption laws are powerful as they can reduce your corporation's income tax to zero for at least 4 years

Relocationg region	Tax redemption period	Tax redemption rate
①Metropolitan city outside of Seoul(e.g. Busan/Ulsan/Daejon) or Specific region	4 + 2 years	100% for first 4years and 50% for additional 2years
②Other region except ①	6 + 3 years	100% for first 6years and 50% for additional 3years

 

 

3.Corporations seeking to obtain this tax benefit should be aware of the following:

• If a corporation closes its business within 3 years after starting operations in the relocated region, it must pay the reduced taxes and penalty taxes.
• If a corporation establishes an head office in the Seoul metropolitan area after relocation, it must also pay the reduced taxes and penalty taxes.
• This tax redemption cannot be applied simultaneously with the tax benefit for investment in specific facilities.

 

 

There are another tax benefits your company might can get! Please check below posts.

[Tax benefit]Tax Benefits Available to SMEs (Small and Medium Enterprises) - Part 3 (Tax Credits for Investments)

[Tax benefit]Tax Benefits Available to SMEs (Small and Medium Enterprises) - Part 1 (Tax Credits for Enterprise Job Growth)

[Tax benefit]Tax Benefits Available to SMEs (Small and Medium Enterprises) - Part 2 (Special Tax Reductions or Exemptions)

 

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