Corporate Tax Reduction
Corporate tax cut for foreign-invested companies applies to income generated from businesses, which are subject to tax exemption or reduction under the Restriction of Special Taxation Act, with foreign investment ratio taken into account. However, in case that a Korean citizen (corporation) directly or indirectly holds 10% or more of the voting shares of a foreign company or a foreign corporation that has invested in a business subject to tax exemption or reduction, the invested shares are not subject to tax abatement or exemption. That is, tax reduction or exemption shall not apply to round trip investment by a person residing in Korea.
The initial date of reckoning tax exemption or reduction is the date which comes first between taxable year wherein the first income was generated, or the taxable year whereto belongs the date on which five years lapse after the beginning date of the business.