Even if it is different from overseas products, if the technology and functions are similar, it is recognized as a ‘U-turn company’

Starting from the 23rd, if the technology and functions are similar to those of products produced overseas, they will be recognized as a 'U-turn company' and will be able to enjoy unprecedented tax benefits.

The Ministry of Trade, Industry and Energy announced on the 3rd that the amendment to the 'Enforcement Decree of the Act on Support for the Return of Companies Expanding Overseas to Korea' containing these contents was passed at the Cabinet meeting.

The U-turn corporate support system introduced in 2013 includes an unprecedented benefit of 100% corporate tax reduction for 7 years and 50% reduction for the next 3 years for companies returning after liquidating or downsizing overseas business sites.

However, there was constant criticism that the strict requirements did not reflect the rapidly changing industrial landscape. In particular, the uniformity requirement that products and services produced between overseas and domestic business sites must be the same or similar was cited as the biggest obstacle.

Accordingly, the Ministry of Trade, Industry and Energy lowered the threshold so that even if the products and services produced are different, they can be recognized as a U-turn company if similarities are recognized by comprehensively reviewing core technologies, functions, and supply chain connectivity.

Exemptions from the requirement to return to Korea through restructuring (liquidation, transfer, or downsizing) of overseas business sites have also been expanded.

Previously, it was possible to maintain an overseas business only if you had a certificate of confirmation for technology or products related to the high-tech industry and supply chain field. However, in the future, even if you do not have a confirmation certificate, if you invest domestically in a core manufacturing facility (mother factory) in the high-tech industry and supply chain field, you can be exempted after expert review.

In addition, even when a company that operates a manufacturing business overseas establishes or expands a company-affiliated research institute in Korea, it is recognized as a return to Korea and supports the attraction of research and development (R&D) functions domestically.

The government established an advisory committee to systematize selection evaluation and subsidy deliberation, and established related standards to support subsidies considering company size and investment region.

The revised system will take effect from the 23rd.