ENFORCEMENT DECREE OF THE FOREIGN INVESTMENT AND FOREIGN CAPITAL INDUCEMENT ACT

Article 1(Purpose) #

The purpose of this Decree shall be to prescribe matters delegated by the Foreign Investment and Foreign Capital Inducement Act and matters necessary for the enforcement of the Act. <Amended by Presidential Decree No. 15264, Feb. 1, 1997>

Article 2(Economic Cooperation Organizations, etc.) #

(1) Economic cooperation organizations as prescribed in Article 2 of the Foreign Investment and Foreign Capital Inducement Act (hereinafter referred to as the “Act”), shall be the following institutions: Provided, That in application of subparagraphs 10 and 11 of the said Article, if a juristic person of the Republic of Korea is a borrower, such organizations shall be limited to institutions providing loans under the payment guarantee of the Government of the Republic of Korea: <Amended by Presidential Decree No. 11771, Sep. 25, 1985; Presidential Decree No. 15264, Feb. 1, 1997>

1. Institutions acting for a foreign government in overseas economic cooperation business;

2. The International Bank for Reconstruction and Development, the Asian Development Bank and other international institutions which deal with businesses concerning development financing;

3. Foreign banking institutions which are invested in by relevant foreign governments, and which are providing loans in accordance with the terms and conditions stipulated by the international institutions of subparagraph 2; and

4. Foreign banking institutions which provide loans in concert with the economic cooperation organizations as referred to in subparagraphs 1 through 3.

(2) “An individual who is a permanent resident of a foreign country” under subparagraph 2 of Article 2 of the Act shall be a person who has obtained the right of permanent residence or sojourn permission in lieu of it in the residence country.

Article 2-2(Definition of Foreign Investment) #

The cases where a foreigner own stocks or quotas of a juristic person or enterprise concerned for the purpose of establishing continued economic relations with an enterprise operated by a juristic person (including any juristic person under incorporation) or a national of the Republic of Korea shall be the cases falling under any of the following subparagraphs:

1. Where a foreigner owns more than 10/100 of the total number of voting stocks or the total amount of contributions issued by the juristic person or enterprise concerned and exercises his vote; and

2. Where it is objectively proved by a joint investment contract or related documentary evidences that a foreigner exercises his substantial influence over the management of the juristic person or enterprise concerned, such as participating in the management of such juristic person or enterprise.

[This Article Newly Inserted by Presidential Decree No. 15264, Feb. 1, 1997]

Article 2-3(Scope, etc. of Long-term Loans Deemed to be Foreign Investment) #

(1) The term “enterprise which has a capital-investment relation with the mother enterprise concerned” referred to in subparagraph 3-2 (b) of Article 2 of the Act means an enterprise which falls under any of the following subparagraphs:

1. Enterprise which owns more than 50/100 of the total number of issued stocks or the total amount of contributions of a foreign mother enterprise; and

2. In case of enterprise whose foreign mother enterprise owns more 50/100 of the total number of issued stocks or the total amount of contributions, a enterprise falling under any of the following items:

(a) Enterprise which owns more 10/100 of the total number of issued stocks or the total amount of contributions of foreign mother enterprise; and

(b) Enterprise whose foreign mother enterprise owns more 50/100 of the total number of issued stocks or the total amount of contributions.

(2) The loans referred to in subparagraph 3-2 (b) of Article 2 of the Act mean those which satisfy the following requirements: <Amended by Presidential Decree No. 15435, Jul. 14, 1997>

1. The use for the loans concerned shall be for settlement funds of machinery, devices and other equipments (excluding parts and office machinery and tools, hereinafter referred to as the “facility” ) introduced from a foreign country for the purpose of using them directly for the production activities of the foreigner-invested enterprise concerned; Provided, That in case of foreigner-invested enterprise which runs manufacturing business, it is possible to introduce loans not only for use in re-introduction of facility but for use in the management of the foreigner-invested enterprise concerned; and

2. They shall be introduced within the limit of the amount of foreign investment, (meaning the amount which sums up each investment amount, if there are more than 2 foreign investors and the amount from which the unredeemed balance is deducted, if a foreigner-invested enterprise has introduced the loans pursuant to the provisions of Article 4 (1)) which a foreign mother enterprise has made an investment in the foreigner-invested enterprise concerned: Provided, That the loans introduced, under the proviso of subparagraph 1, by the foreigner-invested enterprise running manufacturing business shall be within 50/100 of the amount of foreign investment, and not exceed 10,000,000 U.S. dollars.

[This Article Newly Inserted by Presidential Decree No. 15264, Feb. 1, 1997]

Article 3(Removal of Nature of Foreign Capital) #

(1) Where foreign capital which is in use for the purpose as declared, authorized or permitted under subparagraph 9 of Article 2 of the Act, becomes unable to be used for its original purposes, due to a natural calamity or other force majeure, the Minister of Finance and Economy may remove the nature of such foreign capital, upon the request of those who have introduced or are using it.

<Amended by Presidential Decree No. 13317, Feb. 27, 1991; Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 15264, Feb. 1, 1997>

(2) In a case where the introduced foreign capital is extinct due to such causes as referred to in paragraph (1), if any person who has introduced or is using foreign capital, desires to have the nature of foreign capital removed from such capital, he shall declare it to and obtain confirmation of the Minister of Finance and Economy. <Amended by Presidential Decree No. 11943, Jul. 1, 1986; Presidential Decree No. 14438, Dec. 23, 1994>

(3) In cases of falling under any of the following subparagraphs, it shall be considered that the Minister of Finance and Economy has removed the nature of foreign capital: <Newly Inserted by Presidential Decree No. 11771, Sep. 25, 1985; Presidential Decree No. 11943, Jul. 1, 1986; Presidential Decree No. 13317, Feb. 27, 1991; Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 14561, Apr. 1, 1995>

1. Where the borrowers in a loan (including loan as referred to in subparagraph 3-2 (b) of Article 2 of the Act) contract or public loan agreement have completed the repayment of principal and interest, etc. to the lenders;

2. Where the sub-borrower who sub-leased in the whole or in part the public loan from the Government under the provisions of Article 26 (3) of the Act, has completed the repayment of principal and interest, etc. to the Government;

3. Where a borrower (including sublessee) in a public loan agreement is a banking institution or other institution designated by the Minister of Finance and Economy, an end user who loaned such foreign capital from such institutions has completed the repayment of principal and interest, etc.;

4. Where a foreign investor recovers the total amount of his investment, or a registration is cancelled under Article 20-4 (3); and

5. Where the period of a technology introduction contract and the related royalty payment period become due.

Article 4(Scope of Loan Contracts, etc.) #

(1) The scope of a loan contract under subparagraph 10 of Article 2 of the Act shall be one that the repayment or settlement period of the contract concerned exceeds three years, and that the amount or value thereof is more than one million U.S. dollars (it means the amount indicated in the currency of the United States of America or the amount converted into the currency of the United States of America, when indicated in other currencies; hereinafter the same shall apply): Provided, That any of the following subparagraphs shall be excluded: <Amended by Presidential Decree No. 11771, Sep. 25, 1985>

1. A loan contract for financing of a foreign exchange bank under the Foreign Exchange Control Act; and

2. A contract for issuing foreign currency denoted bonds or debentures, concluded by a juristic person of the Republic of Korea: Provided, That any contract shall be excluded that only the foreign investors underwrite the convertible debentures issued by a foreigner-invested enterprise in a way other than a method of issuance through public subscription.

(2) In the case as referred to in paragraph (1), a loan contract to import the raw materials shall be one to introduce such materials not exceeding the portion to be used for six months in the facilities operated by the end user, in the capacity of owner or lessee and in the limits as may be deemed necessary by the competent Minister (it means a head of one of the central administrative agencies of the Government; hereinafter the same shall apply).

(3) The scope of a technology introduction contract under subparagraph 12 of Article 2 of the Act shall be to introduce a technology the scope of which is determined by the Minister of Finance and Economy through a deliberation of the Foreign Investment Council, and service necessary directly for use of such technology, the price of which is paid by the foreign payment means. <Amended by Presidential Decree No. 12475, Jul. 1, 1988; Presidential Decree No. 14178, Feb. 28, 1994; Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 15264, Feb. 1, 1997>

Article 5(Overseas Remittances of Dividends or Recovered Equity Investments) #

(1) When a foreign investor, borrower or licensee of technology desires to make overseas remittances under Article 4 of the Act, he shall obtain confirmation of the head of a foreign exchange bank for such overseas remittances.

(2) The head of a foreign exchange bank shall, when granting confirmation for an overseas remittance, pursuant to the provisions of paragraph (1), confirm the validity of such overseas remittance. <Amended by Presidential Decree No. 13317, Feb. 27, 1991; Presidential Decree No. 14178, Feb. 28, 1994>

Article 6 #

Deleted.<by Presidential Decree No. 14178, Feb. 28, 1994>

Article 7(Procedures of Report on Foreign Investment from Acquisition of New Stocks) #

(1) The Minister of Finance and Economy shall, upon receiving a report as prescribed in Article 7 (1) of the Act, confirm the following matters to determine whether he accepts it or not: <Amended by Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 14561, Apr. 1, 1995; Presidential Decree No. 15264, Feb. 1, 1997>

1. Whether or not the business in which he desires to invest corresponds to the business in which foreign investment is permitted;

2. Whether or not the business in which he desires to invest satisfies the permitted criteria if there exist any permitted criteria such as the restriction on the rate of foreign investment; and

3. Whether or not documents of report are provided adequately.

(2) Deleted. <by Presidential Decree No. 15264, Feb. 1, 1997>

(3) For the purpose of Article 7-2 (1) of the Act, the term “period as prescribed by the Presidential Decree” means immediately, but in case where it is deemed inevitably to take a long time to determine whether the report on a foreign investment is accepted or not, it shall mean five days. <Amended by Presidential Decree No. 14178, Feb. 28, 1994>

(4) If it is deemed necessary to supplement or correct the report on any foreign investment, the Minister of Finance and Economy may demand such supplement or correction with a period fixed, and may extend the period of supplement or correction upon a request of the reporter. In this case, the period needed for such supplement or correction shall not be included in the period of determination as prescribed in paragraph (3). <Amended by Presidential Decree No. 14178, Feb. 28, 1994; Presidential Decree No. 14438, Dec. 23, 1994>

[This Article Wholly Amended by Presidential Decree No. 13845, Feb. 20, 1993]

Article 8 #

Deleted.<by Presidential Decree No. 15264, Feb. 1, 1997>

Article 9(Contents of Acceptance of Report on Foreign Investment Pursuant to Acquisition of New Stocks) #

(1) The term “matters as determined by the Presidential Decree” as referred to in Article 7-4 (1) of the Act means the following matters:

1. Trade name or other title of a foreign investor and his nationality;

2. Investment amount, method and rate of a foreign investor;

3. Business which a foreign investor desires to operate; and

4. Conditions of acceptance of report and other important matters related to the contents report-accepted.

(2) The term “period as determined by the Presidential Decree” as referred to in Articles 8 (2), 13 (5) and 18-2 (4) of the Act means the period pursuant to the provisions of Article 7 (3), respectively, and where it is necessary for correcting or supplementing the report concerned, the provisions of Article 7 (4) shall be applied mutatis mutandis.

[This Article Newly Inserted by Presidential Decree No. 1526, Feb. 1, 1997]

Article 9-2(Procedures of Foreign Investment Pursuant to Acquisition of Existing Stocks, etc.) #

(1) The term “special interested persons as determined by the Presidential Decree” as referred to in Article 8-2 (1) of the Act means those who fall under any of the following subparagraphs:

1. Spouse, lineal ascendant and descendant (including ascendant and descendant of his spouse) of the forefinger concerned;

2. Juristic person which the foreigner concerned and those having a relation as referred to in subparagraph 1 or 3 own more than 50/100 of the total number of issued stocks or the total amount of contributions added together or which is substantially under their control;

3. Foreigner concerned and employees (meaning directors in case of a juristic person, and trade employees, employees by an employment contract, and those who maintain their livelihood on his money or property in case of an individual) of those as referred to in subparagraph 2 or 4; and

4. Juristic person which those as referred to in subparagraph 2, the foreigner concerned and those as referred to in subparagraphs 1 and 3 own more than 50/100 of the total number of issued stocks or the total amount of contributions added together.

(2) The term “enterprise as determined by the Presidential Decree” as referred to in Article 8-2 (3) of the Act means an enterprise whose total assets in a balance sheet at the end of the recent business year is more than two trillion won.

(3) The term “direct transaction method as determined by the Presidential Decree” as referred to in Article 8-2 (6) of the Act means a method which a foreigner and a stockholder of the enterprise concerned directly conclude a contract of sale transactions for existing stocks outside a securities market as referred to in Article 2 (12) of the Securities and Exchange Act.

(4) The Minister of Finance and Economy shall order a foreigner, who violates the provisions of Article 8-2 with respect to the acquisition of existing stocks, etc., to transfer the existing stocks, etc. to a national or a juristic person of the Republic of Korea within the specified period not exceeding the limit of six months, within one month from the date on which he is informed of the fact of the violation: Provided, That he may extend the period not exceeding the limit of six months where it is deemed to be inevitable reasons.

(5) In calculating the acquisition limit of existing stocks, etc. pursuant to the restricted scope of the ratio of foreign investment, where a foreigner acquires the existing stocks, etc. of the category of business which is restricted in the rate of foreign investment pursuant to Article 8-2, the existing stocks, etc. which the foreigner concerned acquires at a securities market pursuant to the provisions of the Securities and Exchange Act shall be included in the acquisition limit, and the existing stocks which a foreigner other than the foreigner concerned acquires at a securities market pursuant to the provisions of the Securities and Exchange Act shall not be included in the acquisition limit pursuant to the restricted scope of the ratio of foreign investment of the business concerned.

(6) Where a foreigner acquires the existing stocks, etc. of an enterprise which operates more than two categories of business of which the rate of foreign investment is limited, the rate of foreign investment of the category of business whose admittable scope of the rate of foreign investment is lowest from among categories of business which the enterprise concerned operates, shall be the acquisition limit.

(7) Where a foreigner desires to acquire the existing stocks, etc. of a listed juristic person and the board of directors has made a resolution of transferring to the foreigner, the enterprise concerned shall announce publicly the contents of the resolution of the board of directors at the Korea Stock Exchange within one day, and report them to the Securities and Exchange Committee within three days and notify them to the Minister of Finance and Economy within five days, from the date of occurrence of the cause.

(8) Where a foreigner desires to acquire the existing stocks, etc. of an unlisted juristic person and the board of directors of the enterprise concerned makes a resolution of transferring to the foreigner, the enterprise concerned shall notify publicly (excluding the acquisition of existing stocks, etc. within the limit as determined by the Ordinance of the Prime Minister) the contents of the resolution of the board of directors in the general daily newspaper within seven days (three days in case of an overthe -counter juristic person) and notify them to the Minister of Finance and Economy, from the date of occurrence of the cause.

(9) The term “period as determined by the Presidential Decree”as referred to in Article 8-3 (2) means the following periods: Provided, That where it inevitably requires a long period of time, the processing period may be extended within the said period, respectively:

1. Seven days in case of acceptance of report; and

2. Fifteen days in case of permission.

(10) The provisions of Article 7 (4) shall apply mutatis mutandis to the transaction of acceptance of report on foreign investment or the transaction of application for permission of foreign investment by the acquisition of existing stocks, etc.

(11) The provisions of Article 9 (1) shall apply mutatis mutandis to the acceptance of report on foreign investment or the change of permitted contents of foreign investment by the acquisition of existing stocks, etc.

[This Article Wholly Amended by Presidential Decree No. 15264, Feb. 1, 1997]

Article 9-3 #

and Article 9-4 Deleted.<by Presidential Decree No. 15264, Feb. 1. 1997>

Article 10(Restricted Business Category, etc. of Foreign Investment) #

(1) The admittable criteria of foreign investment as referred to in Article 9 of the Act shall be governed by the reservation contents of direct investment in the country concerned by non-residents in direct investment section of Annex 1 to the Agreement Inviting Accession to the Convention on the Organization for Economic Cooperation and Development (Reservation to the Code of Liberalization of Capital Movements) from among the Convention on the Organization for Economic Cooperation and Development.

(2) The detailed contents and changed contents on the criteria for permission of foreign investment as referred to in paragraph (1) shall be announced publicly by the Minister of Finance and Economy in consultations with the competent Minister, taking into account the development stage of the category of business concerned in the country and relations, etc. with domestic and foreign economic policies.

[This Article Wholly Amended by Presidential Decree No. 15264, Feb. 1, 1997]

Article 11 #

Deleted.<by Presidential Decree No. 14561, Apr. 1, 1995>

Article 12(Period to Pay Object of Investment) #

Projects for which the payment period of invested object matter is different under the proviso of Article 11 (1) of the Act, and the period of payment shall be as follows: <Amended by Presidential Decree No. 13845, Feb. 20, 1993>

1. In the case of service business in which the amount of the foreign investment is less than one million U.S. dollars, one year; and

2. In the project in which the amount of foreign investment is more than ten million U.S. dollars, three years.

[This Article Newly Inserted by Presidential Decree No. 13317, Feb. 27, 1991]

Article 12-2(Procedures of Registration of Foreigner-Invested Enterprises) #

(1) Where a foreign investor completes the payment of the object matter of the investment pursuant to Article 11 of the Act or acquires the existing stocks, etc. pursuant to Article 8-2 of the Act, he shall make a registration of foreigner-invested enterprise with the Minister of Finance and Economy within thirty days under the conditions as determined by the Ordinance of the Prime Minister.

(2) Where a foreigner-invested enterprise which has made a registration pursuant to paragraph (1) falls under any of the following subparagraphs, it shall make a registration of change in foreigner-invested enterprise within thirty days from the date of occurrence of the cause concerned:

1. Where the report is accepted pursuant to Article 7-2 of the Act;

2. Where the report is accepted pursuant to Article 8 of the Act;

3. Where the report is accepted and the transfer of stocks, etc. is completed pursuant to Article 18-2 (1) of the Act;

4. Where the trade name or title of a foreigner-invested enterprise is changed or the trade name, title or nationality of a foreigner who owns the stocks or quotas of the enterprise concerned is changed; and

5. Where the contents of acceptance of report pursuant to Article 9 (1) are changed.

[This Article Wholly Amended by Presidential Decree No. 15264 Feb. 1, 1997]

Article 12-3(Restriction, etc. on Disposal of Capital Goods) #

(1) For the purpose of Article 13 (1) of the Act, the term “case as prescribed by the Presidential Decree” means any of the following cases: <Amended by Presidential Decree No. 14178, Feb. 28, 1994; Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 14561, Apr. 1, 1995>

1. Where any capital goods introduced without having the customs, etc. as prescribed in Article 15 (1) of the Act reduced or exempted, are disposed of or used: Provided, That this shall not apply in case where the capital goods of those introduced under Article 36 of the Act with the examination and confirmation of the competent Minister, which are prescribed in Article 36 (1) 2 and 3, are disposed of or used before three years pass from the date of license for import as prescribed by the Customs Duties Act (in case of the capital goods the life of which is four years under the Corporate Tax Act, two years, and in case of those the life of which is under three years, one year); and

2. Where any capital goods introduced after having the customs, etc. as prescribed in Article 15 (1) of the Act reduced or exempted, are disposed of or used after five years from the date of import license as prescribed by the Customs Duties Act.

(2) For the purpose of Article 13 (2) of the Act, the term “case as prescribed by the Presidential Decree” means any of the following cases: <Amended by Presidential Decree No. 14178, Feb. 28, 1994; Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 15264 Feb. 1, 1997>

1. Where an enterprise in which foreign investment rate is less than 10/100;

2. Where an enterprise in which foreign investment rate is more than 10/100 desires to operate additionally the business which operates the category of business (meaning the category of business which is not restricted by the admittable criteria of foreign investment as referred to in Article 10) which admits foreign investment without restriction; and

3. Deleted. <by Presidential Decree No. 15264, Feb. 1, 1997>

(3) For the purpose of Article 13 (3) of the Act, the term “case as prescribed by the Presidential Decree” means any of the following cases: <Amended by Presidential Decree No. 14178, Feb. 28, 1994; Presidential Decree No. 15264, Feb. 1, 1997>

1. Where, a foreigner-invested enterprise which carries on the financial, insurance business, etc., and business of which is to acquire stocks or quotas of other enterprises wholly or partly, acquires stocks or quotas of other enterprises pursuant to the provisions of Acts and subordinate statutes;

2. Where an enterprise the foreign investment ratio of which is under 10 /100, acquires stocks or quotas of other enterprises;

3. Where it acquires stocks listed in the Korea Stock Exchange or registered with an over-the-counter market, under the Securities and Exchange Act, in the limit of 10/100 of the total outstanding stocks of the enterprise which has issued them;

4. Where a foreigner-invested enterprise which has acquired stocks or quotas of other enterprises, acquires any stocks or quotas issued by an capital increase of such enterprises in the limit of the existing holding ratio; and

5. Where it acquires stocks or quotas of other enterprises by direct foreign investment pursuant to subparagraph 15 of Article 3 of the Foreign Exchange Control Act.

(4) Deleted. <by Presidential Decree No. 15264, Feb. 1, 1997>

(5) For the purpose of Article 13 (4) of the Act, the term “case conformed to such criteria as prescribed by the Presidential Decree” means case falling under any of the following subparagraphs: <Amended by Presidential Decree No. 14178, Feb. 28, 1994; Presidential Decree No. 15264, Feb. 1, 1997>

1. Where a foreigner-invested enterprise which is registered under Article 12 of the Act, and the foreign investment ratio of which is over 10/100, desires to carry on the category of business for which foreign investment is not allowed or to carry on the business additionally in excess of the admittable criteria of foreign investment as referred to in Article 10;

2. Deleted; and <by Presidential Decree No. 14561, Apr. 1, 1995>

3. Where an enterprise in which the foreign investment ratio is over 10/100, acquires stocks or quotas of other domestic enterprises carrying on any business in which no foreign investment is allowed under Article 10, and it acquires 10/100 of the total issued stocks or total quotas of the domestic enterprise, excluding the cases falling under paragraph (3) 1 or 3.

(6) If it is deemed necessary for granting a permission under Article 13 (4) of the Act, the Minister of Finance and Economy may determine matters necessary for such permission through an examination of the Foreign Investment Council. <Amended by Presidential Decree No. 14178, Feb. 28, 1994; Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 15264, Feb. 1, 1997>

(7) The Administrator of National Tax Administration and the Administrator of Korea Customs Service shall investigate whether a foreignerinvested enterprise violates the provisions of Article 13 of the Act concerning matters related to affairs under their jurisdiction, and report it to the Minister of Finance and Economy. <Amended by Presidential Decree No. 14438, Dec. 23, 1994>

[This Article Newly Inserted by Presidential Decree No. 13317, Feb. 27, 1991]

Article 12-4 #

Deleted.<by Presidential Decree No. 14178, Feb. 28, 1994>

Article 13(Criteria for Reduction or Exemption of Taxes) #

(1) The cases where the income tax, the corporate tax, the acquisition tax, the property tax and the aggregate land tax are reduced or exempted under Article 14 (1) 1 of the Act, shall be those businesses which are deemed necessary for building up the international competitiveness of the domestic industry, which are designated by the Minister of Finance and Economy through the deliberation of the Foreign Investment Council, and which are conformed to the following criteria: <Amended by Presidential Decree No. 13317, Feb. 27, 1991; Presidential Decree No. 13845, Feb. 20, 1993; Presidential Decree No. 14178, Feb. 28, 1994; Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 14561, Apr. 1, 1995; Presidential Decree No. 15264, Feb.1, 1997>

1. For a reduction or exemption of the corporate or income tax, it shall fall under any of the following items;

(a) Where any factory facilities (in case of business other than the manufacturing industry, it refers to the business place; hereinafter the same shall apply) are installed and operated in the areas outside the Seoul Metropolitan area as prescribed in subparagraph 1 of the Table 1 of the Enforcement Decree of the Regulation of Tax Reduction and Exemption Act; and

(b) Where a person whose report has been accepted a new, or who has obtained the authorization, under Article 7 (1) of the Act after April 1, 1995, starts an enterprise, and installs and operates any factory facilities, within the Seoul Special Metropolitan area (excluding the areas as prescribed in the Table 9 of the Enforcement Decree of the Regulation of Tax Reduction and Exemption Act).

2. The reduction and exemption of acquisition tax, property tax and aggregate land tax shall be applicable in case where factory facilities are installed and operated in an industrial complex designated under the Industrial Sites and Development Act, an induction zone designated under the Industrial Placement Factory Construction Act and an industrial zone designated under the Urban Planning Act: Provided, That this shall not apply in case where any factory facilities are installed and operated in a large city under Article 224 of the Enforcement Decree of the Local Tax Act.

(2) The case where corporate tax, income tax, acquisition tax, property tax and aggregate land tax are reduced or exempted under Article 14 (1) 2 of the Act, shall be the case where any person moves into a free export zone and operates a business with the permission of the Minister of Trade, Industry and Energy under Article 8 of the Act on the Establishment of Free Export Zones. <Amended by Presidential Decree No. 13317, Feb. 27, 1991; Presidential Decree No. 13870, Mar. 6, 1993; Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 15264, Feb. 1, 1997>

[This Article Wholly Amended by Presidential Decree No. 12861, Dec. 27, 1989]

Article 14 #

Deleted.<by Presidential Decree No. 13845, Feb. 20, 1993>

Article 15(Determination of Exemption or Reduction of Corporate Tax, etc.) #

(1) The Minister of Finance and Economy shall, upon receiving an application for reduction and exemption of taxes under Article 14 (6) of the Act, examine whether or not the application is conformed to the criteria for reduction and exemption of taxes under Article 13, determine whether or not taxes are reduced or exempted within 20 days, and notify it to the applicant: Provided, That if it is impossible to determine whether or not it is conformed to the criteria for reduction and exemption of taxes under Article 13 due to indetermination of the factory facilities area, such reduction or exemption may be determined under the condition that the tax is reduced or exempted only in case where it is conformed to the criteria for reduction and exemption of taxes under the said Article. <Amended by Presidential Decree No. 13317, Feb. 27, 1991; Presidential Decree No. 13845, Feb. 20, 1993; Presidential Decree No. 14178, Feb. 28, 1994; Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 14561, Apr. 1, 1995; Presidential Decree No. 15264, Feb. 1, 1997>

(2) When the Minister of Finance and Economy determines a tax reduction or exemption under paragraph (1), he shall notify it to the applicant, the Minister of Home Affairs, the Administrator of National Tax Administration, and the Administrator of Korea Customs Services.<Amended by Presidential Decree No. 13317, Feb. 27, 1991; Presidential Decree No. 14438. Dec. 23, 1994>

(3) If deemed to be required inevitably for a long time to determine the reduction and exemption of taxes under paragraph (1), the Minister of Finance and Economy may extend the period of settlement thereof in the limit of 20 days. In this case, the reason and period of settlement thereof shall be notified to the applicant. <Amended by Presidential Decree No. 14178, Feb. 28, 1994; Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 15264, Feb. 1, 1997>

Article 16(Report, etc. on Commencement of Business) #

(1) Any foreigner-invested enterprise for which a reduction and exemption of taxes are determined under Article 14 (6) of the Act before it commences the business (as referred to the day as prescribed in Article 5 (1) of the Value-Added Tax Act; hereinafter the same shall apply), shall report the commencement of business to the chief of the revenue office having the jurisdiction over his business place within twenty days from the commencement day of business. <Amended by Presidential Decree No. 13845, Feb. 20, 1993>

(2) The chief of the revenue office shall, upon receiving the report as referred to in paragraph (1), confirm whether or not the business commencement day of the foreigner-invested enterprise is proper.

(3) The business commencement day of a foreigner-invested enterprise which has a reduction or exemption of taxes determined before the business commencement day, but fails to make the report under paragraph (1), or which has a reduction or exemption of taxes determined after the business commencement day, shall be investigated and confirmed by the chief of the revenue office having the jurisdiction over its business place.

(4) When the chief of the revenue office confirms the business commencement day of a foreigner-invested enterprise under paragraphs (2) and (3), he shall notify it without delay to the foreigner-invested enterprise concerned and the head of a local government having the jurisdiction over such business place.

[This Article Wholly Amended by Presidential Decree No. 13317, Feb. 27, 1991]

Article 17(Reduction and Exemption of Customs Duties, etc.) #

The capital goods on which customs duties, special consumption tax and value-added tax are reduced or exempted under Article 15 (1) of the Act, shall be those which are used directly for businesses on which the corporation or income tax is reduced or exempted under Article 14 of the Act, and an import report on which is completed under the Customs Duties Act within the payment period of the object for investment as prescribed in Article 11 (1) of the Act: Provided, That this shall not apply in case where it is impossible to complete the import report within the payment period of the object for investment as prescribed in Article 11 (1) of the Act, due to a delay of the approval for the establishment of factory and by other inevitable reasons, but the import report is completed within the period approved by the Minister of Finance and Economy in the limit not exceeding the original payment period of the object for investment. <Amended by Presidential Decree No. 14561, Apr. 1, 1995>

[This Article Wholly Amended by Presidential Decree No. 13317, Feb. 27, 1991]

Article 18(Reduction and Exemption of Taxes on Capital Increase) #

(1) In determining whether or not the tax on any increment of capital is reduced or exempted under Article 16 (1) of the Act, if the foreigner-invested enterprise has increased its capital within five years after it decreased its capital with compensation (as referred to in a case where its assets are decreased substantially by repayment of stocks or quotas with compensation, return of decreased amount in its capital, and so on), and then applies for reduction and exemption of taxes, the Minister of Finance and Economy shall determine the reduction or exemption only on the rate of foreign investment to the net increment of the capital held before decreasing it. <Amended by Presidential Decree No. 14438, Dec. 23, 1994>

(2) For the purpose of the proviso of Article 16 (1) of the Act, the term “the criteria as determined by the Presidential Decree” means to increase the investment for the business which is reduced or exempted from taxes under Article 14 of the Act. <Newly Inserted by Presidential Decree No. 14178, Feb. 28, 1994> [This Article Wholly Amended by Presidential Decree No. 13317, Feb. 27, 1991]

Article 19(Additional Collection of Corporate Tax, etc.) #

(1) In the case as prescribed in Article 17 (1) 1 and 4 of the Act, the tax amount reduced and exempted in five years prior to the date of erasion or business discontinuance, shall be collected additionally. <Amended by Presidential Decree No. 14561, Apr. 1, 1995; Presidential Decree No. 15264, Feb. 1, 1997>

(2) In the case as prescribed in Article 17 (1) 2 of the Act, the following tax amount shall be collected additionally: <Amended by Presidential Decree No. 14561, Apr. 1, 1995; Presidential Decree No. 15264, Feb. 1, 1997>

1. If it becomes unconformed to the criteria for reduction and exemption of taxes as prescribed in Article 13, the amount of taxes reduced and exempted within five years before it becomes unconformed to such criteria; and

2. If a person who received a demand for correction under Article 39 (3) of the Act because he fails to fulfill the authorized or reported and accepted particulars or conditions incidental to them, fails to fulfill them, the amount of taxes reduced and exempted within five years before the demanded correction period expires.

(3) In the case as prescribed in Article 17 (1) 3 of the Act, if the business is transferred within three years after the commencement of business (in case of the business as prescribed in Article 14 (1) 1 of the Act, it refers to the beginning day of the taxable year arriving earlier between the taxable year in which the first income accrues from the business and that in which the day five years expire from the day of business commencement, is included; hereinafter in this Article the same shall apply), the reduced and exempted tax amount shall be collected additionally, but the additionally collected amount shall be the amount calculated by the following formula. In this case, the number of months elapsed shall be that of months elapsed from the business commencement day to the month in which includes the day on which stocks or quotas are transferred, but the number of days less than one month shall not be included in the calculation of the number of months: <Amended by Presidential Decree No. 14561, Apr. 1, 1995>

(reduced and exempted tax amount) × {1 (number of months elapsed ÷ 36)} × (tax amount ratio of transferred stocks or quotas to those held by foreign investors at the time of the reduction and exemption (hereinafter as referred to as “stock transfer ratio”))

(4) Deleted. <by Presidential Decree No. 14561, Apr. 1, 1995>

[This Article Wholly Amended by Presidential Decree No. 13317, Feb. 27, 1991]

Article 19-2(Additional Collection of Customs Duties, etc.) #

(1) In cases as prescribed in Article 17 (2) 1 and 5 of the Act, the tax amount reduced and exempted within three years(in cases of the special consumption tax and the value-added tax, five years) prior to the date of erasion or business discontinuance, shall be collected additionally. <Amended by Presidential Decree No. 15264, Feb. 1, 1997>

(2) In the case as prescribed in Article 17 (2) 2 of the Act, the tax amount reduced and exempted on the capital goods used or disposed of for other purpose than was accepted, within three years (in cases of the special consumption tax and the value-added tax, five years) from the date of license for import as prescribed by the Customs Duties Act, shall be collected additionally. <Amended by Presidential Decree No. 15264, Feb. 1, 1997>

(3) In the case as prescribed in Article 17 (2) 3 of the Act, the tax amount reduced and exempted shall be collected additionally in application of the provisions of subparagraphs of Article 19 (2). In this case, in collecting additionally the customs, the term “within five years” used in subparagraphs of Article 19 (2), shall be read as the term “within three years”.

(4) In the case as prescribed in Article 17 (2) 4 of the Act, the tax amount reduced and exempted shall be collected additionally in application of the provisions of Article 19 (3).

(5) The provisions of Article 33 (2) of the Customs Duties Act shall be applicable to the calculation of the additional collected customs as referred to in paragraphs (1) through (3), except in case of the additional collection, if the acceptance of report or the authorization as referred to in Article 17 (2) 1 of the Act is revoked in the case as referred to in paragraph (1). <Amended by Presidential Decree No. 15264, Feb. 1, 1997>

[This Article Wholly Amended by Presidential Decree No. 14561, Apr. 1, 1995]

Article 19-3(Additional Collection of Acquisition Tax, etc.) #

(1) In the case as prescribed in Article 17 (3) 1 of the Act, the total amount of taxes reduced and exempted shall be collected additionally.

(2) In the cases as prescribed in Article 17 (3) 2 and 3 of the Act, the reduced and exempted tax amount shall be collected additionally according to the following subparagraphs: <Amended by Presidential Decree No. 14561, Apr. 1, 1995>

1. In case of the acquisition tax, the amount calculated by multiplying the changed ratio or ratio of transfer, by the tax amount reduced and exempted within five years prior to the date on which the ratio of stocks or quotas is changed, or the stocks or quotas are transferred; and

2. In case of the property tax and the aggregate land tax, the tax amount reduced and exempted shall be collected by applying mutatis mutandis to the provisions of Article 19 (3). In this case, in collecting additionally the reduced and exempted tax amount under Article 17 (3) 2 of the Act, the stock transfer ratio as prescribed in Article 19 (3) shall be considered as the changed ratio of the stocks or quotas as prescribed in Article 17 (3) 2 of the Act.

(3) In the case as prescribed in Article 17 (3) 4 of the Act, the reduced and exempted acquisition tax, property tax and aggregate land tax shall be collected additionally by applying mutatis mutandis to the provisions of Article 19 (2) 2, and in case as prescribed in Article 17 (3) 5 and 6 of the Act, by applying mutatis mutandis to the provisions of Article 19 (1), respectively. <Amended by Presidential Decree No. 14561, Apr. 1, 1995>

[This Article Newly Inserted by Presidential Decree No. 13317, Feb. 27, 1991]

Article 19-4(Causes of Exemption from Additional Tax Collection) #

(1) If it falls under any of Article 17 (5) 1, 3 or 4 of the Act, the additional collection of taxes as prescribed in paragraphs (1) through (3) of the said Article shall not be made, and if it falls under Article 17 (5) 2 of the Act, the additional collection of taxes as prescribed in paragraph (2) of the said Article shall not be made.

(2) For the purpose of Article 17 (5) 4 of the Act, the term “case as prescribed by the Presidential Decree” means the following cases: <Amended by Presidential Decree No. 14178, Feb. 28, 1994; Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 15264, Feb. 1, 1997>

1. Where a foreign investor who has invested in an enterprise associated with a high technology as prescribed in Article 14 (1) 1 of the Act, transfers his own stocks or quotas to a national or juristic person of the Republic of Korea, and the Minister of Finance and Economy deems, after consulting with the competent Minister and through a deliberation of the Foreign Investment Council, that the enterprise is not impeded in producing itself products using such high technology in Korea; and

2. Where a foreign investor transfers his own stocks or quotas to a national or juristic person of the Republic of Korea according to other Acts and subordinate statutes or government policy, and the Minister of Finance and Economy recognizes it, after consulting with the competent Minister and through a deliberation of the Foreign Investment Council.

[This Article Wholly Amended by Presidential Decree No. 13845, Feb. 20, 1993]

Article 20(Notification, etc. of Cause for Additional Collection of Taxes) #

(1) Where the Minister of Finance and Economy, the head of tax office, the customs collector, the head of local government or the president of the entrusted bank (meaning any president, head of a foreign exchange bank or head of its branch bank which is entrusted with the powers of the Minister of Finance and Economy pursuant to Article 46 (2).; hereinafter the same shall apply) is informed of the fact that there occurs any cause to collect taxes additionally under Article 17 (1) through (3) of the Act, he shall notify it without delay to another person who is authorized to do it. <Amended by Presidential Decree No. 13845, Feb. 20, 1993; Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 15264, Feb. 1, 1997>

(2) Where the head of tax office, the customs collector, the head of local government or the president of entrusted bank has notified the occurrence of a cause for additional collection as referred to in paragraph (1), or has collected taxes additionally under Article 17 (1) or (3) of the Act, he shall report it without delay to the Minister of Finance and Economy. <Amended by Presidential Decree No. 13845, Feb. 20, 1993; Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 15264, Feb. 1, 1997; Presidential Decree No. 15264, Feb. 1, 1997>

(3) The date on which a foreigner-invested enterprise discontinues its business under Article 17 (1) 4, paragraph (2) 5 of the said Article, paragraph (3) 6 of the said Article of the Act, and Article 18 (1) 2 of the Act shall be the date of discontinuance of business as prescribed in Article 5 (4) of the Value-Added Tax Act. <Amended by Presidential Decree No. 13845, Feb. 20, 1993; Presidential Decree No. 15264, Feb. 1, 1997>

(4) When the chief of the revenue office confirms the date on which a foreigner-invested enterprise discontinues its business, he shall report it to the Minister of Finance and Economy and notify it to the president of entrusted bank and notify without delay the date of business discontinuance to the customs collector and the head of the local government, who have the jurisdiction over the business place of the foreigner-invested enterprise. <Amended by Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 15264, Feb. 1, 1997>

[This Article Wholly Amended by Presidential Decree No. 13317, Feb. 27, 1991]

Article 20-2(Lease, etc. of State Property) #

(1) The rent or lease fee of the land, etc. as prescribed in Article 17-2 (4) of the Act, shall be the amount calculated by multiplying the value of land, etc. concerned, by the rate of 10/1,000 or more.

(2) Except as provided in the Act and paragraph (1), the lease of the state property as prescribed in Article 17-2 of the Act, shall be subject to the conditions as prescribed by the Acts and subordinate statutes relating to the state property.

(3) The term “business as determined by the Presidential Decree” as referred to in the main sentence of Article 17-3 (1) means the business which falls under any of the following subparagraphs: <Newly Inserted by Presidential Decree No. 15264, Feb. 1, 1997>

1. Business which contributes considerably to national economy such as increased employment and improvement of the balance of international payments and falls under any of the following items:

(a) Business of which a decision on reduction and exemption of tax is made as it falls under Article 14 (1) 1 of the Act and in which the amount of foreign investment is more than 20 million US dollars; and

(b) Business in which the amount of foreign investment is more than 100 million US dollars and which desires to operate manufacturing business.

2. Business which contributes considerably to the expansion of social overhead capital, adjustment of industrial structure or financial selfsupport, etc. of the local government and is determined by the Minister of Finance and Economy through the deliberation of the Foreign Investment Council.

(4) A foreigner -invested enterprise which desires to obtain the reduction or exemption of the use fee or rent of land, etc. which falls under any of subparagraphs of Article 17-3 (1) of the Act shall make an application for reduction and exemption to the administrative office (including persons who are delegated or entrusted pursuant to Articles 21 and 32 (3) of the State Properties Act; hereinafter the same shall apply) of the state property concerned. <Newly Inserted by Presidential Decree No. 15264, Feb. 1, 1997>

(5) Such detailed matters as use fee or rent of state property for which use fee or rent is reduced or exempted pursuant to Article 17-3 (1) of the Act shall be determined by the Ordinance of the Prime Minister. <Newly Inserted by Presidential Decree No. 15264, Feb. 1, 1997>

[This Article Newly Inserted by Presidential Decree No. 14561, Apr. 1, 1995]

Article 20-3(Application for Erasion of Registration) #

If a foreign investor falls under Article 18 (1) 2 through 4 of the Act, or Article 20-4 (3), he may make an application for erasion of the registration to the Minister of Finance and Economy pursuant to Article 18 (1) 6 of the Act.<Amended by Presidential Decree No. 15264, Feb. 1, 1997>

[This Article Newly Inserted by Presidential Decree No. 14561, Apr. 1, 1995]

Article 20-4(Transfer, etc. of Stocks or Quotas) #

(1) Any foreign investor who desires to report any transfer or reduction of the stocks or quotas under Article 18-2 (1) of the Act, shall report it to the Minister of Finance and Economy, within thirty days after the transfer contract is concluded, or the resolution of the general meeting of stockholders or employees on the reduction of capital is made. <Amended by Presidential Decree No. 15264, Feb. 1, 1997>

(2) Deleted. <by Presidential Decree No. 15264, Feb. 1, 1997>

(3) If a foreign investor has handed over the whole of his owned stocks or quotas to a national or juristic person of the Republic of Korea, or the whole of his owned stocks or quotas is lost by the capital reduction of the foreigner-invested enterprise, the Minister of Finance and Economy shall erase the registration of such foreigner-invested enterprise as prescribed in Article 12 of the Act.

(4) In case where a foreigner takes over any stocks or quotas of a foreignerinvested enterprise from a foreign investor, and the foreign investor has made the report as referred in paragraph (1), he shall be considered to have made the report or obtained the authorization as prescribed in Articles 7-4 (1), 8 (1) 4 of the Act. <Amended by Presidential Decree No. 15264, Feb. 1, 1997>

(5) Where the Minister of Finance and Economy or the president of entrusted bank receives the report on the transfer or reduction of the stocks or quotas from a foreign investor pursuant to paragraph (1), he shall notify the contents of the report without delay to the Administrator of National Tax Administration. <Newly Inserted by Presidential Decree No. 15264, Feb. 1, 1997>

[This Article Newly Inserted by Presidential Decree No. 14561, Apr. 1, 1995]

Article 20-5(General Foreign Investment Support Office) #

The general foreign investment support office shall carry out the following services: <Amended by Presidential Decree No. 15264, Feb. 1, 1997>

1. Reception and settlement of the application, report, registration, etc. made by any foreign investor or foreigner-invested enterprise to the Minister of Finance and Economy pursuant to the provisions of the Act and this Decree;

2. Collection and furnishing of various informations related to the foreign investment system, location of factory, taxes, finance, and foreign investment;

3. Reception, investigation and settlement of matters concerning any grievances or proposal related to the foreign investment;

4. Exchange of information, liaison of affairs, and administrative cooperation, with the foreign investment promotion office and the agency related to the inducement of foreign investment;

5. Permission on the extension of the length of stay and the re-entry of the foreign officers and employees of a foreigner invested enterprise and their family living together; and

6. Other various administrative support related to the foreign investment.

[This Article Newly Inserted by Presidential Decree No. 14561, Apr. 1, 1995]

Article 20-6(Resident Officer, etc. in Charge of Foreign Investment) #

(1) In order to manage efficiently affairs related to the business of foreign investment or foreigner-invested enterprises, the Minister of Finance and Economy may request the head of the central administrative agency and Seoul Special Metropolitan City Mayor, Metropolitan City Mayor or Do governor (hereinafter as referred to as the “Mayor/Do governor”) to have the public officials of Grade Ⅳ or V in the general service and subordinate ones under his jurisdiction, work as resident or dispatched officer in the general foreign investment support office, with the approval of the Prime Minister. <Amended by Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 14561, Apr. 1, 1995; Presidential Decree No. 15264, Feb. 1, 1997>

(2) The head of the central administrative agency and the Mayor/Do governor shall, upon receiving the request as referred to in paragraph (1), comply with it, unless there is any special reason. <Amended by Presidential Decree No. 15264, Feb. 1, 1997>

(3) The Minister of Finance and Economy shall bear the expenses necessary for carrying out the affairs of the public official resident in the general foreign investment support office under paragraph (1)(hereinafter as referred to as the “resident officer”). <Amended by Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 14561, Apr. 1, 1995; Presidential Decree No. 15264, Feb. 1, 1997>

(4) The resident officer shall be subject to the direction and control of the Minister of Finance and Economy with respect to his service. <Amended by Presidential Decree No. 14438, Dec. 23, 1994>

(5) If the resident officer falls under any of the disciplinary causes, the Minister of Finance and Economy shall notify it to the head of the agency to which the resident officer belongs. <Amended by Presidential Decree No. 14438, Dec. 23, 1994>

(6) The head of the central administrative agency and the Mayor/Do governor to which each resident officer belongs, shall authorize the resident officer who is the public official of Grade Ⅳ or V in the general service under his control, to decide exclusively the affairs related to the business of the foreign investment or foreigner invested enterprises, unless such affairs are included in matters subject to a political decision. In this case, the contents of such matters to be decided exclusively by the authorization, shall be provided concretely by itemizing them so that each resident officer may settle rapidly such affairs.<Amended by Presidential Decree No. 15264, Feb. 1, 1997>

(7) The settlement of documents subject to an exclusive sanction under paragraph (6) shall be in the direct charge of the competent resident officer who is a public official of Grade Ⅳ or V in the general service.

(8) The settlement of affairs by the resident officers, cooperation with the administrative agencies to which they belong, and other necessary matters, shall be determined separately by the Minister of Finance and Economy after consulting with the heads of the agencies concerned. <Amended by Presidential Decree No. 14438, Dec. 23, 1994>

[This Article Newly Inserted by Presidential Decree No. 14178, Feb. 28, 1994]

Article 20-7(Foreign Investment Promotion Office) #

(1) The Foreign Investment Promotion Office shall carry out the following services: <Amended by Presidential Decree No. 15264, Feb. 1, 1997>

1. Inducement, public relations, and support of the foreign investment;

2. Reception, investigation and settlement of the matters concerning any grievances or proposal of the foreign investor or foreigner-invested enterprise;

3. Exchange of information, liaison of affairs, and administrative cooperation with the general foreign investment support office and the agency related to the inducement of the foreign investment;

4. Operation of the Foreign Investment Inducement Council as prescribed in Article 20-8; and

5. Other various administrative support related to the foreign investment.

(2) Matters necessary for the establishment and operation of the foreign investment promotion office shall be determined by the regulations of the Seoul Special Metropolitan City, Metropolitan City and Do (hereinafter as referred to as the “City/ Do”).

[This Article Newly Inserted by Presidential Decree No. 14561, Apr. 1, 1995]

Article 20-8(Foreign Investment Inducement Council) #

(1) In order to deliberate the following matters, the Foreign Investment Inducement Council (hereinafter in this Article and Article 20-10 as referred to as the “Council”) shall be established in the City/Do: <Amended by Presidential Decree No. 15264, Feb. 1, 1997>

1. Inducement, public relations and support plan of the foreign investment;

2. Settlement of any important grievances of the foreign investor or foreigner-invested enterprise;

3. Matters concerning the settlement of any civil petition affairs as prescribed in Article 18-5 (1) of the Act (hereinafter as referred to as “combined civil petition”); and

4. Other matters which are deemed necessary by the Mayor/Do governor.

(2) The chairman of the Council shall be the foreign investment promotion officer, and members shall be the following persons: <Amended by Presidential Decree No. 15264, Feb. 1, 1997>

1. Person designated by the Mayor/Do governor from among the public officials under his control;

2. Person designated by the head of the Si/Gun/Gu (as referred to the autonomous Gu; hereinafter the same shall apply) or the head of the agency related to the settlement of the civil petition affairs as prescribed in subparagraphs of Article 18-5 (2) of the Act, upon a request of the Mayor/Do governor, from among the public officials of the competent Si/Gun/Gu or employees of the agency concerned; and

3. Person commissioned by the Mayor/Do governor from among those of rich experience and knowledge in the economic cooperation or the economy.

(3) In designating or commissioning the members as referred to in paragraph (2), they may be designated or commissioned by classifying into those who are eligible for attending all meetings of the Council, and those who are eligible for attending only the meeting to which the case related to them is as referred, by the decision of the chairman. <Amended by Presidential Decree No. 15264, Feb. 1, 1997>

(4) The meeting of the Council shall make a decision with attendance of a majority of the members eligible for attending the meeting under paragraph (3), and a concurrent vote of a majority of the members present: Provided, That for a deliberation and decision on the matters as referred to in paragraph (1) 3, it shall require the attendance and agreement of all the members related to such matter. <Amended by Presidential Decree No. 15264, Feb. 1, 1997>

(5) The provisions of Article 40 (5) and (7) through (9) shall apply mutatis mutandis to the Council. <Amended by Presidential Decree No. 15264, Feb. 1, 1997>

(6) Matters necessary for the operation of the Council shall be determined by the Mayor/Do governor through a resolution of the Council. <Amended by Presidential Decree No. 15264, Feb. 1, 1997>

[This Article Newly Inserted by Presidential Decree No. 14561, Apr. 1, 1995]

Article 20-9(Civil Petition Affairs related to Establishment of Factory) #

For the purpose of Article 18-5 (2) 5 of the Act, the term “that as prescribed by the Presidential Decree” means any civil petition affairs falling under any of the following subparagraphs: <Amended by Presidential Decree No. 15264, Feb. 1, 1997>

1. Permission and report on an acquisition of land by a foreigner under Article 6 (1) of the Act on the Acquisition of Lands by Foreigners and Their Management;

2. Authorization on the water supply utilities for industrial use as prescribed in Article 33-2 of the Water Supply and Waterworks Installation Act;

3. Permission on the installation of facilities or structures affecting the public drainage as prescribed in Article 20 of the Sewerage Act;

4. Permission on possession and use in the river zone and coastal zone as prescribed in Articles 25 (1) and 45 (1) of the River Act;

5. Permission on the installation of discharge facilities as prescribed in Article 9 (1) of the Noise and Vibration Control Act, the text of Article 10 (1) of the Clean Air Conservation Act, and Article 10 (1) of the Water Quality Conservation Act; and

6. Permission and report on construction as referred to in Article 8 (1) of the Building Act and Article 9 (1) of the said Act.

[This Article Newly Inserted by Presidential Decree No. 14561, Apr. 1, 1995]

Article 20-10(Procedure of Settlement of Civil Petition Affairs related to Establishment of Factory) #

(1) If the head of the Si/Gun/Gu (as referred to the autonomous Gu; hereinafter the same shall apply), and the head of the related agency (including the office and bureau chiefs of the City/ Do; hereinafter the same shall apply in this Article), receives any civil petition falling under any of subparagraphs of Article 18-5 (2) of the Act (hereinafter as referred to as “civil petition related to establishment of factory”) from a foreignerinvested enterprise, he shall settle it as follows:<Amended by Presidential Decree No. 15264, Feb. 1, 1997>

1. In case of a combined civil petition, the head of related agency shall request the chairman of the Council (hereinafter in this Article as referred to as the “chairman”) to refer it to the deliberation of the Council, within five days after the civil petition is received: Provided, That this shall not apply in case of such insignificant civil petition as determined by the Mayor/Do governor through a resolution of the Council; and

2. In case of other civil petitions, he shall settle it in accordance with the provisions of the Act providing for such civil petition affairs, and the provisions of the Framework Act on Administrative Regulation and Civil Petitions.

(2) The chairman shall, upon receiving the request as referred to in paragraph (1) 1, convene the Council to deliberate such civil petition, within fifteen days after he receives it. <Amended by Presidential Decree No. 15264, Feb. 1, 1997>

(3) When the Council makes a resolution on a settlement of the combined civil petition, the chairman shall notify the result to the head of the Si/ Gun/Gu concerned and the head of the related agency, within three days after the resolution is made. <Amended by Presidential Decree No. 15264, Feb. 1, 1997>

(4) Any resolution of the Council on a settlement of a combined civil petition which requires a consultation with other agency, shall be considered as the consultation.<Amended by Presidential Decree No. 15264, Feb. 1, 1997>

(5) The foreign investment promotion officer or general foreign investment support officer shall check up periodically or at any time the situation of settlement so that any civil petition related to the establishment of a factory filed with the head of the Si/Gun/Gu or the head of other related agency, may be settled rapidly and smoothly. <Amended by Presidential Decree No. 15264, Feb. 1, 1997>

(6) When the head of the Si/Gun/Gu or the head of the related agency has settled any civil petition related to the establishment of factory, he shall notify without delay the result to the foreign investment promotion officer or general foreign investment support officer. <Amended by Presidential Decree No. 15264, Feb. 1, 1997>

(7) The foreign investment promotion officer or general foreign investment support officer shall report the contents to the Minister of Finance and Economy, in the following cases: <Amended by Presidential Decree No. 15264, Feb. 1, 1997>

1. Where the Mayor/Do governor has a copy of the civil petition documents related to the factory establishment sent under Article 18-5 (3) of the Act, or submitted under paragraph (4) of the said Article;

2. Where he has the result of the settlement of civil petition notified under paragraph (6); and

3. Where he is requested by the Minister of Finance and Economy to make a report on the situation of settlement of the civil petition related to the factory establishment.

(8) The Mayor/Do governor may provide by regulations the matters necessary for the settlement of the civil petition related to the factory establishment through a resolution of the Council, in the limit as prescribed by the Act and this Decree, and other Acts and subordinate statutes. <Amended by Presidential Decree No. 15264, Feb. 1, 1997>

(9) Except as provided by the Act or this Decree, or by the Mayor/Do governor under paragraph (8), the provisions of the Act providing the matters concerning the civil petition affairs, and those of the Framework Act on Administrative Regulation and Civil Petitions shall be applicable to the settlement of the civil petition related to the establishment of factory.

[This Article Newly Inserted by Presidential Decree No. 14561, Apr. 1, 1995]

Article 20-11(Insignificant Civil Petition Affairs) #

For the purpose of Article 18-6 (1) 1 of the Act, the term “insignificant civil petition affairs as determined by the Presidential Decree” means the following ones:

1. Where the civil petition affairs as prescribed in Article 18-5 (2) 1 and 3 of the Act, do not fall under a combined civil petition, and do not require a settlement of any civil petition other than those as referred to in items of subparagraph 2, in settling the civil petition concerned;

2. Those falling under any of the following items:

(a) Permission and report on the lumbering, etc. as prescribed in Article 90 (1) of the Forestry Act;

(b) Permission on the partition of land as prescribed in Article 4 (1) of the Urban Planning Act;

(c) Permission on the possession and use of the river as prescribed in Article 25 (1) of the Rivers Act;

(d) Permission on the possession and use of the public water surface as prescribed in Article 4 (1) of the Public Waters Management Act;

(e) Permission on the neglected grave reburial as prescribed in Article 16 (2) of the Burial and Graveyard, etc. Act;

(f) Permission on the ocupation and use of the road as prescribed in Article 40 (1) of the Road Act, permission on any act in an area bordered on two Dos as prescribed in Article 50 (5) of the said Act, and permission on any act in an area abutting on the road as prescribed in Article 51 (3) of the said Act;

(g) Permission on the use of and the benefit from the state properties as prescribed in Article 24 (1) and (2) of the State Properties Act, and abolition of the road, river, ditch and embankment (limited to the state properties under the control of the head of the Si/ Gun/Gu concerned) as prescribed in Article 30 (1) of the said Act;

(h) Permission on the land dealing contract as prescribed in Article 21-3 (1) of the Act on the Utilization and Management of National Territory, and report on land dealing contract as prescribed in Article 21-7 (1) of the said Act; and

(i) Permission on the installation of the discharge facilities as prescribed in Article 9 (1) of the Noise and Vibration Control Act, the text of Article 10 (1) of the Clean Air Conservation Act, and Article 10 (1) of the Water Quality Conservation Act.

[This Article Newly Inserted by Presidential Decree No. 14561, Apr. 1, 1995]

Article 20-12(Civil Petition Affairs to which Proceeding Period as Prescribed by Other Acts and Subordinate Statutes) #

For the purpose of Article 18-6 (1) 2 of the Act, the term “civil petition affairs as prescribed by the Presidential Decree” means the following ones:

1. Deleted; <by Presidential Decree No. 15264, Feb. 1, 1997>

2. Approval on the operational plan as prescribed in Article 21 (1) of the Support for Small and Medium Enterprise Establishment Act, and which is accompanied by a settlement of the civil petition affairs as referred to in subparagraph 3 or 4;

3. Determination on the change in the national land use programs as prescribed in Article 8 (1) of the Act on the Utilization and Management of National Territory; and

4. Determination on the change in the urban planning as prescribed in Article 12 (1) of the Urban Planning Act.

[This Article Newly Inserted by Presidential Decree No. 14561, Apr. 1, 1995]

Article 20-13(Civil Petition Affairs not considered as Permission, etc.) #

For the purpose of Article 18-6 (3) of the Act, the term “civil petition affairs as prescribed by the Presidential Decree” means the civil petition affairs, in case where the contents of the civil petition affairs conflict the related Acts and subordinate statutes.

[This Article Newly Inserted by Presidential Decree No. 14561, Apr. 1, 1995]

Article 21(Procedure for Authorization of Loan Contracts) #

(1) Any person who desires to obtain authorization, or authorization on change as referred to in the main sentence of Article 19 (1) of the Act shall apply to the Minister of Finance and Economy. <Amended by Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 15264, Feb. 1, 1997>

(2) The Minister of Finance and Economy shall, upon receiving an application for authorization or authorization on change under paragraph (1), examine the following matters and determine whether the authorization is granted or not: <Amended by Presidential Decree No. 13845, Feb. 20, 1993; Presidential Decree No. 14178, Feb. 28, 1994; Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 14561, Apr. 1, 1995>

1. Investment plan and contents of contract;

2. Scale, details and procurement scheme of required domestic and foreign capital;

3. Operational plan; and

4. Other matters as deemed necessary by the Minister of Finance and Economy.

(3) Any person desiring to obtain authorization for a loan contract as referred to in the main sentence of Article 19 (1) of the Act and to induce a loan in the amount or value of which is thirty million U.S. dollars or more, shall report the loan inducement plan to the Minister of Finance and Economy prior to sending a request for negotiation of a loan. <Amended by Presidential Decree No. 12475, Jul. 1, 1988; Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 15264, Feb. 1, 1997>

(4) Where the Minister of Finance and Economy deems it necessary to supplement or coordinate with respect to the loan inducement plan reported under paragraph (3), he may make it to be supplemented or coordinated within twenty days from the date the report is received. <Amended by Presidential Decree No. 12475, Jul. 1, 1988; Presidential Decree No. 14438, Dec. 23, 1994>

(5) Where a foreigner-invested enterprise makes a report on a loan contract pursuant to the proviso of Article 19 (1) of the Act, the Minister of Finance and Economy shall accept the report within 7 days from the date of receipt of the notice: Provided, That where it is deemed inevitably to require a long period of time to accept the report, he may extend the period within the limit of 7 days and where it is necessary to supplement or correct the report concerned, the provisions of Article (4) shall be applied mutatis mutandis. <Newly Inserted by Presidential Decree 15264, Feb. 1, 1997>

Article 22(Use and Management of Loan Proceeds) #

(1) Foreign means of payment borrowed under a loan contract shall be used in compliance with the contents of authorization or acceptance of the report as referred to in Article 19 of the Act. <Amended by Presidential Decree No. 15264, Feb. 1, 1997>

(2) If a borrower exchanges the foreign means of payment as prescribed in paragraph (1) for the domestic means of payment, he shall deposit it in a banking institution. In this case, for a loan contract the payment of which is guaranteed by banking institution, it shall be deposited in such institution.

(3) The borrower shall prepare a quarterly fund utilization schedule for the domestic means of payment deposited under paragraph (2), and submit it to the depository banking institution after obtaining confirmation of the competent Minister, and shall use the deposits after getting repayment of them in accordance with the said schedule. The same shall also apply to changes in the fund utilization schedule. <Amended by Presidential Decree No. 14178, Feb. 28, 1994>

(4) The banking institution which has received the deposits under paragraph (2), shall, upon a request for the repayment as referred to in paragraph (3), repay them after confirming the contents as prescribed in paragraphs (1) and (3). <Amended by Presidential Decree No. 14178, Feb. 28, 1994>

(5) The domestic means of payment under the provisions of paragraph (2) shall be deposited in an account designated by the Minister of Finance and Economy. <Amended by Presidential Decree No. 14561, Apr. 1, 1995>

(6) With respect to a loan contract whose report is accepted pursuant to the proviso of Article 19 (1) of the Act, the provisions of paragraphs (2) through (5) shall not apply thereto. <Newly Inserted by Presidential Decree No. 15264, Feb. 1, 1997>

Article 23(Procedure for Report of Technology Introduction Contracts) #

(1) Any person who has concluded a technology introduction contract under Article 23 of the Act, shall report it to the Minister of Finance and Economy. This provision shall also apply when the contract is modified. <Amended by Presidential Decree No. 14438, Dec. 23, 1994>

(2) Deleted. <by Presidential Decree No. 15264, Feb. 1, 1997>

(3) For the purpose of Article 23 (2) of the Act, the term “period as determined by the Presidential Decree” means ten days (in case where an application for exemption of taxes is made at the same time as report on a technology introduction contract under Article 24 (2) of the Act, twenty days), and in case where it is deemed required inevitably for a long time, twenty days (in case where an application for exemption of taxes is made at the same time as a report on a technology introduction contract under Article 24 (2) of the Act, thirty days). <Newly Inserted by Presidential Decree No. 14178, Feb. 28, 1994; Presidential Decree No. 15264, Feb. 1, 1997>

(4) Where the contents of a report as referred to in paragraph (1) are deemed to be obscure, the Minister of Finance and Economy may request to supplement them for a specified period not exceeding 20 days, and where an application is made by the reporter, he may extend the period of the supplement or correction. In this case, the period to be needed for such supplement or correction shall not be included in the period as prescribed in paragraph (3). <Amended by Presidential Decree No. 13317, Feb. 27, 1991; Presidential Decree No. 14178, Feb. 28, 1994; Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 15264, Feb. 1, 1997>

(5) Deleted. <by Presidential Decree No. 15264, Feb. 1, 1997>

Article 24(Scope of Technology Introduction Contract to be Reported) #

(1) The scope of technology introduction contracts to be reported pursuant to Article 23 shall be the contracts whose payment period for prices or period of contract is more than one year and which fall under any of the following subparagraphs:

1. Contract of which an application for tax exemption is made towards the Minister of Finance and Economy, because it falls under a high technology indispensable to a build-up of international competitiveness of the domestic industry as referred to in Article 24 (1) of the Act;

2. Contract which introduces technology on aircraft, space flying objects (including ground support facilities) and their parts as referred to in subparagraphs 2 and 3 of Article 2 of the Aerospace Industry Development Promotion Act; and

3. Contract which introduces technology on materials for defense industry as referred to in Article 4 (2) 1, 2, 4, 6, 7, and 10 of the Act on Special Measures for Defense Industry.

(2) In extending the period of contract which has already entered into force, the period as referred to in paragraph (1) shall be calculated by adding up the period of the initial contract and changed contract.

[This Article Wholly Amended by Presidential Decree No. 15264, Feb. 1, 1997]

Article 24-2(Criteria, etc. for Exemption of Taxes on Technology Introduction Price) #

(1) For the purpose of Article 24 (1) of the Act, the term “case falling under such criteria as determined by the Presidential Decree” means a case which introduces the technology falling under the following subparagraphs, and is conformed to such criteria as determined by the Minister of Finance and Economy through a deliberation of the Foreign Investment Council: <Amended by Presidential Decree No. 14561, Apr. 1, 1995; Presidential Decree No. 15264, Feb. 1, 1997>

1. Technology which has a far-reaching economic or technical effect on the national economy, and which is essential to the high development of the industrial structure and the intensification of industrial competitiveness;

2. Technology which is introduced in Korea for the first time within three years (the date of introduction refers to the date on which the report on the foreign investment attendant on the technology is accepted, or the report on the technology introduction contract is accepted), or which is introduced before three years, and is excellent in the economic effect or technical performance compared with already introduced one; and

3. Technology the process requiring which is mainly carried out in Korea.

(2) Deleted. <by Presidential Decree No. 13845, Feb. 20, 1993>

(3) The Minister of Finance and Economy shall, upon receiving an application for exemption of taxes under Article 24 (2) of the Act, examine whether or not the technology is conformed to the criteria as referred to in paragraph (1), to confirm whether the taxes are exempted. <Amended by Presidential Decree No. 13845, Feb. 20, 1993; Presidential Decree No. 14438, Dec. 23, 1994>

[This Article Newly Inserted by Presidential Decree No. 13317, Feb. 27, 1991]

(4) An application for tax exemption as referred to in Article 24 (2) of the Act shall be made before the technology introduction contract concerned enters into force. <Newly Inserted by Presidential Decree No. 15264, Feb. 1, 1997>

Article 25 #

Deleted.<by Presidential Decree No. 14178, Feb. 28, 1994>

Article 26(Notification) #

The Minister of Finance and Economy shall notify the reporter of whether or not the application corresponds to the criteria for tax exemption as referred to in Article 24-2 (3). In this case, where it is confirmed that it is not the object of the tax exemption, he shall specify the cause thereof.

[This Article Wholly Amended by Presidential Decree No. 15264, Feb. 1, 1997]

Article 27(Application, etc. for Inducement of Public Loan) #

(1) Persons who desire to drive forward the inducement of a public loan under Article 25 (1) of the Act shall apply to the Minister of Finance and Economy through the competent Minister. In this case, for a project conforming to the criteria as determined by the Minister of Finance and Economy, he shall apply after a consultation with the relevant agency. <Amended by Presidential Decree No. 12185, Jun. 25, 1987; Presidential Decree No. 14438, Dec. 23, 1994>

(2) In deciding whether or not to push forward the project of public loan under Article 25 (2) of the Act, the Minister of Finance and Economy shall examine the following matters, and if necessary, he may hear the opinions of the heads of the relevant agencies: <Amended by Presidential Decree No. 11771, Sep. 25, 1985; Presidential Decree No. 12185, Jun. 25, 1987; Presidential Decree No. 14438, Dec. 23, 1994>

1. Deleted; <by Presidential Decree No. 12185, Jun. 25, 1987>

2. Economic and technological validity of the proposed project;

3. Reasonableness of and possibility to procure the amount of the required funds;

4. Condition of plant site and construction plan;

5. Deleted; <by Presidential Decree No. 12185, Jun. 25, 1987>

6. Ability to repay principal and interest;

7. Deleted; <by Presidential Decree No. 12185, Jun. 25, 1987>

8. Reasonableness of a comprehensive foreign capital supply and management measures (limited only to a case where the balance of already induced foreign capital exceeds the amount as prescribed by the Minister of Finance and Economy); and

9. Other matters as deemed necessary by the Minister of Finance and Economy.

Article 28(Consultation) #

(1) When, for implementing a public loan project, the head of a relevant agency desires to draw up or deliver a consent letter or a related memorandum to the prospective lenders or present lenders on the contents of the contract or the project execution, he shall consult in advance with the Minister of Finance and Economy. <Amended by Presidential Decree No. 11771, Sep. 25, 1985; Presidential Decree No. 14438, Dec. 23, 1994>

(2) When the Minister of Finance and Economy desires to conclude a public loan agreement in accordance with the provisions of Article 26 of the Act, he shall consult in advance with the heads of the related agencies on its contents, unless it is in an urgent need to push forward the loan project. <Amended by Presidential Decree No. 14438, Dec. 23, 1994>

Article 29(Sublease of Public Loan) #

(1) When the Minister of Finance and Economy subleases a public loan under Article 26 (3) of the Act, he shall conclude a contract (hereinafter as referred to as “sublease contract”) concerning sublease with the sublessees. <Amended by Presidential Decree No. 14438, Dec. 23, 1994>

(2) The sublessee may further sublease to end users with the approval of the Minister of Finance and Economy. <Amended by Presidential Decree No. 14438, Dec. 23, 1994>

Article 30(Scope of Related Contracts) #

“The related contracts which affect directly the conclusion of the agreement concerned” in Article 26 (2) of the Act, means the contracts for inducement of equipment or raw materials, technology or service contracts, and other contracts equivalent thereto, which are related to the conclusion of the public loan agreement.

Article 31(Approval of Government Repayment Guarantee and Notification) #

(1) For approval of the government repayment guarantee under Article 29 (4) of the Act, the Minister of Finance and Economy shall confirm the following matters: <Amended by Presidential Decree No. 14438, Dec. 23, 1994>

1. Applicability of Article 29 (2) of the Act; and

2. Certainty as to ability of furnishing collateral (excluding persons prescribed in the proviso of Article 30 of the Act).

(2) When the Minister of Finance and Economy has approved of a government repayment guarantee under Article 29 of the Act, he shall notify the applicant of the fact. In this case, if he has decided not to approve of it, he shall specify the reasons on the notification. <Amended by Presidential Decree No. 14438, Dec. 23, 1994>

Article 32(Creation and Management of Mortgages) #

(1) The Minister of Finance and Economy shall make the governor of the Korea Development Bank to perform for him the duty of creation and management of collateral according to the provisions of the text of Article 30 of the Act. <Amended by Presidential Decree No. 14438, Dec. 23, 1994>

(2) When the Minister of Finance and Economy concludes a sublease contract concerning public loan under Article 29 (1) or notifies the approval decision of government repayment guarantee under Article 31 (2), he shall promptly notify it to the governor of the Korea Development Bank, and order him to take necessary steps for the creation and management of the collateral under paragraph (1). <Amended by Presidential Decree No. 14438, Dec. 23, 1994>

(3) Sublessees or government-guaranteed corporations shall provide the governor of the Korea Development Bank with the object of collateral (including stocks and quotas issued by the relevant sublessees or government-guaranteed corporations; hereinafter the same shall apply) within thirty days from the date of the sublease contract or such notification, respectively. If the owner of collateral is not the lessee or the sublessee in the public loan agreement concerned, the owner shall provide it.

(4) The governor of the Korea Development Bank may allow to offer as collateral the capital goods to be induced and the factories and other facilities to be constructed under the sublease contract or public loan agreement which give rise to government payment guarantee, which are a part of objects of the collateral as referred to in paragraph (3).

(5) When the governor of the Korea Development Bank has been offered collateral under paragraph (3) or (4), he shall take without delay the necessary steps to safeguard its rights.

(6) When the governor of the Korea Development Bank desires to prescribe the matters concerning the necessary steps as referred to in paragraph (5), he shall obtain in advance the approval of the Minister of Finance and Economy. <Amended by Presidential Decree No. 14438, Dec. 23, 1994>

Article 33(Security Exempted Institutions) #

(1) “The government-invested institutions” in the proviso of Article 30 of the Act means the juristic persons prescribed by Article 2 of the Framework Act on the Management of Government-Invested Institutions.

(2) The term “persons as provided for by the Presidential Decree” in the proviso of Article 30 of the Act means the juristic persons falling under the following subparagraphs: Provided, That this shall not apply a case where juristic persons falling under subparagraphs 7 through 9 have obtained a payment guarantee of the Government: <Amended by Presidential Decree No. 11771, Sep. 25, 1985; Presidential Decree No. 14438, Dec. 23, 1994>

1. Juristic persons capital of which is wholly subscribed by the government-invested institutions as referred to in paragraph (1);

2. Juristic persons which are operated by government contributions pursuant to relevant Acts;

3. Institutions which manage the affairs on the development financing with long-term development funds borrowed from the Government;

4. National Agricultural Cooperatives Federation, National of Fisheries Cooperatives Federation and National Livestock Cooperatives Federation;

5. Juristic persons total capital of which is jointly subscribed by the government-invested institutions as referred to in paragraph (1) and the juristic persons mentioned in subparagraph 2;

6. Government-invested corporations;

7. Subsidiaries of government-invested corporations;

8. Local government-invested corporations; and

9. Educational foundations and other public juristic persons designated by the Minister of Finance and Economy.

Article 34(Procedure for Compulsory Disposition) #

(1) When the Government repays part of or the whole of the liability covered by the government repayment guarantee, on behalf of the government-guaranteed corporation, the Minister of Finance and Economy shall order the governor of the Korea Development Bank to be reimbursed for the amount it has repaid and the interest thereon from the governmentguaranteed corporation or its directors or executive partners. <Amended by Presidential Decree No. 14438, Dec. 23, 1994>

(2) When the Minister of Finance and Economy considers that the claim for compensation under paragraph (1) cannot be reimbursed, he shall order the governor of the Korea Development Bank to dispose of the collateral under Article 31 of the Act. <Amended by Presidential Decree No. 14438, Dec. 23, 1994>

(3) When the Minister of Finance and Economy considers that the government-guaranteed corporation can discharge its liabilities within a reasonable period of time and can repay all liabilities by the final repayment date arranged in the repayment schedule, he may suspend the disposition of collateral for a certain period of time. <Amended by Presidential Decree No. 14438, Dec. 23, 1994>

(4) When the governor of the Korea Development Bank has disposed of the collateral under paragraph (2), he shall pay to the Government the amounts repaid by the Government on behalf of the government-guaranteed corporation, the interest thereon and the outstanding principal out of the proceeds of the disposition after deducting expenses incurred in the disposition and, in the event of a surplus balance, this balance shall be refunded to the government-guaranteed corporation concerned.

(5) The provisions of paragraphs (2) through (4) shall be applied mutatis mutandis when the sublessee does not repay the whole or part of its liabilities.

Article 35(Agency Fees and Expenses) #

(1) When the governor of the Korea Development Bank has executed the service of creating and managing a collateral for the Minister of Finance and Economy under Article 32 (1), he may request the payment of his agency fee to the Minister of Finance and Economy. <Amended by Presidential Decree No. 14438, Dec. 23, 1994>

(2) When the governor of the Korea Development Bank incurs expenses in creating and managing the collateral as referred to in Article 32 (1), he shall request the reimbursement of such expenses to the governmentguaranteed corporation or the sublessee, or may request payment to the Minister of Finance and Economy, when the government-guaranteed corporation or the sublessee is unable to effect reimbursement. <Amended by Presidential Decree No. 14438, Dec. 23, 1994>

(3) When the Minister of Finance and Economy is requested to pay expenses under paragraph (1) or (2), he shall pay them in the limit of the budget appropriation. <Amended by Presidential Decree No. 14438, Dec. 23, 1994>

Article 36(Examination and Confirmation of Induced Foreign Capital) #

(1) For the purpose of Article 36 of the Act, the term “case conformed to such criteria as determined by the Presidential Decree” means any of the following subparagraphs: <Amended by Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 14561, Apr. 1, 1995>

1. Where a foreign investor or foreigner-invested enterprise introduces the capital goods as prescribed in subparagraphs of Article 15 (1) of the Act, to have the customs, special consumption tax and value-added tax exempted or reduced under the said Article;

2. Where a foreign investor introduces any capital goods as object of the investment;

3. Where a foreigner-invested enterprise introduces the capital goods falling under any of the following items, with the foreign or domestic payment of means invested by any foreign investor:

(a) Capital goods which are second-hand ones; and

(b) Capital goods of such goods as notified publicly by the Minister of Trade, Industry and Energy under Article 25 of the Enforcement Decree of the Foreign Trade Act.

(2) Any person who desires to introduce the capital goods falling under subparagraphs of paragraph (1), prepare a statement of goods to be introduced with the quantity, standards, prices, manufacturers, etc. of such capital goods specified, to apply to the competent Minister for an examination and confirmation prior to the shipment. <Amended by Presidential Decree No. 14561, Apr. 1, 1995>

(3) The competent Minister may, upon receiving an application as referred to in paragraph (2), not allow any capital goods or raw materials to be introduced, with respect to those which are deemed to be supplied with suitable domestic produced goods, after examining the quantity, standards and prices of the capital goods or raw materials to be introduced. In this case, the competent Minister shall hear the opinion of the competent Minister on such capital goods or raw materials.

(4) The competent Minister who has received the application as referred to in paragraph (2), shall notify the applicant of the result of his examination within fifteen days after he receives the application, and the Minister on the capital goods or raw materials shall, upon receiving a request for opinion from the competent Minister under the latter part of paragraph (3), present his opinion within seven days after he receives the request.

(5) Deleted. <by Presidential Decree No. 14561, Apr. 1, 1995>

(6) Deleted. <by Presidential Decree No. 15264, Feb. 1, 1997>

[This Article Wholly Amended by Presidential Decree No. 14178, Feb. 28, 1994]

Article 37(Use of Foreign Capital) #

The foreign capital shall be used in accordance with the contents of the authorization or acceptance of the report as prescribed in Article 19 (1) of the Act or the agreement as prescribed in Article 26 of the Act, and if it is desired to use it differently from such contents, it shall be approved by or reported in advance to the Minister of Finance and Economy. <Amended by Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 15264, Feb. 1, 1997>

[This Article Wholly Amended by Presidential Decree No. 14178, Feb. 28, 1994]

Article 38 #

Deleted.<by Presidential Decree No. 14178, Feb. 28, 1994>

Article 39 #

Deleted.<by Presidential Decree No. 14178, Feb. 28, 1994>

Article 40(Foreign Investment Council) #

(1) A Foreign Investment Council (hereinafter as referred to as the “Council”) shall be established as an advisory organ in the Ministry of Finance and Economy to deliberate the following matters: <Amended by Presidential Decree No. 15264, Feb. 1, 1997>

1. Important matters on the basic policy and system on the inducement of foreign capital such as foreign investment;

2. Important matters on the improvement of foreign investment environment;

3. Matters on the criteria for tax reduction and exemption of foreignerinvested enterprises;

4. Matters on cooperation and adjustment of views between the central administrative agency and the City/Do in connection with foreign investment; and

5. Matters on the decision of support plans necessary for the inducement of foreign investment from among the businesses falling under Article 20-2 (3).

(2) The Council shall be composed of not more than 25 members, including a chairman, and the chairman shall be the Vice-Minister of Finance and Economy and other members shall be those nominated by the heads of the agencies concerned upon the recommendation of the Minister of Finance and Economy from among public officials of Grade I or equivalents, those commissioned by the Minister of Finance and Economy from those of much experience and great insight and knowledge on economic cooperation and international finance and Vice-Mayor or vice-governor of the City/Do: Provided, That any member who is Vice-Mayor or vice-governor shall attend only the meeting to which a bill related to him is submitted. <Amended by Presidential Decree No. 15264, Feb. 1, 1997>

(3) The chairman shall exercise the general control over the affairs of the Council, represent the Council, convene the meeting of the Council, and preside at the meeting of the Council. If the chairman is absent by any accident, the member who is nominated by the chairman, shall act for the chairman.

(4) The meeting of the Council shall be held with attendance of a majority of members who are eligible to attend the meeting pursuant to paragraph (2), and make a decision by a concurrent vote of a majority of members present. <Amended by Presidential Decree No. 15264, Feb. 1, 1997>

(5) The Council may, if necessary, have any interested person state his opinion.

(6) When the chairman convenes a meeting of the Council, he shall notify in writing each member of the date, time, place and purpose of the meeting not later than three days before the meeting is held: Provided, That this shall not apply in case where it is required urgently.

(7) Any member who attends the Council, may receive allowance in the limit of the budget: Provided, That this shall not apply in case where a member who is a public official, attends in direct connection with affairs under his jurisdiction.

(8) Matters other than those as prescribed by this Decree, which are necessary for the operation of the Council, shall be determined by the Minister of Finance and Economy through a resolution of the Council. <Amended by Presidential Decree No. 14438, Dec. 23, 1994>

[This Article Wholly Amended by Presidential Decree No. 14178, Feb. 28, 1994]

Article 41(Report on Foreign Capital Inducement, etc.) #

(1) Any person who has induced foreign capital pursuant to Article 7, Article 8-2 and the proviso of Article 19 (1) of the Act, shall submit to the Minister of Finance and Economy a customs clearance report (in a case of foreign capital for which the customs clearance is not required, a report of withdrawal or arrival; hereinafter the same shall apply), according to the particulars of the report accepted, or the permission, within a month from the day on which the foreign capital clears the customs (in a case where no customs clearance is required, the day on which the foreign capital is withdrawn or arrives; hereinafter the same shall apply). <Amended by Presidential Decree No. 14178, Feb. 28, 1994; Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 15264, Feb. 1, 1997>

(2) Any person who has induced foreign capital under the main sentence of Article 19 (1) of the Act (including those who have induced a public loan, other than the Government) shall submit a report of customs clearance to the head of a foreign exchange bank subject to the Foreign Exchange Control Act who is designated by him within a month from the clearance date of the foreign capital, and the head of foreign exchange bank who has received such report, shall put each month such reports together, and submit to the governor of the Bank of Korea by the fifth day of the following month. <Amended by Presidential Decree No. 15264, Feb. 1, 1997>

(3) Any person who has induced foreign capital under Article 26 of the Act, shall file a report of customs clearance with the governor of the Bank of Korea within a month after its customs clearance.

(4) In a case where an authority as referred to in Article 27 of the Act is entrusted under the conditions as prescribed in Article 46 (5), an end user or administrator of such foreign capital shall, notwithstanding the provisions of paragraph (3), submit the customs clearance report as referred to in paragraph (3) to the head of financing institution or sublessee within a month after the foreign capital clears the customs, and any one who receives such reports, shall put them together each month, and submit them to the governor of the Bank of Korea by the fifth day of the following month. <Amended by Presidential Decree No. 15264, Feb. 1, 1997>

(5) The governor of the Bank of Korea shall put together reports submitted under paragraphs (2) through (4), and report it to the Minister of Finance and Economy by the tenth day of each month. <Amended by Presidential Decree No. 14438, Dec. 23, 1994>

(6) When the competent Minister receives a report relating to a technology introduction contract under Article 46 (1) 2, he shall inform without delay the Minister of Finance and Economy of its contents, and transmit a copy to the Minister of Science and Technology. <Amended by Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 15264, Feb. 1, 1997>

(7) With respect to any person of those having induced a loan according to the provisions of the Act, who has a balance of already induced foreign capital exceeding the amount as prescribed by the Ordinance of the Prime Minister, the contents of foreign capital needed projects and foreign capital inducement plan for the following year may be reported in advance to the Minister of Finance and Economy by November each year. <Amended by Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 14561, Apr. 1, 1995>

[This Article Wholly Amended by Presidential Decree No. 11943, Jul. 1, 1986]

Article 42(Disposal of Foreign Capital) #

(1) When the director of the customs office desires to sell the foreign capital or make other necessary disposal under Article 40 (2) of the Act, he shall submit a list of foreign capital to the Minister of Finance and Economy through the Administrator of the Korea Customs Service, and the Minister of Finance and Economy may, when he considers it appropriate that the sale and other disposal of a certain foreign capital is withheld after consultation with the heads of related agencies, request the director of the customs office to withhold the sale and other disposal of the foreign capital concerned. In this case, this request must be made within twenty days from the day on which the list of foreign capital is received. <Amended by Presidential Decree No. 14438, Dec. 23, 1994>

(2) If there is no request to withhold within the period as referred to in paragraph (1), the director of the customs office shall sell the foreign capital or make other necessary disposal thereof under Article 40 (2) of the Act, and report it to the Minister of Finance and Economy. <Amended by Presidential Decree No. 14438, Dec. 23, 1994>

Article 43 #

Deleted.<by Presidential Decree No. 14178, Feb. 28, 1994>

Article 44(Revaluation of Object of Investment) #

Any national or juristic person of the Republic of Korea who intends to pursue a project in partnership with a foreign investor who has obtained authorization or has made a report under Article 7 of the Act, may revalue the subject matter of investment under Article 41 (4) of the Act, notwithstanding Article 1 (5) of the Enforcement Decree of the Assets Revaluation Act. <Amended by Presidential Decree No. 13317, Feb. 27, 1991; Presidential Decree No. 15264, Feb. 1, 1997>

Article 45(Consultation of Enactment, etc. of Acts and Subordinate Statutes) #

If the competent Minister desires to make or amend new provisions relating to any restriction on ownership of stocks or investment quotas for foreigners, proper categories of business of small and medium enterprises or foreign investment, loan contracts, technology introduction contracts and public loan agreements, he shall consult in advance with the Minister of Finance and Economy. <Amended by Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 15264, Feb. 1, 1997>

[This Article Wholly Amended by Presidential Decree No. 13317, Feb. 27, 1991]

Article 46(Delegation and Entrustment of Authority) #

(1) The Minister of Finance and Economy shall delegate or entrust his authority under Article 44 of the Act in such manner as prescribed in any of the following subparagraphs: <Amended by Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 14561, Apr. 1, 1995; Presidential Decree No. 15264, Feb. 1, 1997>

1. Deleted; <by Presidential Decree No. 14561, Apr. 1, 1995>

2. The authority on the acceptance of report on technology introduction contract under Article 23 of the Act, the approval on extension of the period coming into effect, and on the confirmation on whether or not it corresponds to the criteria for exemption of taxes applied under Article 24 of the Act shall be entrusted to the competent Minister;

3. The following matters of the authority as prescribed in Article 39 of the Act, shall be entrusted to the competent Minister, the Administrator of the National Tax Administration and the Administrator of the Korea Customs Service:

(a) Investigation on the situation that the contents of permission or accepted report on a foreign investor or foreigner-invested enterprise and the terms and conditions for permission or acceptance of report, are fulfilled;

(b) Investigation on the situation of fulfillment of the authorization on the loan contract or contents of acceptance of report as prescribed in Article 19 of the Act, and order of correction; and

(c) Investigation on the situation that a person who made the report under Article 23 of the Act, has carried out the contents thereof, and order of correction.

4. Of the authority as prescribed in Article 39 (1) of the Act, that on the investigation about whether the provisions of Article 13 (1) and (4) of the Act are violated, shall be delegated to the Administrator of the Korea Customs Service; and

5. Of the authority as prescribed in Article 39 (1) of the Act, that on investigation about whether the provisions of Article 13 (2), (3) and (4) of the Act are violated, shall be delegated to the Administrator of the National Tax Administration.

(2) The Minister of Finance and Economy may entrust the president (meaning the president of the foreign exchange bank under the Foreign Exchange Control Act; hereinafter the same shall apply) of the foreign exchange bank who is selected and notified by the Minister of Finance and Economy, with the following authority under Article 44 of the Act: <Amended by Presidential Decree No. 13845, Feb. 20, 1993; Presidential Decree No. 14178, Feb. 28, 1994; Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 14561, Apr. 1, 1995; Presidential Decree No. 15264, Feb. 1, 1997>

1. Acceptance of report on foreign investment as referred to in of Article 7 (1) of the Act;

2. Matters on the follow-up management for foreign investors or foreignerinvested enterprises which have made foreign investments pursuant to the provisions of Article 7 (1) and which fall under any of the following subparagraphs:

(a) Acceptance of report on investment under Article 7 (2) of the Act;

(b) Acceptance of report on any change in the reported contents under Article 7-4 of the Act;

(c) Acceptance of report on the acquisition of stocks or quotas under Article 8 of the Act;

(d) Approval on extension of the period to pay the object of the investment under Article 11 of the Act;

(e) Reception of registration of a foreigner-invested enterprise under Article 12 of the Act;

(f) Permission of and acceptance of report on, disposal, etc. of capital goods under Article 13 of the Act;

(g) Management of induced funds under Article 13-2 (2) of the Act;

(h) Refusal of erasion of registration as referred to in (excluding subparagraphs 1 and 3 of the said paragraph) of Article 18 (1) of the Act and of acceptance of report as referred to in paragraphs (2) and (3) of the said Article;

(i) Reception of report on the inducement of foreign capital and demand for report on the interested persons under Article 38 of the Act;

(j) Release from the nature as a foreign capital under Article 3; and

(k) Acceptance of the report on any transfer or reduction of the stocks or quotas, reception of the registration of change, and effacement of registration, as prescribed in Article 20-4.

3. Feasibility study about whether the loan contract as referred to in Article 19 (1) of the Act shall be authorized; and

4. Acceptance of report on a loan introduction contract as referred to in Article 21 (3).

(3) The competent Minister shall entrust the affairs on examination and confirmation as referred to in Article 36 (1) through (4) with the president of the foreign exchange bank. <Amended by Presidential Decree No. 15264, Feb. 1, 1997>

(4) If it is required to proceed rapidly with the public loan project under Article 44 of the Act, the Minister of Finance and Economy shall entrust a person who is able to carry out directly a negotiation and conclusion of public loan agreement with the authority as to the negotiation and conclusion of the public loan agreement under Article 26 (1) of the Act. <Amended by Presidential Decree No. 14438, Dec. 23, 1994>

(5) The Minister of Finance and Economy may determine detailed matters necessary for executing delegated or entrusted affairs as prescribed in paragraphs (1) through (4). <Amended by Presidential Decree No. 14438, Dec. 23, 1994>

[This Article Wholly Amended by Presidential Decree No. 13317, Feb. 27, 1991]

Article 46-2 #

Deleted.<by Presidential Decree No. 13317, Feb. 27, 1991>

Article 47(Imposition and Collection Procedure of Fine for Negligence) #

(1) In imposing a fine for negligence under Article 50 (2) of the Act, the payment of it shall be notified to the person liable for such fine for negligence, with the fact of offense and amount of the fine for negligence specified in writing, after examination and confirmation of the offense in question.

(2) If the Minister of Finance and Economy desires to impose a fine for negligence under paragraph (1), he shall give the person liable for such fine for negligence an opportunity to state orally or in writing his opinion within a period of not less than ten days. In this case, if any opinion is not stated by the designated date, it shall be considered that the person has no opinion. <Amended by Presidential Decree No. 14438, Dec. 23, 1994>

(3) In determining the amount of the fine for negligence, the Minister of Finance and Economy shall take into consideration the motive and the consequence of the offense. <Amended by Presidential Decree No. 14438, Dec. 23, 1994>

(4) Deleted. <by Presidential Decree No. 14178, Feb. 28, 1994>

(5) The procedure to collect the fine for negligence shall be determined by the Ordinance of the Prime Minister. <Amended by Presidential Decree No. 14438, Dec. 23, 1994>

[This Article Wholly Amended by Presidential Decree No. 11771, Sep. 25, 1985]

Article 48 #

Deleted.<by Presidential Decree No. 13317, Feb. 27, 1991>

Article 49(Enforcement Regulations) #

Matters necessary for the enforcement of this Decree shall be prescribed by the Ordinance of the Prime Minister. <Amended by Presidential Decree No. 14438, Dec. 23, 1994>