[2025 Economic Policy] Up to 75% Subsidy Support for Foreign-Invested Companies Investing in Korea

Support Package for Foreign Investment Attraction in Finance, Taxation, and Financial Sectors

The government has decided to temporarily increase cash subsidies paid to foreign-invested companies up to a maximum of 75%. For foreign investment outside the metropolitan area, a separate quota will be allocated for Opportunity Development Zones. The government plans to significantly strengthen foreign investment incentives to maximize capital inflow.

On the 2nd, the government announced the ‘2025 Economic Policy Direction’ containing these details. The main point is to greatly expand the scale of subsidies paid to foreigners to increase domestic investment by foreign entities.

In particular, from this year, subsidies will be temporarily increased up to 75%. Specifically, subsidies currently paid up to 50% for research and development centers and national advanced strategic technology companies will be expanded to 75% when establishing regional headquarters of global companies. For new growth, advanced, and materials, parts, and equipment (SoBuJang) sectors, support will increase from 40% to 55%, and for large-scale employment investments by global companies and regional headquarters, support will increase from 40% to 50%.

The cash subsidy support limit will also be permanently raised by 5 to 20 percentage points. The government plans to fully execute the support limit and the 20 billion KRW cash support budget for next year within the first half of the year. To expand foreign investment outside the metropolitan area, the national and local governments’ share of national funding will also be increased by 10 percentage points. Considering foreign investment demand, fiscal support will also be expanded to 20 billion KRW next year.

Tax benefits will also be increased. The exemption period for customs duties, individual consumption tax, and value-added tax on capital goods imported for foreign investment will be extended up to a maximum of 7 years. Previously, a 100% exemption was granted for 5 years with a possible 1-year extension, but now a 2-year extension will be allowed.

For foreign investment outside the metropolitan area, a separate quota will be designated for Opportunity Development Zones, providing package support from tax benefits to fiscal and residential environment improvements. When designated as a foreign investment Opportunity Development Zone, the area limit per city or province for special zones will not apply, and existing investments will also be applied retroactively. For example, an additional special zone can be designated equivalent to the area of the designated foreign-invested company (100,000 pyeong), and if designated as an Opportunity Zone when attracting foreign-invested companies in the future, that area will be exempt from the area limit.

Furthermore, the government will establish a preferential support program for foreign-invested companies and is considering creating a foreign investment promotion fund. For foreign-invested companies, it plans to lower loan interest rates and expand loan limits to levels equal to or better than those for returning companies.