Rep. Yang Hyang-ja Proposes 'Economic Free Zone Revitalization Package Act'

Expectations for Accelerated Progress in Economic Free Zone Development

[Asia Economy Honam Reporting Headquarters Reporter Yoon Jamin] Yang Hyangja, a member of the National Assembly (Democratic Party of Korea·Gwangju Seo-gu Eul), is proposing a bill to revitalize economic free zones.

It is expected to give momentum to the promotion of newly designated economic free zones.

According to Rep. Yang on the 13th, she plans to officially propose the "Economic Free Zone Revitalization Package" consisting of three laws (hereinafter referred to as the Economic Free Zone Package Act) on the 14th, which temporarily expands tax support and its targets for newly designated economic free zones.

The Economic Free Zone Package Act contains unprecedented and bold provisions.

First, for newly designated economic free zones only, budgets related to land for lease to resident companies and rental fees for five years, as well as funds necessary for facility operation to attract investment in medical care, education, research, and housing, must be given priority support. During the same period, usage fees and lease fees for national and public properties may also be reduced according to presidential decrees.

The tax benefits are also significant. Real estate acquisition tax for companies residing in economic free zones will be exempted until 2025.

Regarding property tax, it will be exempted for five years from the date the tax obligation first arises, and then reduced by 50% for the following three years. Income tax and corporate tax will be fully exempted for the taxable year in which income first occurs and the taxable years ending within four years from the start of the following taxable year, and only half will be paid for taxable years ending within the next two years.

Above all, by expanding the benefits of economic free zones, which were mainly limited to foreign-invested companies and returnee companies (domestic return companies), to all resident companies, it is expected to accelerate the relocation and attraction of companies to local areas.

In fact, the government expects domestic and foreign investment attraction alone to reach 8.3 trillion won, with a production inducement effect of 23 trillion won, and if this bill passes, these figures could increase further.

Especially for the newly designated Gwangju, Ulsan, and Siheung economic free zones this year, which generally align with the Korean New Deal promoted by the government in areas such as artificial intelligence (AI), hydrogen and unmanned mobility, future cars, and smart energy, the synergy is expected to be even greater if this bill passes.

Rep. Yang said, "For the success of the Korean New Deal, active participation of companies is essential," and added, "The significant tax benefits contained in this bill are expected to accelerate the relocation and reshoring of advanced industry companies to local areas, greatly supporting the promotion of the Korean New Deal."

This content was produced with the assistance of AI translation services.