Companies Engaged in AI and New Technologies Can Now Move into Venture Facilities

Revision of the Enforcement Decree of the Venture Business Act
Regulatory Improvement for Venture Business Cluster Facilities
Expectations for Reduced Rental Burden on Ventures and Startups

In the future, companies engaged in new technologies such as artificial intelligence, the Internet of Things, and autonomous driving will also be able to move into venture company cluster facilities within urban areas.

The Ministry of SMEs and Startups (Minister Lee Young) announced that the Enforcement Decree of the Venture Business Act, which includes this content, was passed at the Cabinet meeting on the 20th. Venture company cluster facilities are buildings designated by local governments upon approval when private or public project operators apply for designation to attract venture companies and other advanced technology companies, providing incentives such as local tax and levy reductions. Representative examples include the SME DMC Tower in Mapo-gu, Seoul, and Pangyo Innob Valley in Bundang-gu, Seongnam-si, Gyeonggi-do.

Previously, only venture companies, knowledge industry and information and communication industry companies, and companies with experience residing in startup incubation centers were eligible to move into venture company cluster facilities. However, with the revision of the Enforcement Decree of the Venture Business Act, the scope of residency has been expanded to include companies engaged in new technologies.

Due to restrictions on resident industries, the number of designated venture company cluster facilities increased from 96 in 2018 to 111 as of November this year, with sluggish new designations and private sector participation. On the other hand, similar facilities such as knowledge industry centers allow general manufacturing companies to move in, leading to criticism that the industry restrictions on venture company cluster facilities are excessive.

This revision is expected to promote the construction of venture company cluster facilities by expanding location choices for startups through deregulation and strengthening business feasibility and reducing implementation risks for construction project operators. Venture company cluster facilities offer incentives such as tax reductions and levy exemptions, resulting in rents averaging 68.2% of nearby office spaces. Going forward, the Ministry of SMEs and Startups plans to specify industries and sectors through revisions to the designation and management guidelines for venture company cluster facilities.

Additionally, the local tax reduction benefits for venture business promotion districts, originally scheduled to expire this year, are expected to be extended for three years with expanded benefits. The Ministry of the Interior and Safety has submitted a government proposal to the National Assembly to increase acquisition tax reductions for companies within venture districts from 37.5% to 50%.

Minister Lee Young stated, "Despite the harsh conditions of COVID-19, ventures and startups have played a key role in the economy with an employment growth rate more than three times that of all companies," adding, "We will accelerate institutional improvements so that innovative companies are not hindered by outdated regulations and can find affordable locations within urban areas."

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