Enjoying Tax Benefits
About 1 in 10 affiliates of South Korea's top 10 business groups are listed as companies invested by foreigners or foreign corporations that are eligible for tax and other benefits.
Under the Foreign Investment Promotion Act, foreign-invested companies refer to those in which offshore investors have a stake of 10 percent or more. They benefit from a range of tax breaks according to the Tax Reduction and Exemption Control Act, such as income tax and value added tax as well as corporate tax, and other incentives, including the one that allows the country to rent out or sell off state-owned properties through a private contract.
According to Chaebul.com on December 18, 91 of 665 units of the nation’s top 10 business groups, or 13.7 percent of the total, were registered with the Ministry of Trade, Industry and Energy (MOTIE) as foreign-invested corporations as of the end of November.
The number of the group’s foreign-invested units increased by 34 in seven years from 57 in 2010.
By group, Lotte Group, South Korea's No. 5 family-controlled conglomerate, saw one in its three subsidiaries are foreign-invested firms. The group had the largest number of 28 foreign-invested companies, or 30.8 percent of its 92 total units. In addition to Hotel Lotte, Lotte Chemical, Lotte Data Communication and Lotte Property & Development were categorized as foreign-invested firms. Lotte had the highest percentage because its founder Shin Kyuk-ho advanced into South Korea after establishing business operations in Japan.
South Korea's largest conglomerate Samsung Group came next with 13 foreign-invested units, including Hotel Shilla, Cheil Worldwide and S-1, as well as the nation’s No. 3 player SK Group did such as SK Telink, SK Airgas and SK Showa Denko.
LG Group had 10 foreign-invested units, including Coca-Cola Korea, GⅡR and Lusem, while Hyundai Motor Group and POSCO Group had 7 foreign-invested subsidiaries each. That included Hyundai Glovis, Innocean Worldwide, Hyundai Card and Hyundai Rotem and POSCO Engineering & Construction and POSCO Terminal, respectively. GS Group, Hanwha Group and Hyundai Heavy Industries Group also had 4 foreign-invested units, respectively.
Japanese investors had stakes in the largest 44 foreign-invested units of the leading business groups, mainly Lotte, followed by U.S. investors with 11 and Dutch investors with six.