The Era of Local Empowerment: Introduction of 100% Corporate Tax Exemption Zones for the Future of Local Economies.

The South Korean government has announced the introduction of "Opportunity Development Zones" to alleviate the concentration of resources in the capital region and promote balanced regional development. These zones will focus on providing substantial tax benefits and incentives to businesses, aiming to create jobs and stimulate population growth in local areas. These efforts are part of a plan to boost local economies and reduce the economic disparity between local regions and the capital region.

 

The introduction of Opportunity Development Zones and various other special zones by the South Korean government marks an important step in promoting the growth and balanced development of local economies.

 

On the 14th, the Presidential Committee on Local Empowerment held a declaration ceremony for the local era at the Busan International Finance Center (BIFC) and presented the "Vision and Strategy for the Local Era." According to this announcement, Opportunity Development Zones will offer a 100% income and corporate tax exemption for the first five years for new businesses or startups, followed by an additional 50% exemption for the next two years. Moreover, if companies dispose of real estate and relocate to these zones, they can defer income and corporate tax on capital gains until the property within the zone is sold.

 

While various economic zones have been operational in local areas, their actual impact has been limited due to insufficient benefits. To address this, the government plans to promote business relocation and investment through the Opportunity Development Zones, offering various tax benefits, including income tax, corporate tax, transfer tax, acquisition tax, property tax, and inheritance tax.

 

Additionally, the Presidential Committee on Local Empowerment plans to establish "Education Freedom Zones" aimed at promoting regional education innovation and nurturing local talents. They also plan to create "Downtown Fusion Zones" in emerging regions and other important areas and introduce "Cultural Zones" for the cultivation of local content and branding.

 

President Yoon Suk-yeol attended the event and emphasized, "For the development and growth of the entire Republic of Korea, Seoul and Busan, as well as the Yeongnam and Honam regions, must develop together." He further stated that the government would boldly pursue tax support, improve residential conditions, and transfer land regulation authority to attract businesses to local regions, conveying the belief that "regional competitiveness is national competitiveness." He also stressed that the current government would not follow the previous government's practice of centralizing all power at the national level.

 

On this day, a public-private forum was held to explore solutions for the local era. Over 200 participants, including business representatives, young farmers and fishermen, and parents, attended. Seventeen governors and education superintendents from local governments, along with the heads of four major local associations and key officials from central government agencies, also participated.

 

The introduction of Opportunity Development Zones and various other special zones by the South Korean government marks an important step in promoting the growth and balanced development of local economies. These efforts are expected to revitalize local economies and reduce economic disparities between regions, ultimately having a positive impact on the overall development and growth of the Republic of Korea.