FDI policy of Korea : tax incentives utilized by Korea and responsiveness of FDI since asian financial crisis

Abstract

1997년 외환위기 이후 한국정부는 외국인투자 증대를 통한 외환위기 극복 의지를 발표하였으며 이에 따른 정책개혁이 진행되었다. 이 시점에서 한국에서 FDI 정책은 한국 개혁을 이끈 성공적인 케이스로 인식되고 있다. 실제 1999년 한국은 155억 달러의 FDI를 유치했다. 이는 1998년도 대비 75.6% 증가된 수치이다. 그러나 조세감면정책은 한국정부가 의도한대로 외국인 투자자들에게 전부 돌아가지는 못하는 경우도 많았다. 투자자 고국과의 세금관련 조약유무나 상대국가에서 외국에서 취득한 소득에 대한 세금은 어떻게 처리하느냐에 따라서 한국 정부가 감면해준 세금은 외국인 투자자에게 돌아가기도 했고 외국인 투자자의 국가에 돌아가기도 했다. 한국 정부는 조세감면 유효성을 제고하는 방향으로 정책을 정비할 필요가 있다. ; Since the Asian Financial Crisis, "Attracting Foreign Investment" has been one of the new government s top priorities. Korea changed government policy to attract FDI and these reforms have increased FDI towards Korea. Now, in Korea FDI has been one of the great success stories of Korea s reform-led recovery. In 1999, Korea succeeded in drawing US $15.5 billion in FDI, compared to the total amount of FDI in 1999, this is a 75.6% increase. However, there seems to be a misfit between these FDI objectives and its means, in spite of all FDI that entered into Korea, which successfully assisted in reviving the economy. The Korean government, facing depletion of foreign exchange reserves, regarded FDI as a tool for overcoming the economic crisis. But, foreign capital inducement, still focuses at enhancing advanced industrial structure, which is the primary objective in the previous FDI policy. Furthermore, the tax benefits of incentives provided by the Korean government may not be maintained by foreign investors to intended by the Korean government. According to various factors, such as the existence of a tax treaty, the application of different methods for double taxation relief, the provision of tax reduction and exemption can either become ineffectual or the tax benefits can be diminished considerably. The Korean government needs to reconsider the tax incentive system for FDI to enhance its effectiveness.