Heavy Taxation Rules of Acquisition and Registration Tax

on the Establishment of Corporation

in the Over-concentration Control Region (Large City)

Ⅰ. Overview 

The heavy taxation is to be applied on the establishment of corporation in the over-concentration control region for the purpose of preventing excessive concentration into the large cities and to contributing to balanced development between regions by Local Tax Law in Korea.  

The heavy taxation rules of the acquisition and registration tax on the establishment of the corporation in the over-concentration control region (large city) in Korea will be reviewed as below.

Ⅱ. Definition 

1. The Concept of ‘Over-concentration Control Region' and ‘Large City' under the Local Tax Law 

(1) The Concept of ‘Over-concentration Control Region'    

The concept of ‘over-concentration control region' refers the definition described in the Article 6 of the 「Seoul Metropolitan Area Readjustment Planning Act」.

【Article 6 of Seoul Metropolitan Area Readjustment Planning Act】

① For the sake of appropriate dispersion of population and industries within the Seoul Metropolitan area, the Seoul Metropolitan area shall be classified as follows.

(2) The Concept of ‘Large City'  

The concept of ‘large city' refers the ‘over-concentration control Region' as described in the 「Local Tax Act」 excluding an Industrial Complex.

(the ‘Industrial Complex' refers the ‘Industrial Complex' as described in the 「Industrial Cluster Development and Factory Establishment Act」)

Ⅲ.  Summary of Relevant Regulations

1. Acquisition Tax 

(1) Heavy Taxation on Acquisition, etc. of Real Estate for Business Purposes in Over-Concentration Control Region 

1) [Corporation] Acquisition of real estate for business purposes of the head or main office (limited to new construction or extension of a building for the head or main office) and land annexed thereto in over-concentration control region

2) [Corporation/Individual] Acquisition of any object of taxation for business purpose acquired in order to newly build or extend a factory in an over-concentration control region (excluding an industrial complex, a promotional zone and an industrial area)

- New construction or extension of a building for factory and land annexed thereto

- Vehicles and mechanical equipment acquired within 5 years from the date of the new construction or extension of a building for factory