외국인투자 조세감면과 유해 조세경쟁

European Union (EU) announced its first list of non-cooperative jurisdictions for tax purpose in the beginning of December 2017. Korea was on the list because tax exemption for foreign direct investments under the Special Tax Treatment Control Act (exemption provision) fell into harmful preferred tax regime. After Korean government made commitment to revising the exemption provision up to the end of December 2018, it was excluded in that list. Absolutely, amending the exemption provision is a most urgent task and, of course, direction toward the amendment is to completely eliminate all potential harmful elements included in that provision. This paper argues that the exemption provision has the two kinds of harmful elements: ring-fencing and lack of transparency. This paper aims to suggest short-term remedies to get ride of them. Removing the harmful element of ring-fencing can be implemented by two sets of measures. First, the tax requirement that the ratio of share held by foreign investor for a foreign invested company is 50% or more should be deleted. Second, entities that are eligible for the benefit of the exemption provision should be modified from foreign invested companies to small and medium-sized companies. The feasible ways to enhance transparency of the exemption provision are directly linked to cut off or reduce administrative discretions. Creating experts group for determining whether technology in question is highly advanced technology can be an effective device to reduce Strategy and Finance Minister’s discretion. The ideal and best method to cut off the special committee’s discretion is to repeal the specially favored tax holidays which means the years of full tax exemption are 5 years.