The authority may allocate special areas to encourage investment in the industries favorable for the development of new towns according to the following provisions on tax exemption or reduction:
1.The profitable undertaking income tax payable of that very year may be deducted by up to 20% of the total investment amount; in case the income tax amount of the very year is not enough for deduction, it may be deducted within 4 following years.
2.Where a landownership holder sells the land used for the original project, and purchase land again for business operating in the new town within 2 years commencing from completion of transfer registration, for the balance of the price of the purchased land exceeding the land price of the original land minus the land value increment tax, the holder may, after starting operating, submit application to the taxation department to apply for refund of the shortage for paying the price of the newly purchased land from the land value increment tax already paid. However, in case the newly purchased land is retransferred or changed to use for industries other than listed in the range of encouragement within 5 years commencing from completion of transfer registration, the refunded tax shall be refunded again.
The encouragement as prescribed in Subparagraph 1 is available for the joint stock companies limited.
As for the reduction or exemption prescribed in the first paragraph, where the application is submitted in the 6th to the 10th year commencing from allocation of the special area, the preference will be reduced by a half, and no preference will be offered since the 11th year.
The procedure of encouragements prescribed in the above three paragraphs will be determined by the central authority jointly with the Ministry of Finance and the Ministry of Economic Affairs.