North Korea Details Tax for Foreign Business
November 20, 2015 Taxation in North Korea
PYONGYANG – In an effort to attract foreign business and investment the government of North Korea has laid out plans for the development of a free trade zone, and has provided generous tax breaks for businesses operating in the area.
Over the course of the week the government of North Korea issued new regulations regarding foreign business and taxation in the Rason free trade zone.
The area was declared to be a free trade zone in 1991, as part of the government’s effort to draw more business, but the latest announcement is the first public comprehensive economic plan set out for the area.
The government has now stated that it is willing to consider the establishment of foreign businesses in several industries, including tourism and manufacturing, and has detailed regulations regarding business establishment procedures, taxation, and investment policies.
It was also stated that businesses operating in the area could face turnover tax, business tax, enterprise income tax, individual income tax, city management tax, vehicle tax, property tax, and legacy tax.
The rate of income tax for businesses operating in the area will be set at 14 percent, with a lowered rate of 10 percent for selected “priority” industries.
Further, businesses which invest at least EUR 30 million into infrastructure facilities will enjoy exemptions from income tax for a period of 4 years, with a reduced rate of 50 percent for the following 3 years.
The rate of the turnover tax and business tax will be set at between 0.3 percent and 12.5 percent, and between 0.6 percent and 6 percent, respectively.
Property tax will be set at between 1 percent and 1.4 percent of the value of the property, and legacy tax will be up to a rate of 30 percent.
Photo By: John Pavelka