All Government Startup News in Korea (Korean Startup News)

Korean Government Expands Startup Support to Foreign Ventures

2024-02-21 2 min read


Korean Government Expands Startup Support to Foreign Ventures

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The Ministry of SMEs and Startups of Korea has announced that the “Small and Medium Enterprise (SME) Startup Support Act” (hereinafter referred to as the “Startup Support Act”) and a partial amendment to its Enforcement Decree were approved during the Cabinet Meeting on the 20th. These changes aim to provide a legal foundation for supporting startups abroad and establish specific criteria for the repayment of startup support funds based on various reasons.

A significant update in the Startup Support Act is the expansion of the startup policy paradigm, which previously focused only on domestic companies, to now include foreign startups. This allows the government to actively support the establishment, settlement, and growth stages of corporations overseas.

In line with the Yoon Suk-yeol government’s ‘Startup Korea’ policy, the government has created a legal basis to support Koreans or domestic companies that start businesses overseas or convert to foreign corporations (Flip).

This revision specifically defines a ‘foreign startup’ as a corporation established abroad by Koreans and domestic corporations that own a significant amount of total shares or equity, thus exerting substantial control. A ‘foreign startup company’ refers to a corporation that has been operating for less than 7 years since beginning its business through a foreign startup.

By separately defining ‘foreign startup companies’, it is anticipated that future legislation, such as the “Act on the Promotion of Venture Investments” and the “Restriction of Special Taxation Act”, will reference this provision to offer more extensive support to foreign startup companies.

The amended “Startup Support Act” passed by the Cabinet will be promulgated on February 27th and will come into effect six months later, while the changes to the Enforcement Decree of the “Startup Support Act” will be implemented starting March 15th.

[Korean Startup Policy News]

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