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ENFORCEMENT DECREE OF THE ACT ON DESIGNATION AND MANAGEMENT OF FREE TRADE ZONES
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ENFORCEMENT DECREE OF THE ACT ON DESIGNATION AND MANAGEMENT OF FREE TRADE ZONES
ENFORCEMENT DECREE OF THE ACT ON DESIGNATION AND MANAGEMENT OF FREE TRADE ZONES
INTRODUCTION
Details of Enactment and Amendment
- Enactment: The Enforcement Decree of the Act on the Establishment of Export Free Zones which was enacted by the Presidential Decree
No. 4682 on February 27, 1970 was wholly amended into the Enforcement Decree of the Act on the Designation, etc. of Free Trade Zones
on September 6, 2000.
- Amendment: This Decree has taken the present form after being wholly amended into the Enforcement Decree of the Act on Designation
and Management of Free Trade Zones on June 22, 2005.
Main Contents
- Free trade zones shall be required to have an airport capable of keeping regular international flight routes opened, and loading
and unloading not less than 500,000 tons of cargoes, and have an area which is used to store and classify cargoes as cargo terminals
or others and hinterland of not less than 500,000 square meters.
- Enterprises that are eligible to locate in free trade zones for the purpose of supporting the business of located enterprises are
limited to anyone who runs the financial business, the insurance business, the customs clearance business and the tax consulting
business, etc., and public institutions such as the National Pension Corporation, the Korea Export Insurance Corporation and the
Korea Airports Corporation.
- Anyone who intends to ship foreign goods, etc. out of any free trade zone into any foreign country is required to file a declaration
on the shipment of foreign goods out of Korea, which details the names, specifications, quantity, classification numbers, destination,
the country of origin and the country of loading of such foreign goods, with the head of customhouse.
- In the event that the head of customhouse finds it impossible to serve notice on the disposal of goods on the grounds of his impossibility
of learning of the domicile or the place of residence of the owner of goods to be shipped out of Korea, he is required to publish
the fact in the Official Gazette or on the bulletin board of his customhouse for not less than 14 days or to post the contents of
the publication in the Internet home page by means of efficiency.
- Machinery and materials that are allowed to be shipped into any planned free trade zone by any located enterprise after they are
exempted from customs duties, etc. are limited to construction materials used directly for constructing buildings and factories,
and machinery and materials, etc. that are used directly for installing facilities of factories and operating factories.
ENFORCEMENT DECREE OF THE ACT ON DESIGNATION AND MANAGEMENT OF FREE TRADE ZONES
Wholly Amended by Presidential Decree No. 18437, Jun. 22, 2004
CHAPTER I GENERAL PROVISIONS
Article 1 (Purpose)
The purpose of this Decree is to prescribe the matters delegated by the Act on Designation and Management of Free Trade Zones and
other matters necessary to enforce the delegated matters.
CHAPTER II DESIGNATION OF FREE TRADE ZONES, ETC.
Article 2 (Designation of Free Trade Zones)
(1)Any person who intends to ask for the designation of a free trade zone in accordance with the former part of Article 4 (1) of the
Act on Designation and Management of Free Trade Zones (hereinafter referred to as the Act ) shall submit a basic plan for the free
trade zone provided for in paragraph (2) of the same Article (hereafter in this Article referred to as the basic plan for the free
trade zone ) and the results of consultations that he holds with the heads of central administrative agencies concerned, the Special
Metropolitan City Mayor concerned, the Metropolitan City Mayor concerned or the Do governor concerned (hereinafter referred to as
the Mayor/Do governor ) to the Minister of Commerce, Industry and Energy: Provided, That in the event that any person asks for the
designation of an area whose development is already completed or is in progress as a free trade zone, he may omit the matters prescribed
by the Minister of Commerce, Industry and Energy from among the matters referred to in paragraph (2).
(2)The basic plan for the free trade zone shall contain the matters falling under each of the following subparagraphs:
1.The name, location, boundary, area and location map of the free trade zone;
2.The promoter of development project, the period of development and the methods of development;
3.A location management plan detailing the goals and directions for operating the free trade zone, types of business to be located
therein, location priority, standards for selecting enterprises to be located therein, a plan for attracting enterprises to the zone
and a plan for locating enterprises (including a drawing thereof), etc.;
4.A land utilization plan, a plan for installing major support facilities (including a drawing thereof) and a plan for building infrastructure
such as roads, harbor and water-supply facilities, etc.;
5.Estimated costs required following designation and a plan for securing financial resources;
6.The analysis of economic effects reaped from the designation of the free trade zone, which include prospects for foreign investment,
trade, international logistics and the growth of domestic employment;
7.Current facilities installed in the zone and the cargo-handling capacity of the zone;
8. Details of land, buildings, and other goods to be expropriated or used and the rights thereof, if they exist;
9.Enterprises currently located in the zone and measures to deal with them;
10.The assessment of environmental impact provided for in the Act on Assessment of Impact of Works on Environment, Traffic, Disasters,
etc. or material necessary to examine such environmental impacts;
11.A plan for installing control facilities such as entranceways and fencing, etc.; and
12.In the event that not less than 2 persons are commissioned or entrusted with the authority to manage the free trade zone by the
administrative authority provided for in Article 8 (1) of the Act (hereinafter referred to as the administrative authority ), the
scope of the jurisdiction over which the persons who are commissioned or entrusted with the authority exercise and ways of defraying
costs required to install control facilities.
(3)The Mayor/Do governor shall, if he makes the general public accessible to the pursual of matters concerning the designation of
any free trade zone in accordance with Article 4 (6) of the Act, publish without delay the pursual of such matters by the general
public in an effective manner, including posting ways of perusing such matters, the perusal period and other necessary matters concerning
their pursual on the Internet home page.
Article 3 (Publication of Designation of Free Trade Zone)
The term other matters prescribed by the Presidential Decree in Article 4 (5) of the Act means the name, the location map and the
land utilization plan of the relevant free trade zone.
Article 4 (Designation Requirements)
(1)The term standards prescribed by the Presidential Decree in subparagraph 1 of Article 5 of the Act means the standards that are
categorized as follows:
1.Industrial complex: the area that is located adjacent to an airport or a harbor, making it easy to ship cargo out of Korea to foreign
countries or into Korea from foreign countries;
2.Airport: the airport is needed to meet the requirements falling under each of the following items:
(a) It is required to have regular international flight routes opened for it and to be capable of dealing with not less than 500,000
tons of cargoes annually; and
(b) It is required to have the area and its hinterland, including a cargo terminal, etc., with their total area exceeding 500,000
square meters, which are used to store, exhibit, sort, etc. air cargoes and the hinterland is required to be linked with the relevant
airport or to be connected with it by the exclusive road, etc., thereby making it possible to ensure the free movement of goods between
them and to supplement the airport s logistic functions of storing, packaging, mixing, repairing and processing, etc. of cargo;
3.Harbor: the harbor is needed to meet the requirements falling under each of the following items:
(a) It is required to have regular international container shipping lanes opened for it, thereby making it possible to load and unload
cargo of not less than 10 million tons annually;
(b) It is required to have piers which are used exclusively by container ships of not less than 30,000 tons; and
(c) It is required to have the storage area and its hinterland provided for in the provisions of the attached Table 1 of the Enforcement
Decree of the Harbor Act, with their total area exceeding 500,000 square meters, and the hinterland is required to be linked with
the relevant harbor or to be connected with it by the exclusive road, etc., thereby making it possible to ensure the free movement
of goods between them and to supplement the harbors logistic functions of storing, packaging, mixing, repairing and processing, etc.
of cargo; and
4.Distribution complex and cargo terminal: they are needed to meet the requirements falling under each of the following items:
(a) They are required to have facilities and equipment that make it possible to handle cargo of not less than 10 million tons annually;
(b) They are required to ship not less than 50/100 of goods into Korea out of foreign countries and to ship or are expected to ship
not less than 20/100 of goods, which have been shipped into Korea, out of Korea into foreign countries; and
(c) They are required to be not less than 500,000 square meters in their area.
(2)The term facilities prescribed by the Presidential Decree in subparagraph 3 of Article 5 of the Act means the facilities falling
under each of the following subparagraphs:
1.Fences, gates, guard posts and other facilities which are needed to prevent foreign goods from being illegally shipped out of any
free trade zone or from being stolen and to satisfy the standards for the area and location, etc. that are prescribed and published
by the Commissioner of the Korea Customs Service; and
2.Facilities which are inspection places where the inspection of goods shipped out of or into any free trade zone is conducted and
meet the standards for their area and locations that are prescribed and published by the Commissioner of the Korea Customs Service.
Article 5 (Change in Insignificant Matters of Free Trade Zone)
The term a change in insignificant matters prescribed by the Presidential Decree in the provisos of Articles 6 (3) and 7 (6) of
the Act means a case falling under each of the following subparagraphs:
1. The case where an area equivalent to not more than 1/10 of the area of the relevant free trade zone is expanded or reduced, or
the location and boundary of such area are changed; and
2.The case where any access road, any embankment or any bridge is reconstructed after being changed and any free trade zone is reduced
or expanded in its area or any of its boundaries are changed on the grounds of a loss of land due to natural disaster.
CHAPTER III MANAGEMENT AND LOCATION OF FREE TRADE ZONES
Article 6 (Division of Area)
(1)The term other area prescribed by the Presidential Degree in Article 9 of the Act means a public facility area and the training
and educational facility area.
(2)The administrative authority shall, when he divides the area of any free trade zone in accordance with Article 9 of the Act, publish
his division of such area in an effective manner, including posting his division of the area on the Internet home page.
Article 7 (Located Types of Business)
(1)The term other business prescribed by the Presidential Decree in Article 10 (1) 3 of the Act means a business falling under each
of the following subparagraphs:
1.The multipurpose logistics business, including the business of brokering international shipping, executing transactions of international
ships and packaging, repairing, processing or assembling goods, etc.;
2.The international logistics business, including the business of repairing, upgrading and assembling of ships and aircraft (including
any equipment necessary to operate ships and aircraft);
3.The business furnishing ship and aircraft supplies, including the business of supplying fuel, portable water, onboard meals and
in-flight meals, etc.; and
4.The business developing logistics facilities and a rental business.
(2)The term type of business prescribed by the Presidential Decree in Article 10 (1) 4 of the Act means the types of business falling
under each of the following subparagraphs:
1.The financial business;
2.The insurance business;
3.The customs-clearance brokerage;
4.The tax consulting business;
5.The accounting business;
6.The shipping brokerage business, the shipping agency business, the ship lease business and the ship management business provided
for in Article 34 of the Marine Transportation Act;
7.The harbor service business that is run under subparagraph 1 (a) through (c) of Article 2 of the Enforcement Decree of the Harbor
Transport Business Act;
8.The educational and training business;
9.The oil supply business;
10.The waste collection, transport and disposal business;
11.The information processing business;
12.The restaurant business;
13.The food sale business;
14.The accommodation business;
15.The bathhouse business;
16.The laundry business;
17.The haircutting business and the beautician business; and
18.Other types of business that are recognized and published by the Minister of Commerce, Industry and Energy as being necessary to
support the business of located enterprises.
(3)The term public institutions prescribed by the Presidential Decree in Article 10 (1) 5 of the Act means the public institutions
falling under each of the following subparagraphs:
1.Corporations in which local governments have made full equity investments or to which such local governments have made full contributions;
2.The National Pension Corporation established under the National Pension Act;
3.The National Health Insurance Corporation established under the National Health Insurance Act;
4.The Korea Export Insurance Corporation established under the Export Insurance Act;
5. The Korea Airports Corporation (hereinafter referred to as the Korea Airports Corporation ) established under the Korea Airports
Corporation Act;
6.The Inchon International Airport Corporation (hereinafter referred to as the Inchon International Airport Corporation ) established
under the Inchon International Airport Corporation Act;
7.The Korea Container Terminal Authority established under the Korea Container Terminal Authority Act; and
8.The Port Authority (hereinafter referred to as the Harbor Corporation ) established under Article 4 of the Port Authority Act.
Article 8 (Change in Permitted Matters, etc.)
(1)Any person who intends to obtain a location permit or a changed location permit in accordance with Article 11 (1) of the Act shall
file an application for such location (such change of location) permit, accompanied by a document attesting that he falls under each
subparagraph of Article 10 (1) of the Act to the administrative authority having jurisdiction over the relevant area.
(2)The term the case where he intends to have permitted matters changed in the latter part of Article 11 (1) of the Act means a
change in the type of business (based on the split-split classification unit in the Korean Standard Industrial Classification, which
is published by the Commissioner of the National Statistical Office under Article 17 (1) of the Statistics Act) or in the area.
(3)The administrative authority shall, upon receiving an application for the location permit or the change of location permit, which
is filed under Article 11 (1) of the Act, decide whether or not to grant such location permit or such change of location permit within
10 days from the date on which he receives such application and notify the applicant of his decision.
(4)The administrative authority shall, if he preferentially grants any location permit in accordance with Article 11 (2) of the Act,
set and publish standards for preferentially granting location permits taking into account the ratio of the amount of foreign investment
and the ratio of the amount of its exports, etc.
Article 9 (Disposal of Land or Factory, etc. for Which Location Permit Is Revoked)
(1)In the event that any person whose location permit is revoked in accordance with Article 15 (5) of the Act (hereafter in this Article,
referred to as a person whose location permit is revoked ) intends to dispose of his land, factory, buildings and facilities (hereinafter
referred to as the factory, etc. ) in any free trade zone, he shall submit a disposal plan, accompanied by documents prescribed
by the Ordinance of the Ministry of Commerce, Industry and Energy, to the administrative authority.
(2)Every person whose location permit is revoked shall dispose of the factory, etc. to any other person who is eligible to locate
in a free trade zone within 6 months from the date on which his location permit is revoked: Provided, That in the event that an auction
and procedures prescribed by the provisions of other Acts are in progress for the disposal of the factory, etc., the progress period
of the relevant procedures shall not be included.
(3)Any person whose location permit is revoked shall, if he fails to dispose of the factory, etc. within the period referred to in
paragraph (2), file a disposal application, accompanied by documents prescribed by the Ordinance of the Ministry of Commerce, Industry
and Energy, with the administrative authority.
(4)The administrative authority shall, upon receiving the disposal application filed under paragraph (3), publish matters concerning
the sales of the factory, etc. in an effective manner, including posting such matters concerning their sales on the Internet home
page and select a transferee.
(5)Any prospective transferor shall, on the recommendation of a prospective transferee by the administrative authority, promptly enter
into negotiations on the transfer of the factory, etc. and conclude a purchase and sale contract within 6 months from the date on
which the prospective receives the recommendation of such transferee.
(6)Any person who acquires by transfer the factory, etc. under paragraphs (2) and (5) shall obtain a location permit or a change of
location permit within 3 months from the date on which he acquires by transfer such factory, etc.
Article 10 (Notification of Location Permit, etc.)
(1)The administrative authority shall, if he notifies the head of customhouse of matters concerning the granting or the revocation
of any location (any change of location) permit in accordance with Article 16 of the Act, attach the copies of documents confirming
the fact of the granting or revocation of such location (such change of location) permit to such notification.
(2)The head of customhouse may, upon receiving the notification referred to in paragraph (1), if it is deemed necessary for that customhouse
to manage goods, ask the administrative authority to submit material within the scope of documents that he has received from the
located enterprise concerned.
Article 11 (Rental and Sale of State-Owned Land or Factory, etc.)
(1)The administrative authority shall, when he sells or rents any State-owned factory, etc. to any located enterprise in accordance
with Article 17 (1) of the Act, sell or rent such State-owned factory, etc. preferentially to any person who obtains a location permit
in accordance with Article 11 (2) of the Act.
(2)The administrative authority may, if it is deemed necessary to sell or rent the factory, etc. in accordance with paragraph (1),
lay down terms necessary to guarantee the execution of any contract.
(3)The administrative authority shall, when he consults with the Minister of Finance and Economy about the sale prices and rents of
the factory, etc. in accordance with Article 17 (2) of the Act, attach the document falling under each of the following subparagraphs:
Provided, That if the material referred to in subparagraph 1 or 2 is not available, such material may be replaced by a written appraisal
statement issued by a certified appraisal institution:
1.A statement detailing financial resources that are put into the relevant the factory, etc.;
2.A price-calculation record; and
3.The land registration map of the land or the plans of the factory, etc.: Provided, That in the case of a site for which work is
under way to level it, if it is difficult to submit the land registration map thereof, such land registration map may be replaced
by a site development plan drawing.
Article 12 (Extension of Purchase Price Payment and Payment in Installments)
(1)When the State-owned factory, etc. located in any free trade zone is sold in accordance with Article 19 (1) of the Act, if any
purchaser of the factory, etc. is difficult to pay the purchase price therefor within the fixed time limit on the grounds that he
falls under each subparagraph of Article 44 (2) of the Enforcement Decree of the State Properties Act or on the other grounds prescribed
by the Ordinance of the Ministry of Commerce, Industry and Energy, the administrative authority may extend the payment settlement
date for the factory, etc. within the scope of 6 months.
(2)In the event that the sale price for the State-owned land or factory, etc. located in any free trade zone under Article 19 (1)
of the Act is in excess of 1 billion won, the administrative authority may have the purchase price paid in equal installments within
the scope of 5 years.
(3)The interest accruing from extending the payment settlement date or the arranging of payment into equal installments referred to
in paragraphs (1) and (2) shall be an amount obtained by the multiplication of the producers inflationary rate during the period
ranging from the sale date to the purchase price settlement date by the sale price of the factory, etc.
Article 13 (Notice for Demanding Payment of Rents, etc. and Action Taken to Collect Rents in Arrears)
(1)The term period set by the Presidential Decree in Article 21 (1) of the Act means the period of 90 days.
(2)With respect to any person who defaults in the payment of rents of the factory, etc. and in the payment of his share of the cost
of maintaining joint facilities, the administrative authority shall serve a notice demanding the payment thereof within 15 days from
the date on which the payment deadline lapses. In this case, the administrative authority shall set a payment time limit of not more
than 15 days from the date on which he serves such notice.
(3)In the event that any arrears are not paid after the lapse of the payment deadline referred to in the latter part of paragraph
(2), the administrative authority may again set the payment deadline of not more than one month and serve a notice demanding the
payment of such arrears.
(4)When the administrative authority serves a notice demanding that the defaulter pay the arrears in accordance with paragraph (3),
he shall also notify the defaulter of the purport that his property may be seized.
Article 14 (Construction of Factory, etc.)
When the administrative authority performs the clerical functions that belongs to the authority of the Mayor/Do governor or the head
of Si/Gun/Gu (referring to the head of the autonomous Gu; hereinafter the same shall be applied), which is provided for in the Building
Act, in accordance with Article 23 (3) of the Act, he shall notify without delay the competent Mayor/Do governor or the head of the
competent Si/Gun/Gu of details of such clerical function performed.
Article 15 (Rental or Transfer of Factory, etc. that Use Foreign Goods, etc.)
(1)Any person who intents to rent part of the factory, etc. that use foreign goods supplied by any support enterprise provided for
in the proviso of Article 24 of the Act, goods provided for in Article 29 (1) 2 of the Act, which are shipped into any free trade
zone after making a report thereon and other goods that are shipped into any free trade zone out of the customs territory in accordance
with subparagraph 3 of Article 4 of the Act on Special Cases concerning the Refundment of Customs Duties, etc. Levied on Raw Materials
for Export (hereinafter referred to as foreign goods, etc. ) shall file an application with the head of customhouse for a rental
permit.
(2)The head of customhouse shall, if he grants the rental permit in accordance with the proviso of Article 24 of the Act, grant such
rental permit within the scope of not more than 40/100 of the total floor area of the factory, etc.
Article 16 (Disposal of Land or Factory, etc. Prior to Completion of Their Construction)
The provisions of Article 9 (4) through (6) shall apply mutatis mutandis to a case where the administrative authority selects a person
to acquire by transfer the land or factory, etc. in accordance with Article 25 (2) of the Act.
Article 17 (Disposal of Land and Factory, etc. Acquired Through Auction, etc.)
(1)Any person who intends to obtain a location permit (including any change of location permit; hereafter in this paragraph the same
shall be applied) in accordance with the main sentence of Article 26 (1) 1 of the Act shall file an application for a location permit
within 3 months from the date on which he acquires the factory, etc.
(2)The provisions of Article 9 shall apply mutatis mutandis to a case where the administrative authority selects a person to acquire
by transfer the factory, etc. in accordance with Article 26 (1) 2 of the Act.
Article 18 (Cost of Maintaining Joint Facilities)
(1)The cost of maintaining joint facilities provided for in Article 28 of the Act shall be an amount that is calculated according
to the amount of earnings accruing from the use of such joint facilities by each located enterprise: Provided, That if it is difficult
to calculate the amount of earnings by each located enterprise, the amount of such earnings may be an amount that is calculated according
to the standards that the administrative authority publishes, taking into account comprehensively the floor areas of the buildings
occupied by located enterprises, the areas of their sites and the numbers of their employees.
(2)The cost of maintaining joint facilities referred to in paragraph (1) shall be levied monthly: Provided, That the cost may be levied
quarterly if the administrative authority deems it necessary to do so.
CHAPTER IV SHIPMENT OF GOODS INTO OR OUT OF FREE TRADE ZONES AND MANAGEMENT, ETC.
Article 19 (Report on Shipment of Goods Out of Korea)
Any person who intends to make a report on the shipment of goods out of Korea in accordance with Article 30 of the Act shall make
a report stating the matters falling under each of the following subparagraphs to the head of customhouse on the shipment of goods
out of Korea:
1.The name, standard, quantity, price and item classification number of the goods;
2.The kind, number and article number of the packaging;
3.The destination, the country of origin and the country of loading;
4.The business operator registration number and customs clearance code; and
5.In the event that supplies used by any foreign trade ship or any foreign trade aircraft are furnished, the material concerning the
type, name or registered mark, nationality, the net tonnage of the relevant ship or the weight of the relevant aircraft, the number
of scheduled days of navigation and the number of passengers and crew members, etc., which all provide a basis for assessing the
proper quantity of supplies needed for the navigations by the relevant ship and the relevant aircraft.
Article 20 (Omission of Confirmation of Shipment of Domestic Goods Out of Free Trade Zone)
The term goods prescribed by the Presidential Decree in the proviso of Article 31 of the Act means the goods falling under each
of the following subparagraphs:
1.Accessible vehicles;
2.Articles carried by accessible persons; and
3.Other goods that are prescribed and published by the Commissioner of the Korea Customs Service as those that are used and consumed
in free trade zones.
Article 21 (Approval for Exporting and Importing Goods Subject to Restrictions on their Export and Import)
(1)Any person who intends to obtain export and import approval from the Minister of Commerce, Industry and Energy or the head of customhouse
in accordance with Article 32 (1) of the Act shall file an application for approving his export and import with the Minister of Commerce,
Industry and Energy or the head of customhouse.
(2)In the event that the Minister of Commerce, Industry and Energy or the head of customhouse grants approval for shipping goods out
of any free trade zone in accordance with Article 32 (1) of the Act, he shall consult thereabout in advance with any agency in charge
of import approval provided for in the Foreign Trade Act.
(3)The term of validity for export and import approval provided for in Article 32 (1) of the Act shall be one year: Provided, That
the Minister of Commerce, Industry and Energy or the head of customhouse may, if he deems it necessary for the stabilization of domestic
prices, coordination of the supply and demand of goods, the delivery terms of goods, and the characteristics of transactions, set
the term of validity otherwise.
Article 22 (Approval of Shipment of Goods Subject to Restrictions on Their Export and Import into Customs Territory)
The provisions of Article 21 shall apply mutatis mutandis to the shipment of goods into the customs territory provided for in Article
32 (3) of the Act.
Article 23 (Temporary Shipment of Foreign Goods, etc. Into or Out of Free Trade Zone)
(1)Any person who intends to obtain a permit from the head of customhouse for temporarily shipping foreign goods, etc. into or out
of any free trade zone in accordance with Article 33 of the Act shall file an application for a temporary shipment permit with the
head of customhouse.
(2)The period during which foreign goods, etc. are temporarily shipped into or out of any free trade zone under paragraph (1) shall
be the period of not more than 6 months: Provided, That any person who intends to obtain a permit for extending the period for the
purpose of exhibiting and publicizing such foreign goods or on the grounds of other inevitability, etc. shall file an application
for extending the period with the head of customhouse prior to the expiration of such period.
Article 24 (Report, etc. on Work Done Outside Free Trade Zone)
(1)Any person who intends to make a report on the work done outside any free trade zone (hereinafter referred to as outside work
) in accordance with Article 34 (1) of the Act shall make an outside work report stating the matters falling under each of the following
subparagraphs to the head of customhouse:
1.The name, standard, quantity and weight of goods before and after the outside work is performed; and
2.The kind, period and place of the outside work and the grounds of performing such outside work.
(2)The scope of the outside work shall be not more than 60/100 for the amount of goods that the relevant located enterprise exported
(referring to the export provided for in subparagraph 3 of Article 2 of the Enforcement Decree of the Foreign Trade Act; hereafter
the same in this paragraph shall apply) after processing them using raw materials in the previous year: Provided, That in the event
that the export performance was nonexistent in the previous year or it is recognized to be inappropriate to apply the export amount
of the previous year on the grounds of a sharp increase in the export performance, etc., the scope of the outside work shall be defined
as follows:
1.In the event that the export performance of the previous year was nonexistent on the grounds that the business commence in the current
year, not more than 60/100 of the amount that is calculated in terms of the annual export performance amount in the month during
which the highest export performance amount is achieved during the period ranging from the date on which the business commences to
the date on which a report is made on the shipment: Provided, That in the event that an export order is received for the first time
after the business commences, the amount of goods for which such export order is given shall be deemed the monthly average export
performance and not more than 60/100 of the amount that is calculated in terms of the amount of annual export performance;
2.In the event that the amount of goods on which an export order is given in the month during which a shipment report is made increases
by not less than 50/100 from the monthly average export amount of the previous year, the amount of goods on which an export order
is given in the month during which a shipment report is made shall be deemed the monthly average export performance and not more
than 60/100 of the amount that is calculated in terms of the amount of the annual export performance; and
3.In the event that the export performance of the previous year fell to not more than 50/100 on the grounds of natural disaster or
other inevitability, etc., not more than 60/100 of the export amount in the past year from the immediately preceding month during
which the relevant grounds accrue.
(3)The shipment period for the outside work shall be not more than one year in the case of raw materials: Provided, That such shipment
period shall be within the term of a contract that is concluded between any located enterprise and any enterprise entrusted with
outside work with respect to the same items in the case of construction materials and the shipment period shall not exceed 3 years.
(4)Goods subject to outside work shall be limited to raw materials or construction materials (including metal mold) that are exclusively
used to manufacture and process raw materials.
(5)The shipment place for the outside work shall be limited to a factory operated by an enterprise entrusted with the outside work
or a workshop attached thereto.
Article 25 (Notification of Goods Whose Storage Period Lapses)
Any person who runs a business of the type provided for in Article 10 (1) 3 of the Act in the area designated by the Commissioner
of the Korea Customs Service in accordance with Article 37 of the Act may, if his goods, the storage period of which lapses, impede
the smooth shipment of cargo into or out of any free trade zone, notify the head of customhouse of the current state of his storage-period
overdue goods in order to take measures to ship them out of any free trade zone or sell them under the conditions as prescribed and
published by the Commissioner of the Korea Customs Service.
Article 26 (Inventory Record, etc.)
(1)The term goods prescribed by the Presidential Decree in the proviso, with the exception of each subparagraph, of Article 38 (1)
of the Act means goods of the type falling under each of the following subparagraphs:
1.Goods whose price is not more than the amount that is set and published by the Commissioner of the Korea Customs Service;
2.Goods that fall under each subparagraph of Article 20; and
3.Goods that lose their economic value after the passage of their durable years and they fall under the provisions of Article 40 of
the Customs Act when they are shipped into the customs territory.
(2)Any person who intends to make a report on the destruction or loss of foreign goods in accordance with Article 38 (3) of the Act
shall make a report stating the name, standard, quantity, price, the name of their owner, the grounds of their loss or destruction,
date and time and their storage place, etc. to the head of customhouse.
(3)Any person who intends to dispose of foreign goods, etc. in accordance with Article 38 (3) of the Act shall make a report stating
the name, standard, quantity, price, the name of their owner, the grounds of their disposal, the date and time of their disposal
and methods of their disposal, etc. to the head of customhouse.
(4)The term period prescribed by the Presidential Decree in Article 38 (4) of the Act means 5 years.
Article 27 (Collection of Customs Duties of Goods Whose Inventory Falls Short)
In the event that customs duties are levied on foreign goods, etc. whose inventory falls short under Article 39 (4) of the Act, the
day falling under each of the following subparagraphs shall be deemed the time when dutiable goods are determined and Acts and subordinate
statutes are applied in accordance with Articles 16 and 17 of the Customs Act and thereafter customs duties are levied thereon:
1.In the event that foreign goods are lost just after they are shipped into any free trade zone, the day on which the relevant foreign
goods are shipped into such free trade zone; and
2.In the event that foreign goods, etc. are manufactured or processed, etc., the day on which such foreign goods are manufactured
or processed, etc.
Article 28 (Publication of Disposal of Goods, etc.)
(1)Any owner of goods, any shipper and any person who is entrusted with the disposal of goods (hereinafter referred to as the owner,
etc. of goods. ) who are all under orders to dispose of goods in accordance with the main sentence of Article 40 (1) of the Act shall,
when the owner, etc. of goods intend to dispose of the relevant goods, notify in advance the head of customhouse of the name, standard,
quantity, price of the goods, the name of the owner of the goods and date and time when they are disposed of and methods of disposing
of the goods, etc. and when the relevant goods are disposed of, they shall notify the head of customhouse of the results thereof.
(2)In the event that the disposal of any goods is published in accordance with Article 40 (2) of the Act, such publication shall be
put up in the Official Gazette or in the bulletin board of the relevant customhouse for not less than 14 days in an effective manner,
including posting details of the publication on the Internet home page.
Article 29 (Restrictions on Shipment of Foreign Goods, etc. Into or Out of Free Trade Zone)
The term goods prescribed by the Presidential Decree in Article 41 (2) of the Act means the goods of the type falling under each
of the following subparagraphs:
1.Wastes including workplace waste, etc.;
2.Illegal weapons including firearms, etc.;
3.Narcotics;
4.Goods that infringe on the trademark rights under the Trademark Act or copyrights under the Copyright Act; and
5.Other goods that are prescribed and published by the Commissioner of the Korea Customs Service as being similar to the goods referred
to in subparagraphs 1 through 4.
CHAPTER V IMPOSITION, REDUCTION AND EXEMPTION OF CUSTOMS DUTIES, ETC.
Article 30 (Approval for Using Domestic Goods as Raw Materials and Deduction from Customs Duty Base)
(1)Any person who intends to obtain approval for using domestic goods as raw materials in accordance with the latter part of Article
44 of the Act shall file an application stating the matters falling under each of the following subparagraphs with the head of customhouse:
1.The name, standard, quantity, weight and price of domestic goods that he intends to use as raw materials;
2. The name, standard, quantity, weight and price of goods that he intends to manufacture, process, assemble or repair using domestic
goods as raw materials; and
3.The work period and the required quantity of domestic goods.
(2)The term raw materials in the latter part of Article 44 of the Act means domestic goods that fall under each subparagraph of
Article 199 (1) of the Enforcement Decree of the Customs Act and their name, quantity by standard and required quantity that can
be confirmed in light of the nature of their manufacture, processing or repair and manufacturing process, etc.
(3)In the event that the name and standard of the domestic goods that are to be used as raw materials are identical and their required
quantity is invariable, the head of customhouse may grant approval for the required quantity of a certain period in the block when
he grants such approval in accordance with the latter part of Article 44 of the Act.
(4)Any person who intends to have the quantity or price of the domestic goods deducted from the customs duty base, which are used
as raw materials under the latter part of Article 44 of the Act, shall file an import declaration, accompanied by the documents verifying
matters falling under each of the following subparagraphs, with the head of customhouse:
1.The written approval for using domestic goods as raw materials referred to in paragraph (1);
2.The written confirmation of domestic goods provided for in Article 29 (2) of the Act; and
3.Other document attesting the quantity, etc. of domestic goods that are so used as raw materials.
(5)In the event that the head of customhouse calculates the quantity and price of domestic goods, customs duties of which are deducted
from the customs duty base in accordance with the latter part of Article 44 of the Act, he shall deduct such customs duties based
on the date on which the relevant domestic goods are shipped into any free trade zone or the date on which a written domestic good
confirmation is issued.
Article 31 (Construction Materials Subject to Exemption of Customs Duties, etc. in Free Trade Zone Site)
The term construction materials prescribed by the Presidential Decree in Article 46 (1) of the Act means the goods of the kind
falling under each of the following subparagraphs:
1.Construction materials that are used directly for constructing buildings or factories; and
2.Machines, machinery materials, facility goods, devices and equipment that are used directly for constructing and operating factories.
CHAPTER VI SUPPLEMENTARY PROVISIONS
Article 32 (Composition and Operation of Committee)
(1)The members of the Free Trade Zone Committee (hereinafter referred to as the Committee ) provided for in Article 50 of the Act
shall be the Vice Minister of the Ministry of Finance and Economy, the Vice Minister of the Ministry of Foreign Affairs and Trade,
the Vice Minister of the Ministry of Government Administration and Home Affairs, the Vice Minister of the Ministry of Agriculture
and Forestry, the Vice Minister of the Ministry of Environment, the Vice Minister of the Ministry of Construction and Transportation,
the Vice Minister of the Ministry of Maritime Affairs and Fisheries and the Vice Minister of the Ministry of Planning and Budget.
(2)The chairman of the Committee (hereinafter referred to as the chairman ) shall convene the Committees meetings and preside over
such meetings.
(3)The Committees meetings shall open with the attendance of a majority of the total members and pass resolutions with the concurrent
vote of a majority of those present.
(4)The chairman shall, when convening any Committee meeting, notify in writing every member of the Committee of the date, time, place
and agenda, etc. of such meeting at least 7 days prior to the meeting: Provided, That the same shall not apply to a case where any
Committee meeting is required to be convened urgently.
(5)The Committee shall have one secretary in charge of administrative affairs and the secretary shall be appointed by the chairman
from among public officials belonging to the Ministry of Commerce, Industry and Energy.
(6)Necessary matters concerning the operation of the Committee shall be prescribed by the chairman after considering the Committees
resolution thereon.
Article 33 (Hearing of Opinion)
The Committee may, if it is deemed necessary to deliberate on its agenda, ask any person interested to be present at its meeting to
hear his opinion and also ask any expert concerned to put forth his opinion at meetings.
Article 34 (Allowances)
Members and experts who are present at the Committees meetings may be paid allowances within budget limits: Provided, That the same
shall not apply to a case where public officials are present at the Committees meetings in direct connection with the official business
of which they are in charge.
Article 35 (Matters on Which Committee Deliberates)
The term matters prescribed by the Presidential Decree in Article 50 (1) 6 of the Act means the matters falling under each of the
following subparagraphs:
1.Major matters concerning the attraction of foreign investment into free trade zones;
2.Matters concerning the financial support for expanding the infrastructure of various types in free trade zones; and
3.Other matters concerning the designation and operation of free trade zones, which are recognized by the chairman as being necessary
to place on the Committees agenda.
Article 36 (Opening of Branch Offices, etc.)
(1)The Minister of Finance and Economy, the Minister of Justice, the Minister of Information and Communication, the Minister of Health
and Welfare, the Minister of Labor and the Commissioner of the Korea Customs Service may open their respective branch offices, or
post their respective public officials to such branch offices located, in free economic zones in accordance with Article 51 of the
Act in order to deal with administrative affairs involving the imposition and collection of customs duties and taxes, the control
of immigration and emigration, mail, communications, quarantines and labor affairs.
(2)The head of any administrative agency shall, when intending to open its branch office in any free trade zone or post public officials
at such branch office, consult in advance with the administrative authority thereabout.
Article 37 (Joint Check of Free Trade Zones)
The Minister of Commerce, Industry and Energy, the Minister of Construction and Transportation and the Minister of Maritime Affairs
and Fisheries may organize a joint free trade zone check team assigned to check and confirm matters concerning location permits granted
by institutions that are commissioned to perform the work or entrusted with performing the work in accordance with Article 40, the
current state of exports and imports and the actual state of controlling the country of origin required by the Foreign Trade Act,
and ask the administrative authority to submit materials necessary for such check and confirmation.
Article 38 (Provision of Information Pertaining to Logistics, etc.)
(1)The administrative authority and the Commissioner of the Korea Customs Service may conclude agreements with nonprofit incorporated
associations, under which the latter carries out activities aimed at attracting foreign investments in logistics, nurturing logistics
enterprises, helping logistics enterprises make inroads into foreign countries and collecting, providing and studying information
pertaining to logistics in order to develop the logistics industry in free trade zones.
(2)The administrative authority and the Commissioner of the Korea Customs Service may financially support the associations referred
to in paragraph (1) within budget limits to help them cover necessary expenses.
Article 39 (Application, etc. Filed in E-Format)
Any application, any notification and any document submission provided for in this Decree may be filed, made and submitted in an e-format
using the information and communications network.
Article 40 (Delegation and Entrustment of Authority)
(1)The Minister of Finance and Economy may entrust the administrative authority with the authority concerning the receipt of any application
for reducing and exempting taxes filed by any foreign investor and any application filed by any foreign investor, the reduction and
exception of taxes, a change in contents of the reduction and exemption of taxes, or a decision, a confirmation and a notification
with respect to whether or not any application is eligible for the reduction and exemption of taxes in free trade zones provided
for in Articles 121-2 and 121-4 of the Restriction of Special Taxation Act in accordance with Article 55 (2) of the Act.
(2)The administrative authority shall, when he performs the administrative affairs belonging to the authority with which he is entrusted
in accordance with paragraph (1), notify the Minister of Finance and Economy of the results thereof.
(3)The term corporations prescribed by the Presidential Decree in Article 55 (3) of the Act means the corporations falling under
each of the following subparagraphs:
1.The Korea Airports Corporation;
2.The Inchon International Airport Corporation; and
3.The Port Authority.
(4)The Minister of Commerce, Industry and Energy shall delegate the authority held by the administrative authority, which falls under
each of the following subparagraphs, with respect to the free trade zones of industrial complexes under Article 8 (1) 1 of the Act
to the administrator of every free trade zone administrative agency in accordance with Article 55 (3) of the Act:
1.The work of managing free trade zones under Article 8 (2) of the Act;
2.The categorization of free trade zones under Article 9 of the Act;
3.The location permits or a change in any location permit under Article 11 of the Act;
4.The revocation of any location permit under Article 15 of the Act;
5.The notification of location permit, etc. under Article 16 of the Act;
6.The rental and sale, etc. of any State-owned land or factory, etc. under Article 17 of the Act;
7.The extension of the payment settlement date of the purchase price for the factory, etc. and the payment of the purchase price in
installments under Article 19 of the Act;
8.The reduction and exemption of rents under Article 20 of the Act;
9.The notice served to demand the payment of rents in arrears and the action taken to collect rents in arrears under Article 21 of
the Act;
10.The receipt, etc. of any construction permit and any construction report under Article 23 of the Act;
11.The acquisition by transfer of the factory, etc., the selection of any transferee and the receipt of the report on transfer, rental
and use under Article 25 of the Act;
12.The acquisition by transfer of the land or factory, etc. under Article 26 (1) 3 of the Act;
13.The installment, maintenance and management of control facilities under Article 27 of the Act;
14.The collection of the cost for maintaining the joint facilities under Article 28 of the Act;
15.The issuance of access certificates and passes for entering free trade zones and any notification by the head of customhouse under
Article 52 of the Act;
16.The holding of hearings under Article 54 of the Act;
17.The authority concerning the receipt of any application for reducing and exempting taxes filed by any foreign investor and any
application filed for changing the reduction and exemption of taxes, the reduction and exception of taxes, a change in the reduction
and exemption of taxes, or a decision, a confirmation or a notification with respect to whether any application is eligible for the
reduction and exemption of taxes under paragraph (1) and the notification of the results of administrative affairs to the Minister
of Finance and Economy under paragraph (2); and
18.The imposition and collection of fines for negligence under Article 70 (1) and (3) 1 of the Act.
(5) The Ministry of Construction and Transportation shall delegate authority for conducting matters falling under any of the following
subparagraphs with respect to any free trade zone that is linked with or is accessible to any airport and its hinterland provided
for in subparagraph 2 of Article 8 of the Act in accordance with Article 55 (3) of the Act to the head of the Civil Aviation Safety
Authority:
1.The division of area under Article 9 of the Act;
2.The location permit and a change of location permit under Article 11 of the Act;
3.The revocation of any location permit under Article 15 of the Act;
4. The notification of any location permit, etc. under Article 16 of the Act;
5. The rental and sale of any State-owned land or factory, etc. under Article 17 of the Act;
6.The extension of the payment settlement date of the purchase price and the arranging of payment of the purchase price in installments
for the factory, etc. under Article 19 of the Act;
7.The reduction and exception of rents under Article 20 of the Act;
8.The notice demanding the payment of rents, etc. and the action taken to collect rents in arrears under Article 21 of the Act;
9.The construction permit and the receipt of any report thereon, etc. under Article 23 of the Act;
10.The acquisition by transfer of the factory, etc., the selection of any transferee and the receipt of the report on transfer, rental
and use under Article 25 of the Act;
11.The acquisition by transfer of the factory, etc. under Article 26 (1) 3 of the Act;
12.The holding of hearings under Article 54 of the Act;
13.The authority concerning the receipt of any application for reducing and exempting taxes filed by any foreign investor and any
application filed for changing the reduction and exemption of taxes, the reduction and exception of taxes, a change in the reduction
and exemption of taxes, or a decision, a confirmation or a notification with respect to whether any application is eligible for the
reduction and exemption of taxes under paragraph (1) and the notification of the results of administrative affairs to the Minister
of Finance and Economy under paragraph (2); and
14.The imposition and collection of fines for negligence under Article 70 (1) and (3) 1 of the Act.
(6)The Ministry of Construction and Transportation shall delegate his authority for conducting matters falling under any of the following
subparagraphs with respect to any free trade zone that is linked with or accessible to any airport and its hinterland provided for
in subparagraph 2 of Article 8 of the Act to the President of the Korea Airports Corporation or the President of the Incheon International
Airport Corporation in accordance with Article 55 (3) of the Act:
1.The work of managing free trade zones under Article 8 (2) of the Act;
2.The installment, maintenance and management, etc. of control facilities under Article 27 of the Act;
3.The collection of the cost of operating joint facilities under Article 28 of the Act; and
4.The issuance of access certificates and passes for entering any free trade zone and the notification of such issuance to the head
of customhouse under Article 52 of the Act.
(7)The Minister of Maritime Affairs and Fisheries shall delegate authority for conducting affairs falling under any of the following
subparagraphs with respect to the State-owned property located in harbors and their hinterlands, which is under the jurisdiction
of the Ministry of Maritime Affairs and Fisheries under Article 8 (1) 5 of the Act, property that is used to make equity investment
in the Port Authority established under Article 6 of the Port Authority Act and other property that is acquired directly by the Port
Authority to the administrator of any maritime affairs and fisheries office in accordance with Article 55 (3) of the Act: Provided,
That the Minister of Maritime Affairs and Fisheries shall delegate his authority on the installment, maintenance and management,
etc. of control facilities provided for in Article 27 of the Act on the property that is used to make equity investment in the Port
Authority in accordance with Article 6 of the Port Authority Act and other property that is acquired directly by the Port Authority
and the collection, etc. of the cost of maintaining joint facilities to the President of the Port Authority:
1.The work of managing free trade zones under Article 8 (2) of the Act;
2.The categorization of free trade zones under Article 9 of the Act;
3.The location permit and a change in the location permit under Article 11 of the Act;
4.The revocation of any location permit under Article 15 of the Act;
5.The notification of any location permit, etc. under Article 16 of the Act;
6.The rental and sale, etc. of any State-owned land or factory, etc. under Article 17 of the Act;
7.The extension of the payment settlement date of the purchase price and the arranging of payment of the purchase price in installments
for the factory, etc. under Article 19 of the Act;
8.The reduction and exemption of rents under Article 20 of the Act;
9.The notice demanding the payment of rents, etc. and the action taken to collect rents in arrears under Article 21 of the Act;
10.The receipt of any construction permit and any report, etc. under Article 23 of the Act;
11.The acquisition by transfer of the factory, etc., the selection of any transferee and the receipt of a report on transfer, rental
or use under Article 25 of the Act;
12.The acquisition by transfer of the factory, etc. under Article 26 (1) 3 of the Act;
13.The installment, maintenance and management, etc. of control facilities under Article 27 of the Act;
14.The collection, etc. of the cost of maintaining joint facilities under Article 28 of the Act;
15.The issuance of access certificates and passes for entering free trade zones and the notification of such issuance to the head
of customhouse under Article 52 of the Act;
16.The holding of hearing under Article 54;
17.The authority concerning the receipt of any application for reducing and exempting taxes filed by any foreign investor and any
application filed for changing the reduction and exemption of taxes, the reduction and exception of taxes, a change in the reduction
and exemption of taxes, or a decision, a confirmation or a notification with respect to whether any application is eligible for the
reduction and exemption of taxes under paragraph (1) and the notification of the results of administrative affairs to the Minister
of Finance and Economy under paragraph (2); and
18.The imposition and collection of fines for negligence under Article 70 (1) and (3) 1 of the Act.
(8)The Minister of Maritime Affairs and Fisheries shall delegate authority for conducting matters falling under any of the following
subparagraphs with respect to public property owned by the City/Do, which is linked with and accessible to any airport and its hinterland
provided for in Article 8 (1) 5 of the Act, to the Mayor/Do governor in accordance with Article 55 (3) of the Act:
1.The work of managing free trade zones under Article 8 (2) of the Act;
2.The categorization of free trade zones under Article 9 of the Act;
3.The location permit and a change of location permit under Article 11 of the Act;
4.The revocation of any location permit under Article 15 of the Act;
5.The notification of any location permit, etc. under Article 16 of the Act;
6.The receipt of any construction permit and the receipt of any report, etc. under Article 23 of the Act;
7.The acquisition by transfer of the factory, etc., the selection of any transferee and the receipt of the report on transfer, rental
and use under Article 25 of the Act;
8.The acquisition by transfer of the factory, etc. under Article 26 (1) 3 of the Act;
9.The installment, maintenance and management, etc. of control facilities under Article 27 of the Act;
10.The collection, etc. of the cost of maintaining joint facilities under Article 28 of the Act;
11.The issuance of access certificates and passes for entering free trade zones and the notification of such issuance to the head
of customhouse under Article 52 of the Act;
12.The holding of hearings under Article 54 of the Act;
13.The authority concerning the receipt of any application for reducing and exempting taxes filed by any foreign investor and any
application filed for changing the reduction and exemption of taxes, the reduction and exception of taxes, a change in the reduction
and exemption of taxes, or a decision, a confirmation or a notification with respect to whether any application is eligible for the
reduction and exemption of taxes under paragraph (1) and the notification of the results of administrative affairs to the Minister
of Finance and Economy under paragraph (2); and
14.The imposition and collection of fines for negligence under Article 70 (1) and (3) 1 of the Act.
(9)The Minister of Maritime Affairs and Fisheries shall delegate authority for conducting affairs falling under any subparagraph of
paragraph (8) with respect to the public property owned by the Si/Gun/Gu, which is linked with or accessible to any airport and its
hinterland provided for in Article 8 (1) 5 of the Act, to the head of Si/Gun/Gu in accordance with Article 55 (3) of the Act.
ADDENDA
(1)(Enforcement Date) This Decree shall enter into force on June 23, 2004.
(2)(Abrogation of Other Acts and Subordinate Statues) The Enforcement Decree of the Act on Designation and Management of Customs-Free
Zones for Building International Logistics Centers shall be abrogated.
(3)Omitted.
(4)(Relations with Other Acts and Subordinate Statutes) Where other Acts and Subordinate Statutes cite the previous Enforcement Decree
of the Act on Designation and Management of Customs-Free Zones for Building International Logistics Centers, the previous Enforcement
Decree of the Act on the Designation, etc. of Free Trade Zone or their provisions at the time of the entering into force of this
Decree, and if this Decree includes provisions corresponding to them, they shall be deemed to have cited this Decree or the provisions
corresponding to this Decree.
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