South Korea expands tax support for strategic industries
According to a report by South Korea's "Newsis" on January 16, the South Korean government has officially launched tax support policies for future strategic industries such as semiconductors, artificial intelligence (AI), and hydrogen energy. The Ministry of Finance and Economy announced on the 16th a revision draft of 21 enforcement decrees, including the Income Tax Act, the Corporate Tax Act, and the "Restriction of Tax Special Act," and plans to announce and implement them within February. The purpose of this revision is to implement the 2025 tax reform plan, concretize the legislative intent through the enforcement decree, and make the industrial policy more closely connected with the tax system, with a focus on supporting corporate research and development (R&D) and investment activities.
The core of the revision draft lies in expanding the scope of "national strategic technologies." The government has increased the number of relevant subdivided technologies from 78 to 81, added new materials and component technologies for next-generation multi-chip modules (MCM) in the semiconductor field, and expanded the scope of application of high-energy-efficiency semiconductor design and manufacturing technologies to the packaging process. In the hydrogen energy field, green and blue hydrogen technologies have been added, and in the field of future transportation, technologies for the transportation, propulsion, and digital design and production operations of environmentally friendly advanced ships have been newly established. At the same time, the scope of new growth and core technologies has also been expanded from 273 items in 14 fields to 284 items, covering multiple directions such as carbon neutral transformation in the steel and petrochemical industries, high-end materials, batteries, and environmental protection processes.
In terms of the R&D tax system, the government has for the first time included the purchase cost of data for AI training in the scope of R&D tax credits to reflect the actual needs of data-driven R&D and relieve the cost burden on AI and big data enterprises. In addition, if the R&D facilities for national strategic technologies and new growth technologies meet the conditions during the commercialization stage, they can still enjoy a high proportion of tax credits. The tax system related to employment has also been refined simultaneously, raising the minimum standard for newly recruited employees for comprehensive employment tax credits and relaxing the eligibility criteria for youth employment incentives. The government said that the revision of this enforcement decree will accelerate private investment decisions through tax incentives and promote the transformation of core technologies and the development of strategic industries. (Economic and Trade Window of the Consulate-General in Busan)
