Korean Economy News
Korean govt cuts corporate taxes to back chip, battery, vaccine capacity

[Graphics by Song Ji-yoon]

이미지 확대

[Graphics by Song Ji-yoon]

The government promised the first tax cut under President Moon Jae-in for large companies responsible for national strategic technologies of semiconductors, batteries and vaccines.

Under the tax code revisions proposed for 2021, tax on R&D investment in the three areas will be deducted by 30-40 percent for established companies and 40 to 50 percent for mid-sized and smaller players starting the latter half.

Tax deduction rate for facility investment in 31 categories will be raised to 6 percent for large companies, 8 percent for midsized companies and 16 percent for smaller companies.

The incentives come on top of existing grants for general and proprietary technologies in show of the government’s drive to back the three core technologies as the country’s strategic assets.

The latest deduction can reduce 1.63 trillion won – 331.8 billion in income tax and 1.3 trillion won in corporate tax – over the next five years. When counting in other increases in the new tax code, the actual tax saving would come to 1.5 trillion won over the next five years.

The proposed revision in corporate tax also includes tax cuts for startups and those supporting job growth. Reshoring tax incentives would be extended to the end of 2024 on top of allowing up to two years for business to complete relocation.

By Chun Kyung-woon and Cho Jeehyun

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]

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