SEJONG, South Korea’s finance ministry said Tuesday it plans to expand the scope of research and development (RandD) projects eligible for tax credits this year in line with efforts to secure new growth engines.

Under the plan, South Korea will offer tax credits for RandD projects in 66 areas of the country’s seven strategic industries, up from the previous 62, according to a revised enforcement ordinance released by the Ministry of Economy and Finance.

The seven areas refer to the semiconductor, battery, vaccine, display, hydrogen, future transportation, and pharmaceutical segments.

The revision will broaden the range of semiconductor technologies eligible for tax credits to encompass the high-bandwidth memory sector.

South Korea will also offer tax credits for a separate batch of 270 technologies under 14 categories, with the defense sector being included for the first time.

The finance ministry unveiled updated tax policies in other areas as well.

For example, South Korea will offer a 10 percent tax
credit to conglomerates for their expenses related to entertainment content production, provided that 80 percent of the total spending, such as staff wages, occurs domestically.

The rate for small and medium-sized firms will be set at 15 percent.

All South Koreans are eligible to receive tax credits for their postpartum care services expenditures. This benefit was previously limited to individuals earning less than 70 million won annually.

Starting in 2025, corporate-owned automobiles must be equipped with light green license plates to qualify for tax benefits. This measure aims to prevent the personal use of these vehicles by business owners.

The finance ministry said the latest sets of policies will result in a decrease in tax revenue of around 100 billion won (US$74.9 million) to 200 billion won.

The enforcement ordinance is expected to be passed by the Cabinet on Feb. 27 for implementation.

Source: Yonhap News Agency