[新정부 국정과제 확정] The reshoring membrane will be lifted layer by layer… Full coverage of corporate tax and R&D support

To revitalize corporate investment, employment, and reshoring, the Yun Seok-yeol government will provide tax support such as corporate tax cuts.

On the morning of the 3rd, the Presidential Transition Committee (Acquisition Committee) announced the ‘Yun Seok-Yeol government 110 tasks’ at a press conference in Tongui-dong, Jongno-gu, Seoul. This includes the binge of economic activity centered on private companies, which President-elect Yoon Seok-yeol has been emphasizing since the presidential election.

The transition committee selected ‘dynamic innovative growth’ as ​​one of the government’s visions. He said, “Growth is driven by the private sector, and the government must make a good distinction between what should and should not be done.”

Reshoring refers to the return of foreign companies to their home countries. A typical example is moving production facilities to a country where labor costs are low and returning to work. The corporate tax rate is considered the biggest variable in reshoring.

In fact, the US, major European countries, and Japan have been actively reshoring for years with unprecedented tax benefits. On the other hand, South Korea raised the corporate tax rate to collect 330 trillion won over the past five years under the Moon Jae-in administration.

During a personnel hearing at the National Assembly the day before, Choo Kyung-ho, a deputy prime minister and candidacy for the Minister of Strategy and Finance, said, “The corporate tax rate should be lowered” in relation to the current government’s increase in the top corporate tax rate from 22% to 25%. The tax rate is higher than the average of the Organization for Cooperation and Development (OECD) and compared to major competitor countries, and the taxation system section is also complicated,” he pointed out.

The transition committee also decided to strengthen tax support for R&D promotion for transition to a digital and low-carbon economy, stock options to support the influx of outstanding talent from venture companies, and companies returning to Korea. In order to facilitate the transfer of technology and capital between generations, the requirements for the family business inheritance deduction and the family business succession gift tax special system are rationalized.

A new frame is also made for policy effectiveness. It is about overcoming the low-growth crisis centered on the market and shifting the focus toward creating a productive welfare system.

In this regard, the role of policy finance is also reestablished. The transition committee said, “The policy finance plans to focus on supplying large-scale, long-term, and high-risk areas such as future core technologies and carbon neutrality.” For venture companies, we plan to strengthen support for customized ESG-related consulting.”