Adequate tax support is provided for electric vehicles – this is the fact | news

The Ministry of Strategy and Finance said, “We would like to inform you that sufficient tax support is provided for electric vehicles.”

[기사 내용]

ㅇ In the United States, through the Inflation Reduction Act, when an electric vehicle factory is built, a tax credit of up to 30% is given, but in Korea, it is reported that only 1% (5% for medium- enterprises size, 10% for small and medium enterprises).

[기재부 입장]

□ The basic tax credit rate for electric vehicle manufacturing facilities in the USA is 6%.

ㅇ An additional deduction rate is applied when requirements such as paying wages above a certain level to construction workers of the relevant facility are applied, and a tax credit of up to 30% is given.

□ Tax support for EV-related investments in Korea is at a sufficient level.

ㅇ Currently, secondary batteries (batteries), a key part of electric vehicles, have been designated as a national strategic technology, and tax support is provided at a higher level than general investment.

– In the case of investment in a facility, the tax credit is currently at a level of 8% (8% for medium enterprises, 16% for small and medium enterprises), and the deduction rate has been raised to 15% (15) . % for medium enterprises, 25% for small and medium enterprises) and at the same time, the tax credit rate for the increase in investment is 4→10 The amendment to the 「Special Law on Special Law」, which’ n include a temporary increase in 2023 to %, to be discussed in the extraordinary National Assembly in February.

– 30% to 50% tax credit for Research and Development expenses

ㅇ In addition, core technologies for electric vehicles, such as electric vehicle drive system efficiency technology and high-speed and high-efficiency wireless charging technology, are designated as growth technologies and new source.

– In the case of investment in facilities, the tax credit is currently at a level of 3% (6% for medium-sized enterprises, 12% for small and medium-sized enterprises), and it is intended to temporarily expand to 6% ( 10% for medium enterprises, 18% for small and medium enterprises) in 2023*

* The tax credit rate for the increase in investment is also temporarily raised in 2023 from 3% to 10%

– Receives 20% ~ 40% tax credit for Research and Development expenses

□ Korea not only provides tax support for investment and research and development, but also provides tax support for corporate employment.

ㅇ Through the integrated employment tax credit introduced this year, the government provides a wider range of employment-related tax support than the United States, including support for tax credits between KRW 4 million and KRW 15.5 million per head for every increase in employment, regardless of industry and wage requirements.

□ The government will continue to provide support for investments in cutting-edge technologies such as electric vehicles.

Enquiries: Ministry of Strategy and Finance, Taxation Division, Special Tax System Division (044-215-4130)