Higher tax credit for investment in semiconductor facilities by large corporations from 6 to 8%… Plenary meeting tonight

An amendment to the Special Taxation Limitation Act (Special Taxation Act), which increases the tax credit for conglomerates on investment in semiconductor facilities from the current 6% to 8%, will be introduced to the full meeting of the National Assembly on the night. the 23rd. The amendment to the Special Act, presented on this day, also includes content to increase the income deduction rate for public transport credit card use from 40% to 80% in the second half of this year. An amendment to the Income Tax Act, which postpones the taxation of virtual assets for an additional two years, which is due to come into force next month, is also being presented at the plenary on this day.

According to the National Assembly, the amendment to the Special Act, which will be presented to the plenary together with next year’s budget bill, includes a tax deduction of 8% of the investment amount for large companies that investment in national industrial strategic high technology. facilities such as semiconductors, batteries, and biotechnology. Currently, the tax credit rate for large corporations is 6% of the investment amount. The tax credit rate for medium-sized enterprises (8%) and small and medium-sized enterprises (16%) will remain the same.

Previously, the People’s Power Semiconductor Industry Competitiveness Improvement Special Committee argued that the tax credit rate for investment in facilities in national high-tech strategic industries such as semiconductors should be increased significantly from 6% to 20% for companies large, 8% to 25% for medium-sized companies, and 16% to 30% for small and medium-sized enterprises. After taking office, President Yoon Seok-yeol also emphasized establishing a system to strengthen the competitiveness of the semiconductor industry. In addition, the Democratic Party proposed tax credit rates of 10%, 15%, and 30%. The Ministry of Strategy and Finance had opposed it, citing concerns about a reduction in tax revenue, saying it could not accept more than 8%, but the Ministry of Strategy and Finance eventually accepted the situation. Representative Ryu Seong-geol, secretary of the National Assembly’s ruling Party’s Planning and Finance Committee, said, “The government is of the opinion that the tax credit rate is excessive, so this decision was made through consultation between the ruling and the opposition. parties.” Independent lawmaker Yang Hyang-ja, chairman of the Special Committee on Semiconductors, said on social media that day, “The tax credit rate has retreated to 8%, which is at the level of breaking a presidential election promise.”

An amendment to the Special Act was also included in the review of the Special Act to raise the income deduction rate from the current 40% to 80% for credit card use on public transport such as buses and subways between July and December this year. The government plans to extend it until the first half of next year, which requires additional legislation.

The virtual assets taxation, which was due to come into force in January next year, is expected to be delayed again. The ruling and opposition parties intend to process the amendment to the Income Tax Act, which postpones the taxation of virtual assets for two years from 2023 to 2025, in a plenary meeting on this day. Initially, from next year, a 20% tax rate was to be applied to profits exceeding 2.5 million won (deductible amount) per year raised as virtual assets. The government tried to start taxing virtual assets from October 2021, but it was postponed three times to January 2022, January 2023, and January 2025.