COVID-19 Supplementary Budget Plan Includes 5G In-Building Tax Credit Proposal

Ministry of Economy and Finance Requests COVID-19 Supplementary Budget Plans from Each Ministry
Ministry of Science and ICT to Include 5G In-Building Tax Credit Proposal
Insufficient In-Building Coverage Hinders 5G Popularization by Carriers
If Tax Credit Approved, In-Building Investment Also Gets 2-3% Deduction... Expected to Accelerate 5G Deployment

[Asia Economy Reporter Koo Chae-eun] As the supplementary budget (추경) for responding to the novel coronavirus infection (COVID-19) has been formalized, it has been confirmed that the Ministry of Science and ICT (과기정통부) included a 5G in-building (indoor) investment tax credit proposal in the supplementary budget project plan.

This aims to promote investment activation and boost domestic demand by offering an 'incentive' for telecom companies to expand in-building coverage, while also addressing users' quality complaints related to '5G dead zones.'

According to the government on the 27th, the Ministry of Science and ICT plans to prioritize including the 5G in-building investment tax credit in the supplementary budget project plan to be submitted to the Ministry of Economy and Finance. A Ministry of Science and ICT official explained, "We are reviewing the 5G in-building investment tax credit from the perspective of investment activation," adding, "The Network Policy Office is carefully examining the level of the in-building tax credit and the effects of the supplementary budget formation."

If the Ministry of Science and ICT's supplementary budget project plan passes through the Ministry of Economy and Finance, in-building investments will also be included in the 5G tax credit, expected to receive a 2-3% tax credit. Currently, under the Restriction of Special Taxation Act, 5G network investments receive a 2% tax credit rate in the metropolitan area and up to 3% in non-metropolitan areas.

Telecom companies welcome this move. The frequent complaints about 5G being non-functional were mainly because it was difficult to use 5G inside buildings. In fact, last year SK Telecom and KT aimed to build 1,000 in-building coverage sites but failed to reach the target. KT, the only company to disclose the number of in-building coverage sites, built a total of 406. Unlike LTE, 5G signals do not properly reach indoor shadow areas, and building owners' consent is required for installing indoor repeaters, causing significant delays in network construction.

An industry insider said, "The government considers the 5G network construction timeline to be 2022, but the slow pace of in-building coverage construction made telecom companies hesitant," adding, "The in-building investment tax credit has been a continuous request from telecom companies to the government, and if included in this supplementary budget, it will help accelerate the 5G infrastructure build-out."

Meanwhile, the Ministry of Science and ICT plans to submit the 'supplementary budget project plan,' which includes the 5G in-building investment tax credit and research and development (R&D) budgets, to the Ministry of Economy and Finance as early as this week. Currently, the first vice minister's office is compiling the project plan including the R&D sector, while the second vice minister's office is drafting a project plan incorporating opinions gathered through ICT company meetings.

This content was produced with the assistance of AI translation services.