[2022 Economic Policy] Carbon Neutral R&D Investment, Up to 50% Tax Credit... Supporting 115 Trillion Won Investment

Ministry of Economy and Finance Announces '2022 Economic Policy Direction'

[Sejong=Asia Economy Reporter Kwon Haeyoung] The government will significantly expand tax and financial incentives for future investments to foster strategic industries including semiconductors and batteries, and to respond to carbon neutrality.

The Ministry of Economy and Finance announced the '2022 Economic Policy Direction' containing these details on the 20th.

First, 65 technologies in three major fields?semiconductors, batteries, and vaccines?will be designated as 'National Strategic Technologies,' expanding tax benefits for research and development (R&D) and facility investments. Once designated as National Strategic Technologies, the tax credit rates will increase by 10 percentage points for R&D and by 3?4 percentage points for facility investments, allowing tax credit benefits of 30?50% and 6?16%, respectively.

Tax support for core carbon neutrality technologies will also be strengthened. A separate category for 'carbon neutrality' will be established under new growth and fundamental technologies, adding major and innovative technologies from high carbon-emitting industries to the support targets. Included are hydrogen flow reduction in steelmaking, green hydrogen production, and electric heating naphtha cracking technologies. Among these, hydrogen-related technologies will be continuously reviewed for designation as National Strategic Technologies, selecting those requiring strategic development from the perspectives of national economy and security.

Policy fund supply for investments responding to National Strategic Technologies and carbon neutrality will also be reinforced. In particular, a 35 trillion KRW scale 'Low-Carbon Industrial Structure Promotion Program' will be operated, offering preferential interest rates up to 1 percentage point depending on the amount of carbon emission reduction.

The additional 20 percentage point tariff reduction period for small and medium-sized enterprises (SMEs) and mid-sized companies introducing factory automation equipment will be extended by one year until the end of 2022.

Furthermore, the enactment of the 'National Advanced Strategic Industry Special Act,' known as the Semiconductor Special Act, and the establishment of detailed support contents and procedures through enforcement ordinances will be promoted in the first half of next year. The government plans to promptly finalize support targets by designating strategic technologies that are important from an economic security perspective and serve as the foundation for industrial competitiveness and job creation.

In addition, support will be provided for major investment projects worth 115 trillion KRW next year by resolving field difficulties, improving systems, and coordinating stakeholders in corporate, private investment, and public institutions.

Efforts to supplement construction investment will also continue, including support for stabilizing funds and rebar supply for small construction companies, and timely reflection of market prices when calculating public sector construction costs. Plans for the development of advanced investment zones will be established, including designation and operation of advanced investment zones in the first half of the year.

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