6~16% Tax Credit for Facility Investment in 'National Strategic Technologies'... Duty-Free Purchase Limit Abolished

Ministry of Economy and Finance Announces '2021 Revised Tax Law Follow-up Enforcement Rule Amendment'

[Asia Economy Sejong=Reporter Kwon Haeyoung] From this year, if investments are made in facilities related to 'national strategic technologies' such as semiconductors, batteries, and vaccines, large enterprises can receive a tax credit of 6% of the investment amount, and small and medium enterprises can receive up to 16%. A new growth commercialization facility for the 'carbon neutrality' sector has been newly established, which applies a higher tax credit rate compared to general facility investments, and related tax benefits will also be expanded when investing in these facilities. The duty-free purchase limit, which was capped at 500 dollars (approximately 600,000 KRW), will also be abolished.

The Ministry of Economy and Finance announced the '2021 Revised Tax Law Follow-up Enforcement Rules Amendment' containing these details on the 9th.

National strategic technology commercialization facilities are broadly categorized into ▲memory, system, material parts and equipment (semiconductor) ▲commercial batteries, next-generation secondary batteries, material parts (battery) ▲vaccine development, production, and raw materials. When investing in facilities related to these fields, large enterprises receive a 6%, mid-sized enterprises 8%, and small enterprises 16% tax credit rates. This is 5 to 6 percentage points higher than the general facility tax credit rates (large, mid-sized, small enterprises: 1%, 3%, 10%).

When investing in new growth commercialization facilities, a higher tax credit rate than general facilities is also applied. The target, which previously included 155 facilities across 10 fields such as future cars and next-generation broadcasting and communications, will be expanded from this year to 181 facilities across 11 fields with the addition of carbon neutrality, bio, and resource circulation. For example, when investing in carbon neutrality facilities, large enterprises can receive a tax credit of 3%, mid-sized enterprises 5%, and small enterprises 12% of the investment amount.

The duty-free purchase limit will also be abolished. The duty-free purchase limit applied to domestic travelers departing overseas was established at 500 dollars in 1979 and has been maintained at 5,000 dollars since September 2019. The government announced in the '2022 Economic Policy Direction' released in December last year that this limit would be removed to induce domestic consumption of overseas spending and support the duty-free industry.

The scope of import value-added tax exemption to alleviate the treatment cost burden for rare disease patients will also be expanded. Three additional diseases have been added: generalized myasthenia gravis, neuromyelitis optica spectrum disorder, and neurofibromatosis type 1.

Furthermore, when management rights are transferred through listed stock transactions, the market price was previously increased by 20%, but in cases where stocks are traded to implement a rehabilitation plan, the market price increase will be excluded from the calculation.

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