PP Council "Tax Credit Rate for Video Content Production Costs Should Be Increased"

[Asia Economy Reporter Oh Su-yeon] The PP Council under the Korea Cable TV Broadcasting Association stated on the 20th, “The government’s proposed improvement plan for tax credits related to program production costs must reach a conclusion as soon as possible so that it can be applied to the production sites urgently in need.”

Tax credits are a form of direct reduction where a certain percentage of the investment amount, i.e., expenditure, is deducted from the payable tax amount, supporting content production through government revenue forfeiture.

Currently, the tax credit rate for production costs in South Korea is about one-tenth of that in major advanced countries. The industry voices that this level is far too low to expect economic effects such as fostering the content industry and creating jobs.

The credit rates in major overseas countries are 25-35% in the United States, 16-40% in Australia, 10% in the United Kingdom, and around 30% in France, showing a significant gap.

The council explained that South Korea’s support, which provides tax credits of 3% for large corporations, 7% for mid-sized companies, and 10% for small and medium enterprises, places domestic content companies at a disadvantage in competing on the global stage against these countries.

There is also an issue regarding the scope of the credit target. It is argued that the scope should be expanded beyond direct production to include production investment costs, thereby broadening support for various creative activities to secure original content.

To this end, an amendment to Article 13-9 (Tax Credit for Video Content Production Costs) of the Enforcement Rules of the Restriction of Special Taxation Act is necessary. According to this article, to be recognized as a production company eligible for tax benefits, contracts must be concluded with responsible persons in three fields: writers, main cast, and key staff.

It is argued that this condition should be relaxed to allow small and medium PP companies, which have weaker production capabilities or infrastructure access, to receive tax credits.

Professor Kim Yong-hee of Dongguk University Graduate School of Film and Video suggested, “A survey on the desired tax credit rate showed results ranging from 10% to 23.8% depending on company size, with responses indicating that the savings would be reinvested. This means that tax credits ultimately lead to production investment, requiring proactive administration from government authorities.”

Park Sung-ho, chairman of the PP Council, said, “Although the tax credit, which was implemented in 2016 as a key measure for the creative economy and cultural prosperity, has indeed served as a catalyst for K-content, we expect that groundbreaking support will be quickly prepared to strengthen the competitiveness of domestic content companies in the global competitive system.”

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