'K Chips Act' Submitted to National Assembly Plenary Session... 8% Tax Credit for Large Corporations

8% of Mid-sized Companies, 16% of Small Businesses
It Seems the Government Proposal Was Ultimately Accepted

[Asia Economy Reporter Geum Bo-ryeong] The amendment to the Restriction of Special Taxation Act, commonly known as the 'Semiconductor Special Act (K-Chips Act),' will be submitted to the National Assembly plenary session on the 23rd.

Ryu Seong-geol, the ruling party whip of the National Assembly's Planning and Finance Committee, told reporters after the 3rd meeting of the Special Committee on Economic Stability held at the National Assembly on the same day, "For tax credits, it will be reflected in today's revised bill as 8% for large corporations, 8% for mid-sized companies, and 16% for small and medium enterprises," adding, "It will be submitted to the plenary session today."

The bill includes provisions to provide tax credits at a certain rate of the investment amount for large corporations, mid-sized companies, and small and medium enterprises investing in national advanced strategic industry facilities such as semiconductors and batteries. The existing tax credit rates are 6% for large corporations, 8% for mid-sized companies, and 16% for small and medium enterprises.

Photo by Getty Images Bank

This proposal appears to have finally accepted the government's opinion. The government expressed the position that due to a decrease in tax revenue, tax credits for large corporations can only be reduced to 8%. While the People Power Party proposed raising the tax credit rates for semiconductor facility investments to 20% for large corporations, 25% for mid-sized companies, and 30% for small and medium enterprises by 2030, the Democratic Party of Korea argued it was a 'chaebol privilege' and suggested 10% for large corporations, 15% for mid-sized companies, and 30% for small and medium enterprises.

Representative Ryu explained, "When discussions about investment tax credits took place in the tax subcommittee, 20%, 25%, and 30% were mentioned at the time, but there was a negative opinion from the executive branch that it was too excessive," adding, "Then, through further negotiations between the ruling and opposition parties, it was decided together with the government to set it at 8%, 8%, and 16%."

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