Democratic Party Unveils 'Industrial Policy' for Strategic Industry Development... Introduction of 'Tax Incentives to Promote Domestic Production of Strategic Industries'

Corporate Tax Credit for Domestic Sales of Final Products Such as Secondary Batteries and Electric Vehicles
Jin Seongjun: "Actively Considering Cash Refund Measures"

The Democratic Party of Korea announced an industrial policy on the 27th to protect the domestic ecosystem of national strategic industries. They plan to introduce a ‘Strategic Industry Domestic Production Promotion Tax System’ separately from the existing ‘Integrated Investment Tax Credit’.

Jin Seong-jun, the policy chief of the Democratic Party, explained at the policy coordination meeting held at the National Assembly on the same day, "The Democratic Party intends to introduce a new ‘Strategic Industry Domestic Production Promotion Tax System’ for advanced products, separate from the existing ‘Integrated Investment Tax Credit’," adding, "For products finally manufactured domestically as national strategic industries and sold to domestic end consumers, we propose granting corporate tax credit benefits proportional to domestic production and sales volume for up to 10 years."

Jin added, "Especially, from the perspective of protecting and fostering strategic industries amid intensifying international competition, we will actively consider a plan to refund part of the tax credit amount in cash under strict conditions."

The support targets include domestic manufacturing industries essential for a carbon-neutral society, such as electric vehicles and secondary batteries, green steel, petrochemicals and other basic materials, as well as sustainable aviation fuel and renewable energy-related industries.

Park Chan-dae, floor leader of the Democratic Party of Korea, and Jin Sung-jun, chairman of the Policy Planning Committee, are talking at the Policy Coordination Meeting held at the National Assembly on February 27, 2025. Photo by Kim Hyun-min

The Democratic Party explained that this approach differentiates itself from existing industrial support policies. Jin said, "So far, tax support policies for corporate activities in our country have mainly focused on ‘research and development’ and ‘investment’," adding, "In the case of investment, the focus has been on improving production capacity through facility investment, so the ‘Investment Tax Credit’ system introduced in 1968 has been the foundation and has been maintained until now. This system is advantageous for industries where initial facility investment costs are high and continuous new facility investments are required to increase production efficiency, but in reality, it does not provide strong incentives to improve production efficiency in industries where significant costs continuously occur at the product production stage."

Jin emphasized the necessity of industrial policy in response to the intensified international environment changes since the Trump administration. He said, "The tariff bombs launched by President Trump have been falling indiscriminately on allies, neighboring countries, and product categories," adding, "In this economic war without gunfire, our Republic of Korea must also prepare our own weapons to protect our industries and safeguard jobs." He also explained that Japan is implementing a ‘Strategic Sector Domestic Production Promotion Tax System’.

Jin stated, "Given these extraordinary times, extraordinary measures beyond the existing framework are necessary," and added, "The Democratic Party will devote all efforts to securing the competitiveness of our key industries amid the current trade and economic crisis and to establishing a solid foundation so that companies can operate without worries."

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