[2023 Tax Reform] Bio Association "Welcomes Expansion of Tax Credit for Biopharmaceuticals"

Regret Over Non-Application to Entire GMP Building
"Expecting Active Government Review"

The bio industry has expressed its welcome for the government's policy direction to designate biopharmaceuticals as a 'national strategic technology' and expand tax credits.

At the Celltrion factory in Songdo, Incheon, the final manufacturing process of the anticancer biosimilar 'Herzuma' is underway. Photo by Kim Hyunmin, Incheon kimhyun81@

The Korea Bio Association issued a statement on the 27th regarding the government's '2023 Tax Law Amendment,' saying, "We actively welcome the announcement of the subordinate law amendment to the Restriction of Special Taxation Act, which adds eight technologies and four facilities in the biopharmaceutical field as national strategic technologies and commercialization facilities."

The Bio Association commented on the amendment, "It will be a groundbreaking opportunity to reverse the overall sluggish domestic investment atmosphere and expand companies' will and investment in biopharmaceutical development," adding, "We deeply appreciate the efforts of related ministries, including the Ministry of Economy and Finance and the Ministry of Trade, Industry and Energy, who swiftly gathered diverse opinions from related associations, industries, and experts until the amendment was finalized."

The tax law amendment expands the scope of national strategic technologies, which previously only applied to vaccines, to include eight technologies such as discovery and manufacturing technologies for new biopharmaceutical candidates, biosimilars (biopharmaceutical generics) and improvement technologies, and non-clinical trial technologies for new biopharmaceuticals, as well as four facilities designated as national strategic technologies. Among these, seven technologies except for the non-clinical trial technology for new biopharmaceuticals were included in new growth and original technologies with somewhat lower tax credit rates compared to national strategic technologies, but are expected to be upgraded to national strategic technologies through this amendment. The Bio Association emphasized, "In particular, the non-clinical trial technology for new biopharmaceuticals, which was not previously eligible for tax support under the Restriction of Special Taxation Act, has been newly added this time, so many small and medium-sized enterprises and startups in the early stages of biopharmaceutical development are expected to benefit."

While welcoming the amendment, the Bio Association also expressed some regrets. Regarding facilities, tax benefits are expected to expand for four commercialization facilities, including biopharmaceutical and biosimilar manufacturing facilities and facilities producing materials, parts, and equipment (SoBuJang), but tax credits are not applied to the entire building where these facilities are located. According to the current Restriction of Special Taxation Act and related enforcement ordinances and rules, business-use tangible assets such as machinery and equipment are eligible for tax credits, but land and buildings are not, so construction costs for factory buildings other than production line construction in pharmaceutical manufacturing facilities do not receive tax credits. This issue was also raised by the industry at the 'Bioeconomy 2.0 Roundtable' held on the 20th, where expansion plans for tax credits on biopharmaceuticals were discussed. The association stated, "Although expanding support to the entire building meeting excellent pharmaceutical manufacturing and Good Manufacturing Practice (GMP) standards was not included, we hope the government will actively consider this in the future."

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