Companies that purchase hardware (HW) and others to implement OLED (Organic Light Emitting Diode) production facilities and AI (Artificial Intelligence) will receive tax deduction benefit up to 7% of the costs. South Korean Government announced that it will be revising 17 enforcement regulations to regulate issues and major systematic improvements mandated by 2018 revised tax laws and enforcement ordinance.
South Korean Government added and modified facilities that are subject to tax deduction in order to prepare for Industry 4.0 and hydrogen economy. It is going to give 1%, 3%, and 7% of tax deduction to major companies, medium-sized companies, and small and medium companies respectively whenever they purchase equipment such as HW and industrial 3D printers to implement OLED production facilities and AI or ‘energy saving facilities such as hydrogen production, compression, and storage facilities. For ‘safety facilities’ such as facilities that eliminate harmful chemical substances or safety valves that release boiler pressure, it will provide 1%, 5%, and 10% of tax deduction respectively. “We have established these new tax benefits after receiving suggestions from ministries and offices concerned and we are going to deduct taxes from costs of facilities and equipment that are purchased to provide new growth for companies.” said Lee Jae-myeon, who is the head of Ministry of Economy and Finance’s Special Taxation System Department.
Cost of development of human resources related to Industry 4.0 will now be subject to tax deduction for R&D and cost of development of human resources fields. Tax deduction rates for major companies, medium-sized companies, and small and medium companies will be between 0 and 2% and 8 and 15% and 25% respectively. However, companies that want to receive such tax deduction will need to prepare and store R&D programs, R&D reports, and research notes and submit general tables of their research projects.
South Korean Government is only going to levy 0.01% of patent fees whenever duty-free shops from major companies sell products from small and medium companies and medium-sized companies. Current patent fee is between 0.1% and 1% of sales. “Enforcement regulation will be made public and enforced sometime during the middle of March after going through pre-announcement of legislation, discussions between relevant departments, and evaluation by Ministry of Government Legislation.” said Ministry of Economy and Finance.
Staff Reporter Yoo, Seonil | ysi@etnews.com