As the whole world rolls up its sleeves to support semiconductors and engages in fierce competition, the semiconductor industry is concerned that the scale of government tax support for semiconductors has been reduced.

According to the amendment to the Restriction of Special Taxation Act passed by the National Assembly on the 23rd, the tax credit rate for semiconductor facility investment by large corporations, which had been anticipated by the semiconductor industry, has been slightly increased from the current 6% to 8%.

This falls short of the recent ruling party proposal of 20% and the opposition party proposal of 10% for semiconductor support.

Along with this, the deductions for middle-sized enterprises and small and medium-sized enterprises were maintained at the current rates of 8% and 16%, respectively, falling short of the 25% deduction proposal that had been discussed.

The industry seems disappointed by this amendment.

The Federation of Korean Industries expressed concern that the National Assembly and the government might be fixated on the short-term effect of reduced tax revenue, arguing that raising the tax credit rate for facility investment in high-tech industries needs to be approached from a long-term perspective to secure leadership in future industries and continuously increase tax revenue through industrial and corporate growth.

Officials from semiconductor technology academic societies stated that semiconductor companies have entered the most intense arena of survival competition in the 70-year history of the semiconductor industry, and that private companies find it difficult to survive, let alone maintain a gap with foreign companies, without active government support. They further noted that the 8% tax credit for facility investment set forth in the recently amended Restriction of Special Taxation Act is significantly insufficient compared to competing countries such as the United States (25%), which will inevitably lead to a serious decline in the national competitiveness of Korean semiconductor companies.

Currently, the United States provides a 25% tax credit to companies investing in semiconductor facilities within its borders, and the Taiwanese government has recently [provided] R&D and... of semiconductor companies headquartered in the country He has proposed an amendment to the Industrial Innovation Act to raise the tax credit rate for facility investment from 15% to 25%.

In addition, Japan decided to provide 476 billion yen, which is half of the construction cost, to attract a TSMC semiconductor factory to Kumamoto.

Industry officials stated, “This amendment to the tax credit severs the future of our country’s semiconductor industry and subjects our successors to false hope,” adding, “We hope the National Assembly and the government will continue discussions on expanding the tax credit rate and supplement related measures so that our companies can maintain competitiveness in the fierce global war for high-tech industries.”