The semiconductor equipment investment tax deduction rate, which was only slightly expanded in the amendment to the Special Tax Exceptions and Limitations Act passed by the National Assembly in December of last year, is expected to be significantly increased again and submitted to the National Assembly. If passed, it is expected to strengthen tax support for the semiconductor industry.

At the first State Council meeting chaired by the President on January 3, the ‘Measures to Strengthen Tax Support for Semiconductors, etc.’ were reported.

This reinforcement plan significantly increases the tax deduction rate for investments in national strategic technology facilities, such as semiconductors, from the current 8% to 15% for large and medium-sized enterprises, and from 16% to 25% for small and medium-sized enterprises.

Additionally, a temporary investment tax credit will be introduced for one year in 2023, providing an additional tax credit of 2% for general businesses, 3% for large corporations, 4% for mid-sized businesses, and 6% for small and medium-sized businesses for new growth and original technologies.

Additionally, the additional tax deduction rate for increased investment will be temporarily increased to 10% in 2023.

This support is expected to reduce the additional tax burden of over 3.6 trillion won, including semiconductors, and is expected to provide the highest level of tax support compared to major competitors such as Taiwan, the United States, and Japan.

This type of tax support comes at a time when full support for strategic items with significant economic security value, such as semiconductors, is urgently needed amid intensifying competition for global technological hegemony and supply chains, and the amendment to the Tax Special Measures Act passed by the National Assembly last December fell short of industry expectations.

Accordingly, President Yoon Seok-yeol instructed the Ministry of Strategy and Finance on December 30th of last year to actively review measures to further expand tax support for national strategic industries such as semiconductors.

The semiconductor industry also welcomed the government's tax support announced today.

The Korea Semiconductor Industry Association welcomed the government's tax support and expressed gratitude to the government for taking care of national strategic industries such as semiconductors during difficult times, including with the national finances.

He also said that this will serve as a strong driving force for large-scale manufacturing facility investments by large corporations, and furthermore, it will significantly expand investments by domestic small and medium-sized enterprises, thereby solidifying the ecosystem of our semiconductor industry.

The government plans to prepare a revision to the 'Tax Special Restriction Act' in January and push for its swift passage through the National Assembly.