The expansion of tax credits for facilities and technologies related to future automobiles, such as electric vehicle production facilities and water electrolysis production facilities, is expected to revitalize domestic investment in the industry.

The Ministry of Economy and Finance announced on the 10th that it would issue legislative notice for the amendment to the Enforcement Decree of the Restriction of Special Taxation Act and on the 15th for the amendment to the Enforcement Rules of the Restriction of Special Taxation Act.

Looking at the main contents of the amendments to the enforcement decree and enforcement rules being announced for legislative notice, the scope of national strategic technologies and commercialization facilities is expanded. In the future mobility sector, five technologies and three facilities, including electric vehicle production facilities and electric vehicle charging technologies and facilities, are added to the national strategic technologies and commercialization facilities, while in the hydrogen sector, five technologies and facilities, including water electrolysis-based clean hydrogen production technologies and facilities, are added.

Expectations are high that the expansion of tax credits will stimulate domestic investment for the establishment of a global electric vehicle production hub.

In this regard, Kang Nam-hoon, Chairman of the Korea Automobile Manufacturers Association, welcomed the expansion of tax credits for electric vehicle production facilities, stating, “Not only this policy support, but also previous government policies such as electric vehicle purchase subsidies and individual consumption tax reductions served as the foundation that enabled our automotive industry to overcome the crisis amidst the global economic downturn.” “We once again thank the government for its swift and bold measures regarding the future vehicle industry, including electric vehicles, and the industry will strive to meet the government’s expectations,” they stated.

Meanwhile, this tax credit includes numerous special provisions in addition to the future mobility sector.

The scope of application for the special deduction of cultural business promotion expenses has been expanded to include costs for purchasing amusement park tickets.

Interest and dividend income generated from investments in high-risk, high-return bond investment trusts that include 45% or more of corporate bonds rated BBB+ or lower, and private funds that include 45% or more of BBB+ or lower bonds and 15% or more of A-rated bonds, are subject to separate taxation at a rate of 14%.

If you hold government bonds for individual investment with a maturity of 10 years or more until maturity, interest income is taxed separately at a rate of 14% within a limit of 200 million won of the purchase amount.

This amendment is scheduled to be promulgated and implemented in early June after going through legislative notice, review by the Ministry of Government Legislation, and the Vice-Ministers' Meeting and Cabinet Meeting (Enforcement Decree).