A tax law amendment to increase and extend the tax credit rate for semiconductor R&D and facility investment passed the National Assembly plenary session on the 27th. This was a bipartisan agreement to financially support the domestic semiconductor industry in the global market amid extreme political confrontation following the state of emergency.
On that day, the National Assembly held a plenary session to put to vote a revision of the Tax Exemption Restriction Act, commonly known as the 'K-Chips Act.' The vote resulted in 239 votes in favor, 14 against, and 4 abstentions out of 257 members present.
The K-Chips Act, which passed the plenary session, includes a provision to increase the tax credit rate for semiconductor R&D and facility investment by 5 percentage points. Under current law, the semiconductor industry including secondary batteries, vaccines, displays, and biopharmaceuticals is classified as 'national strategic technologies' eligible for investment tax credits. The tax credit rate is 15% for large and medium-sized corporations and 25% for small businesses. If the amendment is implemented, the rates will rise to 20% and 30%, respectively.
The expiration date for the tax credit has also been extended by 7 years to the end of 2031. The eligible expenses include labor costs, material costs, facility rental fees, and outsourced research and development expenses incurred by corporate research centers or R&D departments.
The application period for tax credits related to national strategic technologies and new growth and fundamental technologies R&D, excluding semiconductors, has also been extended by 5 years. Accordingly, the current tax benefits of 15% for large and medium-sized corporations and 25% for small businesses can be received until the end of 2029.
◇"Joint ownership by a couple" homeowners also receive deferred payment for comprehensive real estate tax
A revision that includes homeowners with 'joint ownership by a couple' in the deferment application for comprehensive real estate tax has also passed. The current deferment system applies to homeowners aged 60 or over who qualify as a household of one dwelling or have owned the dwelling for over 5 years, and it applies to the portion of the comprehensive real estate tax exceeding 1 million won. The revision expands the target for deferment considering the prolonged economic downturn and increased burden of the comprehensive real estate tax. The income standard for deferment remains at a total salary of 70 million won.
◇Mandatory submission of "quarterly transaction statements" for shared accommodation businesses
The National Assembly also passed a revision of the Value-Added Taxes Act that mandates operators of shared accommodation platforms, such as Airbnb, to submit 'quarterly transaction statements.' Under the amendment, non-residents and foreign corporations that sell or mediate transactions through shared accommodation platforms must submit transaction details by the end of each quarter (by the 15th of the following month) to the Commissioner of the National Tax Service, among others.
◇Expansion of retail operators in foreign exchange brokerage
The Foreign Exchange Transaction Act amendment to introduce 'customer-oriented foreign exchange brokerage' also passed the plenary session. This aims to allow real demand entities like corporations to receive simultaneous quotes from multiple institutions through specialized electronic brokerage firms and transact at better rates. Once the law is enacted, brokering will also be conducted for foreign exchange transactions between corporations, individual clients, and financial institutions.