[Retreated K Chips Act] Steps Toward Reconsideration Again... Acknowledgment of Insufficient Support

[Image source=Yonhap News]

[Asia Economy Reporter Park Sun-mi]"National strategic technologies like semiconductors are assets of national security. It is regrettable that the tax support plan proposed by the Semiconductor Special Committee was not sufficiently discussed. I hope that measures to further expand tax support will be actively considered."

President Yoon Seok-yeol instructed on the 30th of last month to review the additional expansion of tax support for semiconductors. This acknowledges that the K-Chips Act (Semiconductor Special Act) introduced by the government was insufficient to support the semiconductor industry and companies. The government's semiconductor support policy, which has been criticized as a 'retreated K-Chips Act,' is now back on the operating table, gaining a chance for revival.

As part of the K-Chips Act, an amendment to the Restriction of Special Taxation Act (RSTA) to increase the corporate tax credit for semiconductor facility investment from the current 6% to 8% passed the National Assembly on the 23rd. However, the response on the ground is lukewarm. It is evaluated as largely insufficient to empower the semiconductor industry.

▲ The mere 2 percentage point increase in the tax credit rate makes it difficult to attract additional domestic investment and foreign investment ▲ The processing was delayed due to time wasted in political disputes between ruling and opposition parties ▲ Although the government announced plans to focus on creating semiconductor specialized complexes and nurturing talent, the industry no longer trusts these plans?these are the current issues with the policies being pursued.

This article examines what Korea lacks compared to competing countries like the United States and Taiwan, which are pouring national funds into the semiconductor industry, and what the semiconductor industry needs and expects from government support.