Display Also a National Strategic Technology... Tax Reduction for U-Turn Companies for Up to 5 Years Including Corporate Tax

[Asia Economy Sejong=Reporter Dongwoo Lee] From this year, display design and manufacturing technology will be newly included in national strategic technologies. Display technology will receive a tax credit rate of up to 25% for facility investments, alongside semiconductors, secondary batteries, vaccines, and others.

The Ministry of Economy and Finance announced on the 18th the "2022 Tax Reform Follow-up Enforcement Decree Amendment" containing these details. Five new technologies related to panels (AMOLED, Micro LED, QD) and materials and parts (deposition and coating materials for panel manufacturing, TFT formation equipment and components) were newly designated.

Under current laws, display technology is classified as a new growth and source technology, which is one level below national strategic technology in terms of government support. With the designation as a national strategic technology, if the Tax Incentives Limitation Act (TILA) amendment, which the government is re-promoting, passes the National Assembly, tax benefits will increase up to 25%. Small and medium enterprises can receive a 40-50% research and development (R&D) tax credit for related technologies. Mid-sized and large enterprises are eligible for a 30-40% tax credit.

The semiconductor support field, which is already included in national strategic technologies, will also be expanded. In addition to the existing 20 semiconductor technologies, core technologies such as foundry-oriented IP design and verification technology and system semiconductor testing have been added. Next-generation memory semiconductors (PIM), power semiconductors (UHV, high-voltage analog IC), and display semiconductors (T-Con, PMIC) have been included by expanding the current technology scope. As a result, national strategic technologies have expanded to a total of 32 technologies across 4 fields.

New growth and source technologies, which are one level below national strategic technologies, will also expand from 260 to 272. Newly included technologies this time are carbon neutrality (8), energy and environment (2), intelligent information (1), and convergence materials (1).

Tax support requirements for returning companies will also be relaxed. Companies that have expanded overseas and return to Korea can receive a 100% exemption on income tax and corporate tax for up to 5 years. The period to complete domestic facility expansion after transferring or closing overseas business sites will be extended from 2 years to 3 years. Tax exemptions will also apply when new facility investments are made in idle spaces within existing domestic business sites.

This is a follow-up measure after the tax reform bill passed the National Assembly at the end of last year. The Ministry of Economy and Finance plans to announce the enforcement decree amendment for public comment from the 19th of this month until July 3.