"Additional Tax Credit for Hydrogen and Future Cars"... Opposition Proposes Korean Version of IRA Act (Comprehensive)

Special Taxation Act for the Field of Support to be Codified into Law
Tax Credit Rates Remain the Same as Government Proposal
Carbon Neutral Industry Promotion Act Also Proposed Together

Park Hong-geun, the floor leader of the Democratic Party of Korea, said on the 15th, "We will propose the so-called 'Korean version of the IRA Act,' including the bill to expand investment tax credits for national strategic technologies (Special Tax Treatment Control Act) and the Special Measures Act on the Protection and Competitiveness Enhancement of Carbon Neutral Industries (Carbon Neutral Industry Promotion Act)."

At the Democratic Party's Supreme Council meeting that day, Floor Leader Park said, "In the economic crisis, especially in the semiconductor industry, it is important for the ruling and opposition parties to join hands."

Park Hong-geun, floor leader of the Democratic Party of Korea, is speaking at the floor strategy meeting held at the National Assembly in Yeouido, Seoul on the 14th. Photo by Kim Hyun-min kimhyun81@

He explained, "The Democratic Party accepted additional investment tax credits for semiconductors despite concerns about policy confusion and revenue reduction caused by the government and ruling party, in order to fulfill its responsibility and role as a competent alternative party for the economy and people's livelihood. We went a step further by expanding the target not only to immediate semiconductor facility investments but also to core strategic industries for new growth engines such as hydrogen, renewable energy, and future vehicles."

Floor Leader Park urged, "The government and ruling party should reflect on their past incompetence and lack of measures and show a more responsible attitude before the people. The government should officially apologize for the confusion caused during the process of expanding semiconductor investment tax credits and create a 'trust environment' where both ruling and opposition parties can work together to overcome the crisis."

He added, "I earnestly call for bipartisan cooperation so that the Democratic Party's 'Korean version of the IRA Act' can be promptly processed."

The Special Tax Treatment Control Act, named the Korean version of the IRA Act, is expected to be proposed by Representative Shin Dong-geun, the Democratic Party's secretary of the National Assembly's Planning and Finance Committee, while the Carbon Neutral Industry Promotion Act will be proposed by Representative Yang Yi-won of the Democratic Party.

The Special Tax Treatment Control Act proposed by Representative Shin includes a 15% tax credit for semiconductors, secondary batteries, bio-industries such as vaccines, displays, carbon-neutral industries such as renewable energy and hydrogen, and future mobility. However, small and medium-sized enterprises (SMEs) can receive up to a 25% credit.

Previously, the government proposed a Special Tax Treatment Control Act that provides a 15% tax credit for large corporations and a 25% credit for SMEs only for facilities designated by presidential decree as facilities for the commercialization of national strategic technologies designated by the president. The Democratic Party appears to follow the government's policy to expand tax credit benefits for semiconductors, but differs in that it specifies the supported industries by law. Initially, there was speculation that the Democratic Party's bill might increase the credit benefits beyond the government's proposal in terms of rates, but it ultimately matched the government's proposal.

The Democratic Party plans to promote the Korean version of the IRA Act along with the Special Tax Treatment Control Act, but the processing of the bills is not expected to be linked. This is because the bill proposed by Representative Shin alone includes tax support benefits for industries such as hydrogen. Representative Yang said, "Even if the Special Tax Treatment Control Act and the Korean version of the IRA Act are not processed together, support for carbon industries is possible," adding, "The Korean version of the IRA Act is more specific and provides a basis for support." Representative Yang added, "There seems to be no reason for the ruling party to oppose it," and "Globally, support is increasing not only for semiconductors but also for green industries, electric vehicles, renewable energy, and green hydrogen."