HBM Design and Manufacturing Facilities Eligible for Up to 25% Tax Credit

Ministry of Economy and Finance to Promote Revision of 18 Enforcement Rules

The government will raise the investment tax credit rate for commercialization facilities of high-bandwidth memory (HBM) up to a maximum of 25%.

The Ministry of Economy and Finance announced on the 27th that it will push for amendments to 18 enforcement rules, including this matter.

First, the Enforcement Rules of the Restriction of Special Taxation Act will be revised to expand the scope of national strategic technology commercialization facilities and new growth commercialization facilities.

National strategic technology commercialization facilities are those that apply a temporary investment tax credit with higher rates (15%, 15%, 25%) compared to general facilities (large, medium-sized, small and medium enterprises at 3%, 7%, 12%). Currently, 50 facilities in seven fields?semiconductors, secondary batteries, vaccines, displays, hydrogen, future mobility, and biopharmaceuticals?are included.

Through this rule amendment, HBM will be included among semiconductor types. In the display sector, facilities manufacturing equipment and light components for organic light-emitting diode (OLED) pixel formation and encapsulation processes will be newly included. In the hydrogen sector, facilities related to ▲hydrogen gas turbine (co-firing and full firing) design and manufacturing technology ▲hydrogen reduction steelmaking technology ▲hydrogen storage efficiency technology will also be newly included.

New growth commercialization facilities also apply a temporary investment tax credit with higher rates (6%, 10%, 18%) compared to general facilities (large, medium-sized, small and medium enterprises at 3%, 7%, 12%). Currently, 181 facilities in 13 fields such as future automobiles and carbon neutrality are included.

Additionally, integrated reactor module manufacturing facilities and biomass aviation fuel production facilities will be added, and the defense industry sector will be newly established, expanding to 185 facilities in 14 fields.

This rule amendment was prepared to stipulate matters delegated by last year’s tax law revision and enforcement decree, as well as major improvements. It will be announced for legislative notice starting on the 28th of this month, followed by inter-ministerial consultations and review by the Ministry of Government Legislation, and will be promulgated and enforced next month.

The government previously announced a draft amendment to the tax law enforcement decree last month, which provides a tax credit of up to 40-50% for research and development (R&D) expenses related to these technologies.