[Lowest Share of Large Corporations] Taiwan Raised TSMC, Untouchable by US and China... The World Provides 'Generous Support' to Large Corporations

Massive Subsidies and Tax Benefits to Foster Domestic Industry
France Tops European FDI with Corporate Tax Cuts and Deregulation

Major countries around the world, including the United States, China, and France, actively support their large corporations through massive investments and deregulation. There is a growing call for our government to strengthen support for large corporations in line with global trends.

According to industry sources on the 24th, the United States is providing substantial support centered on eco-friendly energy and the semiconductor industry. Through the Inflation Reduction Act (IRA), it is investing $369 billion (approximately 493 trillion KRW) in ‘green industries’ such as eco-friendly energy production, automobiles, and batteries. It offers tax credits of up to 30% for manufacturing facilities related to electric vehicles and batteries, and 10% for production facilities of battery, solar, and wind power components. When purchasing electric vehicles that are finally assembled in North America and meet the battery critical mineral procurement ratio, subsidies of up to $7,500 (approximately 10 million KRW) are provided. In the semiconductor industry, efforts continue to secure technological superiority with a total investment of $280 billion (approximately 374 trillion KRW).

China actively utilizes subsidy policies to promote the growth of companies producing high-tech intermediate and capital goods under the ‘Made in China 2025’ strategy. In 2020, China provided about 100 billion yuan (approximately 19 trillion KRW) in subsidies to these companies, more than doubling the amount compared to 2015. To revitalize the market economy, it has implemented policies such as easing automobile purchase restrictions, relaxing financial regulations, revising foreign investment laws, and deregulating platform companies and the gaming industry. In particular, in the automobile industry, the standards for scrappage and upgrade subsidies were doubled, and subsidies of up to 20,000 yuan (approximately 3.8 million KRW) are provided when purchasing new energy vehicles.

Since the Macron administration, France has lowered the corporate tax rate from 33% to 25% and significantly eased labor regulations by simplifying dismissal criteria. The administrative processing period for corporate-related permits has also been shortened from an average of 17 months to 9 months. Pro-business tax policies have been strengthened by abolishing the corporate value-added burden (CVAE), which is part of the production tax contributing to the regional economy, and reducing the corporate land burden (CFE) to about half of the previous level.

Additionally, France has decided to invest 30 billion euros (approximately 45 trillion KRW) in future industries such as semiconductors, biotechnology, energy, and aerospace to foster them as national strategic industries. To this end, it has prepared a regional semiconductor industry development roadmap and is investing $6 billion, while actively supporting reshoring (relocation of production bases back to the country) of major companies in the medical field. As a result, France has ranked first in foreign direct investment (FDI) in Europe for five consecutive years. According to an Ernst & Young (EY) survey, last year, the number of FDI projects for new plant establishment or facility expansion in France was 1,194, surpassing the UK and Germany. Global companies cited France’s deregulation and pro-business environment as key factors in their investment decisions.

Choi Jun-seon, Honorary Professor at Sungkyunkwan University School of Law, said, "In the global era, national power depends on the number of large corporations and how much they dominate the global market," adding, "The reason world powers cannot touch Taiwan is because Taiwan has the large corporation TSMC." He continued, "We must secure growth momentum through active support and deregulation to revive large corporations."