Tax Credits for R&D and Facility Investments Expected to Accelerate Corporate Investment
Laying the Foundation for Internalizing the Domestic Secondary Battery Raw Material Supply Chain Dependent on China
Lee Gang-deok, Mayor of Pohang, expressed a welcoming stance on the ‘Enforcement Decree Amendment of the Restriction of Special Taxation Act’ that designates secondary battery core raw material manufacturing technology as a national strategic technology.
Mayor Lee Gang-deok of Pohang is explaining the direction of Pohang City's secondary battery industry at the New Year's press conference last January. Photo by Pohang City
On the 3rd, Mayor Lee said, “We welcome the government’s direct and aggressive support measures, such as tax credits on corporate facility investments and support for research and human resource development, by designating manufacturing and processing technologies of lithium, nickel, cobalt, and manganese?core raw materials of secondary batteries?as national strategic technologies.”
The government has prepared a partial amendment to the ‘Enforcement Decree of the Restriction of Special Taxation Act’ to include manufacturing and processing technologies of metal compounds for cathode materials such as lithium hydroxide, lithium carbonate, nickel sulfate, cobalt sulfate, and manganese sulfate as national strategic technologies to strengthen support for secondary battery companies.
With this amendment, companies will receive tax credits of up to 50% on research and development (R&D) investments and up to 25% on facility investments. Public comments will be collected through legislative notice until February 5, followed by a Cabinet meeting for final confirmation.
Until now, national strategic technologies included manufacturing technologies for the four core components of secondary batteries: batteries, cathode materials, anode materials, and electrolytes, but raw materials for cathode materials were not included. With this expansion through the amendment, investments by related companies in Pohang are expected to gain momentum.
The nickel sulfate and cobalt sulfate production plant of Woojeon J&F, scheduled to be completed this year, is expected to benefit from cost reductions due to tax credit advantages.
Additionally, Ecopro is anticipated to accelerate investments by Ecopro Materials and Innovation, which produce nickel sulfate and lithium hydroxide in the Blue Valley National Industrial Complex.
In particular, the government is promoting the internalization of the domestic secondary battery raw material supply chain, which is absolutely dependent on China, and is also implementing research and human resource development support measures to provide a foundation for companies to enter the market.
Mayor Lee Gang-deok emphasized, “The government is actively supporting to strengthen the competitiveness of the secondary battery industry, which is facing a crisis due to global supply chain instability and dependence on China. Pohang will do its best to create new opportunities through continuous innovation and cooperation with the government and to enable companies to focus on production and investment.”
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
