Jo Incheol: "Special Tax Law to Boost Private AI Investment Passes National Assembly"

Designation of AI as a National Strategic Technology
Expansion of Tax Credit Rates

Jo Incheol, Member of the National Assembly.

On the 27th, Representative Cho Incheol of the Democratic Party of Korea (Gwangju Seo-gu Gap) announced that the Restriction of Special Taxation Act (hereinafter referred to as the Special Taxation Act), which upgrades artificial intelligence (AI) to a national strategic technology and expands tax credits, has passed the National Assembly plenary session.

The current Special Taxation Act applies different tax credits to investments in new growth and original technologies and national strategic technologies. In the case of AI, it is classified as a new growth and original technology, so the tax credit rate for research and development (R&D) and facility investment is only 20-40%, and the tax credit rate for commercialization facility investment costs is limited to 3-43%.

The amendment proposed by Representative Cho upgrades AI to a national strategic technology, raising the tax credit rate for AI R&D to 30-50% and the tax credit rate for commercialization facility investment to 15-64%. It also includes a plan to extend the sunset date for tax credits from December 31, 2024, to December 31, 2030.

Representative Cho explained that increasing tax benefits is essential to significantly boost private investment, as investment in research funds and facilities for AI technology R&D is crucial to enhancing the competitiveness of the AI industry.

Representative Cho stated, "AI has become a core infrastructure in the digital economy era, and bold government-level support is absolutely necessary. Just as the Kim Daejung administration propelled Korea to become an IT powerhouse by establishing a high-speed internet network, now is the time for large-scale national investment in AI infrastructure."

He added, "Expanding tax support will accelerate AI research and development and play a major role in enabling companies to establish more long-term investment strategies."

Meanwhile, Representative Cho previously established the institutional framework for the development of Korea's AI industry by leading the enactment of the world's second "AI Basic Act." He plans to continue follow-up legislative work, including this Special Taxation Act amendment.