[2025 Tax Reform] Expanded AI Tax Benefits... Tax Credits for K-Webtoon Production Costs

AI, Shipping, and Defense Industries Also Receive Expanded Tax Benefits
Tax System Reforms to Support Intensifying Global Competition

The government will significantly expand tax support for future promising industries such as artificial intelligence (AI), webtoons, video content, and shipping. Various AI technologies will be newly designated as detailed items under national strategic technologies, providing up to 50% in tax benefits. Tax credits will also be applied to webtoon production costs. To help domestic content giants compete with global content producers such as Netflix, additional tax credits will be granted to large content companies. In order to ease the tax burden on small business owners and self-employed individuals, local gift certificates will now be recognized as business expenses.

The Ministry of Economy and Finance announced the "2025 Tax Reform Plan" containing these measures at the Tax System Development Review Committee, which was held at the Bankers Club in Myeong-dong, Seoul at 5 p.m. on July 31, presided over by First Vice Minister Lee Hyungil.

AI Technologies Officially Incorporated as Strategic Technologies... Data Centers Designated as Commercialization Facilities

This year, the government newly established concrete detailed technologies in the AI sector, which was newly designated as a "national strategic technology" at the beginning of the year. From now on, the following will be recognized as national strategic technologies: ▲ Generative AI (development of foundational models that generate text and images), ▲ Agent AI (used for autonomous actions and industrial process operations by linking with machinery), ▲ Advanced learning and inference (improving AI performance using meta-learning and reinforcement learning), ▲ Low-power, high-efficiency AI computing (lightweight and optimized to operate efficiently even on small devices), and ▲ Human-centered AI (supporting humans to understand the AI decision-making process).

Currently, industries designated as national strategic technologies under the Restriction of Special Taxation Act include semiconductors, secondary batteries, vaccines, displays, hydrogen, future mobility, biopharmaceuticals, and AI. Once recognized as a national strategic technology, a high tax credit rate is applied to research and development (R&D) investment in the relevant field. Small enterprises receive a tax credit of 40?50%, while medium-sized and large enterprises receive 30?40%.

To promote investment in AI infrastructure, "AI data centers" have also been newly designated as national strategic technology commercialization facilities. When designated as a commercialization facility, a higher tax credit rate is applied to investments in business equipment and facilities than for general facilities, through the integrated investment tax credit (25% for small enterprises, 15% for medium-sized and large enterprises). In addition, the period for income tax reduction for returning domestic AI talent will be extended. Outstanding overseas professionals, such as AI experts, who return to Korea after working at foreign research institutions for more than five years, will benefit from a 50% income tax reduction for ten years, and the application period for this benefit will be extended by three years.

Significant Expansion of Tax Support for Shipping, Autonomous Vehicles, and Defense Industry

The government will also expand tax support for the future transportation and mobility sector. In order to enhance shipping competitiveness, "AI intelligent autonomous navigation technology" will be designated as a detailed item under national strategic technologies, and production facilities for equipment required for AI intelligent autonomous navigation will also be designated as "commercialization facilities," thereby increasing tax support.

To expand research and investment in future vehicles, tax benefits will also be provided for autonomous vehicle technologies. "Passenger recognition and interface" technology related to automobiles will be newly established as a detailed item under national strategic technologies, and existing technologies such as "driving situation recognition sensor technology" and "driving intelligence information processing system" will be expanded to receive tax benefits.

Tax support for the defense industry will also be increased. Technologies and facilities related to entry into and stabilization of global supply chains for defense materials (technologies for manufacturing and developing defense materials for export and supply chain stabilization) will be added as detailed items under new growth source technologies and commercialization facilities, granting tax benefits. When recognized as a new growth source technology, a higher tax credit rate (30?40% for small enterprises, 20?30% for medium-sized and large enterprises) is applied compared to general R&D. New growth commercialization facilities are also eligible for the integrated investment tax credit, which applies a higher tax credit rate (12% for small enterprises, 6% for medium-sized enterprises, 3% for large enterprises) than for general facility investments.

First Tax Support for Webtoon Production Costs... Applies to Publicly Released Content

Support for the domestic webtoon industry has also been newly established. For labor costs, copyright fees, and program costs related to webtoon content production, small enterprises will receive a 15% tax credit, while large and medium-sized enterprises will receive 10%. However, the tax credit applies only to content that is actually produced by those responsible for webtoons under the "Act on the Promotion of Comics" and is posted or sold on a platform. Park Geumcheol, Director of the Tax Bureau at the Ministry of Economy and Finance, explained, "Webtoons are a field where Korea is overwhelmingly strong globally, and there was a broad consensus on the need for support, so we established the tax credit this time."

Increased Tax Credit Rate for Video Content... 10% Basic Credit for Large Enterprises

The tax support system for video content will be extended for three years until December 31, 2028. In particular, reflecting the reality that domestic large production companies are competing with global content platforms, the basic tax credit rate of 10% applied to medium-sized enterprises will also be applied to large enterprises. Small and medium-sized enterprises will continue to receive a basic 15% plus an additional 15%, and a basic 10% plus an additional 10%, respectively. For large enterprises, the basic 5% plus an additional 10% credit will be expanded to a basic 10% plus an additional 10%. Park explained, "While domestic video producers may be large enterprises in Korea, compared to global companies like Netflix, they are not that big. We raised the tax credit rate for large enterprises to enhance the competitiveness of domestic producers."

Local Gift Certificates Included in Business Promotion Expense Limit for Traditional Markets

To support small business owners and the self-employed, the government will also recognize expenditures on local gift certificates by companies as additional items for business promotion expenses. Previously, only up to 10% of the amount spent at traditional markets could be additionally recognized within the business promotion expense limit, but with this revision, amounts spent using local gift certificates will also be recognized as expenditures at traditional markets, and the additional limit will be expanded to 20%.

For example, if the business promotion expense limit for a small enterprise is 36 million won, the amount spent at traditional markets or using local gift certificates can now be recognized as an additional expense up to 7.2 million won (20%) within this limit. The government expects this will contribute to revitalizing traditional markets and local economies while reducing the tax burden on companies.

Relaxed 'Business Deterioration' Requirement for Termination of Yellow Umbrella Mutual Aid

The tax burden related to the termination of the Yellow Umbrella Mutual Aid, which is called the "severance pay" for the self-employed, will also be reduced. The Yellow Umbrella Mutual Aid is a system that supports small business owners to receive a lump sum payment similar to severance pay upon closure or retirement. Previously, in order to be recognized as terminating due to business deterioration and receive a lower tax rate as retirement income, the revenue had to decrease by more than 50% compared to the average of the previous three years. If terminated for other reasons, it was classified as other income and subject to comprehensive taxation. Going forward, the requirement for business deterioration as a reason for mid-term termination of the Yellow Umbrella Mutual Aid will be relaxed. The standard has been eased to "a decrease in revenue of more than 20% compared to the average of the previous three years."