Korea to expand tax benefits for global M&As in chip, vaccines and battery sectors
S. Korea is seeking to expand tax benefits to facilitate domestic M&As of foreign entities in the areas of semiconductors, vaccines, and batteries dubbed national strategic assets amid the intensifying global race and prolonged supply chain disruptions. Under the tax reform plan from the new government pending legislative review and approval, the government proposes to grant up to 10 percent tax deduction to Korean firms in their acquisitions of assets in foreign entities with proven technologies in the country’s designated national strategic technology sectors, such as semiconductor, battery, display, future mobility, robotics, and biopharmaceuticals. The tax breaks are part of the government`s efforts to sustain chip supremacy as home to the world’s top two memory chipmakers—Samsung Electronics and SK hynix. The tax incentive may further persuade SK hynix to go after U.K.’s chip design giant ARM. The tax credits are due to expire in the end of this year, but the government is also seeking to extend its grant to the end of 2025 to facilitate more global M&As in the country’s growth engines. If the amendment in the special tax act passes the National Assembly, it will go effective Jan. 1, 2023.
New 'EcoFriendly Mobility' Special Regulation Free Zone
With regards to the eco-friendly mobility business, three new regions were designated as a Special Regulation Free Zone—the Jeonnam Modified Electric Vehicle Special Zone, Gyeongbuk Electric Vehicle Next-Generation Wireless Charging Special Zone, and Gyeongnam Ammonia Co-fired Fuel Propulsion System Ship Special Zone. On Aug. 4, the government held the 8th Special Regulatory Free Zone Committee (Special Zone Committee) presided by Prime Minister Han Deok-soo at the Government Complex Seoul. According to the Ministry of SMEs and Startups, the government has designated three new Special Regulation Free Zones. By 2026, the period of designation for the Special Regulation Free Zone, are expecting outcomes including the revenues of KRW 168 billion, new hires of 582 workers and enterprise attraction of 32 companies.
*This article is extracted from Invest KOREA information center, 2022.