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Changes in Government Policy: Tax Cut Plan & Support in Bio-healthcare Sector

Updated: Sep 5, 2023

S. Korea unveils sweeping tax cut plan to spur corporate investment

S. Korea plans to cut corporate and income taxes in a bid to encourage companies to increase investment and reduce the tax burden on people troubled by high inflation, the finance ministry said on July 21. The Yoon Suk-yeol government unveiled details of its sweeping tax reform proposal as it aims to revitalize the corporate sector for economic growth and help stabilize lives of ordinary people. The ministry plans to submit the bill to the National Assembly before Sept. 2 for approval.



The tax reform plan is in line with the Yoon administration's economic policy direction that is centered on supporting private sector-led economic growth with deregulation and tax cuts. "(With the tax cut), the government plans to help companies actively expand investment and create jobs," Finance Minister Choo Kyung-ho told a press briefing on Monday. To spur corporate investment, S. Korea plans to lower the maximum rate of the corporate tax to 22 percent from the current 25 percent.


Seoul moves to expedite support and deregulation in bio-healthcare sector

The Korean government grooming biotech and healthcare sectors as key growth drivers for economy in the post-Covid world will expedite support and deregulations to encourage the development of blockbuster drugs and vaccines. “The bio-health sector is directly linked to the growth of the Korean economy as it protects public health and creates new high-paying jobs,” President Yoon Suk-yeol said during his visit to Healthcare Innovation Park at Seoul National University Bundang Hospital on Aug. 10, where he vowed for more financial support to help build a K-bio vaccine hub and empower companies to focus on developing blockbuster medicines and vaccines. Under the government’s plan, a public-private fund dedicated to therapy/vaccine research and development will be raised KRW 500 billion (USD 383.4 million) this year to be expanded to up to KRW 1 trillion later. The government also plans to provide KRW 2.2 trillion by 2030 to support R&D programs for pipelines in phase 2 clinical trials.



The regulatory review period for innovative medical devices will be shortened to 80 days from the current 390 days, with other deregulation efforts under the government’s regulatory sandbox program. Regarding the deregulation policy, Yoon vowed to implement a plan to drastically shorten the review and licensing period for artificial intelligence-backed innovative medical devices so that they can be used quickly in the field. The policy reflects the industry’s opinion that the review period for marketing approval of medical devices should be shortened once they are designated as innovative products, so that they can be applied to clinical sites quickly even without health insurance benefits.



 

*This article is extracted from Invest KOREA information center, 2022.








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