South Korea to offer tax relief to companies working on blockchain technology

The government of South Korea has added 16 fields such as blockchain and fine dust reduction technology to R&D tax credit in a bid to boost innovation.

The Ministry of Strategy and Finance has announced proposed amendments to the enforcement decree of the 2018 tax law, which is to be enforced in February.

South Korea provides R&D tax relief through a hybrid R&D tax credit and volume-based investment credit.

According to the document, 16 areas including fine dust reduction technology, blockchain, and wearable robots will be added to the existing tax credit for R&D in new growth industries.

As a result, 30-40% of R&D expenses for small enterprises and 20-30% of R&D expenses for large and medium-sized enterprises engaged in these areas would be tax deductible. At present, the R&D tax deduction rate of large corporations is 0-2%, 8-15% for medium enterprises, and 25% for SMEs.

In September 2018, the government pledged its support for domestic blockchain companies to further encourage the booming blockchain industry in the country. Second Vice Minister of Science and ICT Min Won-ki met with blockchain startups at Blocko’s office in Bundang, Gyeonggi Province. The meeting was part of the government’s efforts to engage with businesses in the 10 key ICT sectors of the Fourth Industrial Revolution.

More recently, reports suggested that South Korea authorities were considering imposing cryptocurrency tax.

[Most of the article has been translated online from Korean]