South Korea intends to provide tax breaks and assistance for chip industry

South Korea’s finance minister announced that authorities will introduce comprehensive tax incentives under corporate reforms aimed at boosting the value of listed businesses in the coming months. The minister, Choi Sang-mok, stated that after gathering further input from market players in the upcoming months, these incentives will be presented.

In a media report released on Tuesday, Minister Choi also pledged continued government support for the nation’s critical semiconductor sector. “It’s time to discuss specific actions for the ‘Value-up Programme’,” Choi said, adding, “We plan to hold two or more sessions in June and July to gather opinions before proposing annual tax code revisions.” Choi emphasized that while preparing tax incentives for businesses participating in the government’s “Corporate Value-Up Programme,” first announced in February, authorities will aim to balance fairness and effectiveness. The goal of this program is to enhance the value of listed companies.

South Korea has announced additional tax cuts on corporate revenue for businesses that increase shareholder returns and on dividend income for shareholders, addressing market feedback that the initial proposal did not meet expectations.

Choi mentioned that next month, the government will unveil specific plans to strengthen the nation’s semiconductor sector. They will continue to refine a set of recently introduced policies designed to enhance the international competitiveness of domestic businesses.

South Korea, an export-oriented economy, welcomed indications of support for a three-way free trade agreement (FTA) with China and Japan. The leaders of these three countries endorsed speeding up discussions for a trilateral FTA at a conference on Monday.Regarding the domestic economy, Choi forecasted that consumer inflation would likely stabilize at the mid-to-lower 2% level in the second half of the year. Additionally, he projected that tax revenues in 2024 would exceed those of the previous year, despite corporate tax revenues falling short of expectations so far.

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