Starting in 2024, the Korean government is expanding R&D tax credits to support future high-tech industries and introducing tax reductions for companies investing in and creating jobs in designated crisis regions. Tax incentives for capital market activation and venture investment are also being strengthened, alongside inclusive tax policies aimed at supporting low- and middle-income households, multi-child families, and small business owners. The Ministry of Economy and Finance has prepared 21 revised enforcement decrees, including the Income Tax Act, which will be implemented in July after legislative notice and cabinet approval. These reforms aim to boost national strategic technologies, emerging and fundamental technologies, and artificial intelligence.
The scope of national strategic technology tax credits will increase from 78 to 81 items across 8 sectors, while emerging and fundamental technologies will expand from 273 to 284 items in 14 sectors. AI training data purchases are now eligible for R&D tax credits, and temporary commercialization of R&D facilities will also qualify for tax benefits. Integrated employment tax credits will apply only to employment increases exceeding 5 for mid-sized companies and 10 for large corporations, with additional credits for hiring youth (15–34), people with disabilities, and those over 60. Specifics for capital gains tax deferral on foreign subsidiary stock contributions and recognition of bad debts from guarantees are also clarified.
To invigorate the capital market, special tax rules for high-dividend companies, revised investment and cooperation incentives, and expanded tax deferral for university asset replacements are introduced. The annual tax deduction limit for KOSDAQ venture fund investments is raised to KRW 20 million per person, and tax relief for start-ups in crisis regions is strengthened. The requirements for corporate tax reduction for headquarters relocation outside the Seoul metropolitan area are eased, and tax and customs benefits for returning overseas companies are expanded. Additional tax incentives are provided for housing purchases in depopulated areas and for unsold housing in non-metropolitan regions.
Public support measures include tax exemption on youth savings interest, expanded non-taxable night shift allowances for production workers, and increased non-taxable limits for private school staff parental leave. Special collection rules for small business tax arrears, income tax exemption for closed dog farms, and relaxed withdrawal conditions for the Yellow Umbrella mutual aid fund are also implemented. Taxpayer rights and convenience are enhanced through flexible taxpayer designation for jointly owned homes, expanded audit oversight, and reduced e-filing tax credit thresholds. Efforts to prevent tax evasion, improve collection efficiency, and expand mandatory cash receipt issuance are also underway.
This tax reform strategically balances the need for technological advancement with social inclusiveness. By expanding R&D tax credits and supporting AI and emerging technologies, Korea is strengthening its global competitiveness and fostering an innovative ecosystem. At the same time, enhanced support for vulnerable groups and small businesses, along with improved taxpayer rights, ensures a more equitable and sustainable economic environment.