K-CHIPS Act Passes the Standing Committee

  • Reporter. 임현정
  • 입력 2023.05.01 13:23
2nd Plenary Session of the 404th National Assembly Strategy and Finance Committee (segye.com)
2nd Plenary Session of the 404th National Assembly Strategy and Finance Committee (segye.com)

On March 16th, the Planning and Finance Committee of the National Assembly passed a revised bill for the Act on Restriction of Special Taxation. Also known as the K-CHIPS Law, the act aims to provide additional tax benefits for domestic semiconductor facility investments by expanding the tax deduction rate for investments made in national strategic technology facilities. The bill added hydrogen and future transportation as a part of the national strategic technologies, in addition to the existing sectors including semiconductors, secondary batteries, and vaccines. This implies that the field of national strategic technology will now be determined by the revised law instead of enforcing the decree of the act. However, Jang Hye-young, a lawmaker of the Justice Party, argues that there is no reason to pass a policy that will reduce tax revenue by ₩4.3 trillion in two years with investment tax deductions. Despite the disagreement towards raising the tax deduction rate again after a month, the expansion of the deduction range progressed as pressure from the United States increased. Afterward, the Democratic Party demanded that the government include hydrogen and future-oriented transportation in the national strategic technologies, as well as accepting the increase in tax deductions. The K-CHIPS Law was processed at the plenary session on March 30th after going through the Judiciary and Legislation Committee.

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