To Expand Tax Deduction for Small And Medium Size Companies` Equipment Investment

All small and medium size companies, which invest in information system, will be benefited beginning next month, such as paying less corporate tax amounting to 5 percent of the purchasing price of equipment, including the computer purchase. Loan interests will be lowered, which are applied to various policy funds, such as industry foundation funds.

The government held a economic policy review meeting, presided over by Jin Nyum Deputy Prime Minister and the Economy and Finance Minister, yesterday at the Kwhachun government building, and set up the measures for the recovery of economic vitality, such as the expansion of taxation aids for the investment in equipment as well as research development.

The government decided to expand tax deduction amounting to 5 percent of investment for automation and informationalization, which was limited to the small and medium manufacture companies, to all kinds of small and medium size companies. The government also decided to include the computer purchase price in tax deduction items. Information protection system was also included in investment tax deduction for the small and medium size companies of which deduction rate is 3 percent.

The government plans to increase the tax deduction rates for the research, human resource development, and equipment investment from 5 percent to 10 percent, and to expand the applied area from the non-metropolitan area to the metropolitan area.

The government decided to add 8 business items, such as science as well as technology service business, performance industry, computer schools, and seed and nursery plant production businesses, to the items to which temporary investment tax deduction is applied. Regardless of the size, companies receive tax deduction amounting to 10 percent of investment according to the temporary investment tax deduction.

The government also decided to lower the loan interests of the finance, investment loaners, special accounting, and financial funds from 6.5 percent to 5.75 percent, and to cut the interest rates of the policy funds for investment as well as research development during September. Along with these, the government decided to revise 12 laws, such as the merchant bank law and the trust business law, out of 30 laws which invoke the 30 company designation system, while considering the revision of 11 laws including media law.

yhchoi65@donga.com