The main opposition Democratic Party of Korea on Wednesday proposed a revision to the Act on Restriction of Special Taxation to ensure that a tax credit rate of up to 15 percent is applied to large businesses’ investments in semiconductor infrastructure. In effect, it accepted the government’s proposed revision issued in January to increase tax credit rates as per the South Korean version of the Chips Act.
DP floor leader Park Hong-keun said at the party's Supreme Council meeting at the National Assembly, “Our party proposes a revised bill of the so-called Korean IRA Act to ensure higher tax credits on investments in national strategic technologies and nurture carbon-neutral industries.” He stressed that bipartisan cooperation matters to overcome economic difficulties that also affect the semiconductor industry. “We accepted the government’s policy proposal despite the discord over policy directions between the government and the party as well as concern about reduced tax revenues,” he said. “We aim to serve as a competent political entity with a great sense of responsibility.”
The main opposition party’s revision to the Act on Restriction of Special Taxation is in line with that of the government. Both agree that tax credit rates should be increased from 8 to 15 percent for large businesses and from 16 to 25 percent for SMEs. The difference is that the DP proposes that a broader range of industries should enjoy greater tax benefits when their investments are made in semiconductors and secondary cells, vaccinations, biotechnology, renewables, and hydrogen or other carbon-neutral technologies.
The ruling and opposition parties plan to talk at a subcommittee meeting under the National Assembly’s Strategy and Finance Committee on Thursday so that it can be handled at the plenary session this month. In response, the Justice Party criticized the proposal as a reckless and unilateral attempt to cut taxes for the rich using semiconductors as an excuse. Justice Party’s lawmaker Jang Hye-young, a Strategy and Finance Committee member, held a press conference at the National Assembly, saying, “The People Power Party and the Democratic Party always act like bitter rivals. However, they give it a break to go out of their way to cut taxes for the rich and give special treatment to conglomerates.”
Seong-Ho Hwang firstname.lastname@example.org