The planned incentives, modeled in part on U.S. and Japanese schemes, would cover semiconductors, solar power, batteries, AI robots, wind power and core materials, parts and equipment.
South Korea plans to introduce production tax credits next year for six strategic industries, expanding support beyond its current investment-focused tax breaks. The program is set to cover semiconductors, solar power, secondary batteries, AI robots, wind power and core materials, parts and equipment, in what officials describe as a Korean version of the U.S. Inflation Reduction Act. Unlike existing incentives for investment in national strategic technologies, the new system would tie benefits directly to output using a fixed-amount credit for each unit produced and sold domestically. The Ministry of Economy and Finance indicated the approach in its second-half economic growth strategy announced on July 14. The government is also considering output-linked subsidies for loss-making companies that cannot use tax credits, including South Korea’s three battery makers, which have been in the red for years and do not pay corporate tax. A tax revision bill due in early August will name the six eligible categories, while detailed rules will be set by enforcement decree.