The National Assembly of Korea (Rep.) approved a bill designed to support the semiconductor industry by offering increased tax incentives to chipmakers on Thursday, 27 February 2025.

The updated Act on Restriction of Special Taxation, known as the K-Chips Act, focuses on raising the tax credit rate for companies that invest in facilities within key national industries such as semiconductors, secondary batteries and future cars.

Under the current law, the semiconductor industry is recognized as a national strategic industry, along with secondary batteries, vaccines, displays, and biopharmaceuticals, qualifying it for investment tax credits. Once the revised bill is enacted, the tax credit rate for large corporations will increase from 15% to 20%, while small and medium-sized enterprises will see their rate rise from 25% to 30%.

The legislation also prolongs the R&D tax credit for other national strategic industries and for emerging growth and core technology sectors by an additional five years. Meanwhile, the credit rate for large conglomerates will stay at 15% and SMEs will continue to enjoy a 15% rate until the end of 2029.

The Korea International Trade Association praised the government’s support for the semiconductor sector, stating that “full support for the semiconductor industry, a core of advanced industries, will provide an essential foundation for export expansion and national economic growth.”

During the plenary session, the Assembly approved a bill extending the research and development tax credits for new and national strategic technologies by five years until 2029 and for semiconductors by seven years until 2031.