Korea to add OLED as national strategic technology for more tax benefit

If the bill passes the National Assembly, Samsung Display Co. and LG Display Co. will be able to receive a tax credit of up to 25 percent when building an OLED plant in Korea this year. [Sources : Samsung, LG]

South Korea is planning to add advanced display design and manufacturing to its list of national strategic technologies to provide tax benefits to eligible companies that are facing fierce competition, especially from rivals in China.

According to sources on Thursday, the Ministry of Economy and Finance is drafting a revision to the tax law enforcement decree to be unveiled next week. The highlight of the revision is the addition of OLED and other advanced display solutions to the national strategic technology eligible for tax deduction of up to 16 percent for small companies and 8 percent for large companies. This compares with a 1 percent tax credit for facility investment by large companies in general technologies.

Currently, only about 30 technologies are registered as national strategic technologies in three fields – semiconductors, vaccine and batteries. The government is also considering designating items with excellent energy-saving performance, such as high-efficiency boilers and transformers, as new growth and source technologies for a tax credit of up to 12 percent for small companies. Green and blue hydrogen technologies will be reviewed for a status upgrade to national strategic technologies.

As announced, the government plans to hold a cabinet meeting to propose an amendment to the Restriction of Special Taxation Act designed to raise the tax credit rate for national strategic technologies. The revised bill raises the tax benefit for these key technologies to 15 percent for large and mid-sized companies and 25 percent for SMEs, while increasing a tax credit rate for increased investment to 10 percent for this year only. If the bill passes the National Assembly, Samsung Display Co. and LG Display Co. will be able to receive a tax credit of up to 25 percent when building an OLED plant in Korea this year.