Article 10 (Tax Credit for Research and Development Expenses)

Where a domestic corporation has expenses for research and development and human resources development, as prescribed by Presidential Decree (hereinafter referred to as "research and development expenses"), the amount obtained by summing the amounts in the following subparagraphs shall be deducted from the income tax (limited to income tax on business income) or corporate tax for the relevant tax year. In such cases, subparagraphs 1 and 2 shall apply only to research and development expenses incurred by December 31, 2029 (December 31, 2031 for technologies in the semiconductor field among national strategic technologies under subparagraph 2), and where both subparagraphs 1 and 2 can be applied, only one of them may be applied at the taxpayer's election. <Amended by Act No. 12263, Dec. 27, 2010, Act No. 12955, Dec. 31, 2011, Act No. 12263, Jan. 1, 2013, Act No. 12844, Jan. 1, 2014, Act No. 12955, Dec. 23, 2014, Act No. 13559, Dec. 15, 2015, Act No. 14406, Dec. 20, 2016, Act No. 14899, Dec. 19, 2017, Act No. 16134, Dec. 24, 2018, Act No. 16852, Dec. 31, 2019, Act No. 18678, Dec. 28, 2021, Act No. 19413, Apr. 11, 2023, Act No. 20047, Dec. 31, 2023, Act No. 20761, Dec. 31, 2024, Act No. 20131, Mar. 14, 2025> 1. With respect to research and development expenses incurred for technologies that are deemed necessary to support considering future prospects and industrial competitiveness, as prescribed by Presidential Decree (hereinafter referred to as "new growth and source technologies"), the amount calculated by multiplying the research and development expenses incurred in the relevant tax year for new growth and source technologies (hereinafter referred to as "research and development expenses for new growth and source technologies" in this Article) by the sum of the rates in items (a) and (b): (a) Rates according to the type of enterprise: 1) In the case of small and medium-sized enterprises: 30/100 2) In other cases: 20/100 (In the case where a small or medium-sized enterprise first ceases to be a small or medium-sized enterprise, as prescribed by Presidential Decree, 25/100 until the end of the tax year within 3 years from the beginning of the tax year in which it first ceased to be a small or medium-sized enterprise) (b) The rate obtained by multiplying the ratio of research and development expenses for new growth and source technologies to the revenue of the relevant tax year (referring to sales calculated according to accounting standards for enterprises under Article 43 of the Corporate Tax Act. The same applies hereinafter in this Article) by a certain multiple prescribed by Presidential Decree. Provided, that the limit shall be 10/100. 2. With respect to research and development expenses incurred for technologies related to semiconductors, secondary batteries, vaccines, displays, hydrogen, future transportation and mobility, biopharmaceuticals, artificial intelligence, and other fields prescribed by Presidential Decree, which are recognized as strategically important from the perspective of national security and have a significant impact on the national economy as prescribed by Presidential Decree (hereinafter referred to as "national strategic technologies"), the amount calculated by multiplying the research and development expenses incurred in the relevant tax year for national strategic technologies (hereinafter referred to as "research and development expenses for national strategic technologies" in this Article) by the sum of the rates in items (a) and (b): (a) Rates according to the type of enterprise: 1) In the case of small and medium-sized enterprises: 40/100 2) In other cases: 30/100 (In the case where a small or medium-sized enterprise first ceases to be a small or medium-sized enterprise, as prescribed by Presidential Decree, 35/100 until the end of the tax year within 3 years from the beginning of the tax year in which it first ceased to be a small or medium-sized enterprise) (b) The rate obtained by multiplying the ratio of research and development expenses for national strategic technologies to the revenue of the relevant tax year by a certain multiple prescribed by Presidential Decree (if it exceeds 10/100, it shall be 10/100). 3. In the case of research and development expenses of a domestic corporation that do not fall under subparagraphs 1 and 2 or for which subparagraphs 1 and 2 are not elected (hereinafter referred to as "general research and development expenses" in this Article), the amount corresponding to any one of the following items selected by the taxpayer. Provided, that if general research and development expenses have not occurred for 4 years preceding the beginning of the relevant tax year, or if the general research and development expenses incurred in the immediately preceding tax year are less than the average annual occurrence of general research and development expenses incurred for 4 years preceding the beginning of the relevant tax year, the amount corresponding to item (b) shall apply: (a) With respect to the amount by which the general research and development expenses incurred in the relevant tax year exceed the general research and development expenses incurred in the immediately preceding tax year, an amount equivalent to 25/100 of the excess amount [in the case of a mid-sized enterprise (hereinafter referred to as "mid-sized enterprise" in this Article) as prescribed by Presidential Decree, 40/100; and in the case of small and medium-sized enterprises, 50/100]. (b) The amount calculated by multiplying the general research and development expenses incurred in the relevant tax year by the rates according to the following classification: 1) In the case of small and medium-sized enterprises: 25/100 2) In the case where a small or medium-sized enterprise first ceases to be a small or medium-sized enterprise, as prescribed by Presidential Decree: The rates according to the following classification (a) Until the end of the tax year within 3 years from the beginning of the tax year in which it first ceased to be a small or medium-sized enterprise: 20/100 (b) Until the end of the tax year within 2 years from the period in (a): 15/100 3) In the case of a mid-sized enterprise not falling under 2): 8/100 4) In cases not falling under any of 1) through 3): The rate according to the following calculation formula (limited to 2/100) Ratio of general research and development expenses to revenue of the relevant tax year × 1/2

A domestic corporation intending to apply paragraph ① shall file an application for tax credit as prescribed by Presidential Decree.

When applying paragraph ①, expenses incurred for activities to develop new services and service delivery systems shall be limited to those incurred for own research and development, excluding amounts not combined with the science and technology field. <Newly inserted by Act No. 16852, Dec. 31, 2019, Act No. 18678, Dec. 28, 2021>