ARTICLE 10 (TAX CREDIT FOR RESEARCH AND DEVELOPMENT EXPENSES FOR HUMAN RESOURCES DEVELOPMENT)

When a domestic company incurs expenses for research and development and human resources development as prescribed by Presidential Decree (hereinafter referred to as "research and development expenses for human resources development"), the sum of the amounts calculated under the following subparagraphs shall be deducted from the income tax (limited to income tax on business income) or corporate tax for the relevant taxable year. In this case, subparagraphs 1 and 2 shall apply only to research and development expenses for human resources development incurred by December 31, 2029 (December 31, 2031, for technologies in the semiconductor field among national strategic technologies under subparagraph 2), and if both subparagraphs 1 and 2 can be applied simultaneously, only one of them shall be applied at the taxpayer's discretion. <Amended by Act No. 11562, Dec. 27, 2010; Act No. 11782, Dec. 31, 2011; Act No. 11997, Jan. 1, 2013; Act No. 12208, Jan. 1, 2014; Act No. 12882, Dec. 23, 2014; Act No. 13563, Dec. 15, 2015; Act No. 14100, Dec. 20, 2016; Act No. 14471, Dec. 19, 2017; Act No. 15220, Dec. 24, 2018; Act No. 16875, Dec. 31, 2019; Act No. 17850, Dec. 28, 2021; Act No. 19253, Apr. 11, 2023; Act No. 19802, Dec. 31, 2023; Act No. 20795, Dec. 31, 2024; Act No. 21115, Mar. 14, 2025> 1. With respect to research and development expenses for obtaining technologies prescribed by Presidential Decree, considering future prospects and industrial competitiveness, that are recognized as requiring support (hereinafter referred to as "research and development expenses for new growth and source technologies"), the amount calculated by multiplying the research and development expenses for new growth and source technologies incurred in the relevant taxable year by the sum of the rates under (a) and (b). (a) Rates according to the type of enterprise: 1) In the case of a small and medium-sized enterprise: 30/100 2) In other cases: 20/100 (In the case of a small and medium-sized enterprise that ceases to be a small and medium-sized enterprise for the first time as prescribed by Presidential Decree, 25/100 for taxable years ending within three years from the beginning of the taxable year in which it ceased to be a small and medium-sized enterprise for the first time). (b) The rate calculated by multiplying the ratio of research and development expenses for new growth and source technologies to the revenue for the relevant taxable year (referring to the sales calculated according to accounting standards of the enterprise under Article 43 of the Corporate Tax Act. The same applies hereinafter in this Article) by a certain multiple prescribed by Presidential Decree. However, the limit shall be 10/100. 2. With respect to research and development expenses for obtaining 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 for their strategic importance from a national security perspective and have a significant impact on the overall national economy (hereinafter referred to as "national strategic technologies"), the amount calculated by multiplying the national strategic technology research and development expenses incurred in the relevant taxable year by the sum of the rates under (a) and (b). (a) Rates according to the type of enterprise: 1) In the case of a small and medium-sized enterprise: 40/100 2) In other cases: 30/100 (In the case of a small and medium-sized enterprise that ceases to be a small and medium-sized enterprise for the first time as prescribed by Presidential Decree, 35/100 for taxable years ending within three years from the beginning of the taxable year in which it ceased to be a small and medium-sized enterprise for the first time). (b) The rate calculated by multiplying the ratio of national strategic technology research and development expenses to the revenue for the relevant taxable year by a certain multiple prescribed by Presidential Decree (if it exceeds 10/100, it shall be 10/100). 3. For domestic companies that do not fall under subparagraphs 1 and 2 or do not choose to apply subparagraphs 1 and 2 (hereinafter referred to as "general research and development expenses for human resources development"), the amount calculated under any one of the following items that they choose. However, if no general research and development expenses for human resources development have been incurred for the four years preceding the beginning of the relevant taxable year, or if the general research and development expenses for human resources development incurred in the immediately preceding taxable year are less than the average annual amount of general research and development expenses for human resources development incurred for the four years preceding the beginning of the relevant taxable year, the amount calculated under (b) shall apply. (a) With respect to the excess amount when the general research and development expenses for human resources development incurred in the relevant taxable year exceed the general research and development expenses for human resources development incurred in the immediately preceding taxable year, 25/100 of such excess amount [in the case of a middle-sized enterprise prescribed by Presidential Decree (hereinafter referred to as "middle-sized enterprise") in this Article, 40/100, and in the case of a small and medium-sized enterprise, 50/100]. (b) The amount calculated by multiplying the general research and development expenses for human resources development incurred in the relevant taxable year by the rates according to the following classification: 1) In the case of a small and medium-sized enterprise: 25/100 2) In the case where a small and medium-sized enterprise ceases to be a small and medium-sized enterprise for the first time as prescribed by Presidential Decree: Rates according to the following classification (a) For taxable years ending within three years from the beginning of the taxable year in which it ceased to be a small and medium-sized enterprise for the first time: 20/100 (b) For taxable years ending within two years from the period in (a): 15/100 3) In the case of a middle-sized enterprise not falling under 2): 8/100 4) In cases not falling under any of 1) through 3): The rate calculated by the following formula (limited to 2/100). Rate of general research and development expenses for human resources development to revenue for the relevant taxable year × 1/2

A domestic company intending to apply paragraph (1) shall apply for the tax credit in the manner 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 independent research and development, excluding amounts not combined with the science and technology field. <Newly added by Act No. 16875, Dec. 31, 2019; Act No. 17850, Dec. 28, 2021>