Article 24 (Integrated Investment Tax Credit)

Where a domestic company, as prescribed by Presidential Decree, invests in assets falling under item 'a' or 'b' of subparagraph 1 (excluding used goods and rental assets prescribed by Presidential Decree; hereinafter referred to as the same in this Article) (excluding investments made through leases prescribed by Presidential Decree; hereinafter referred to as the same in this Article), the amount obtained by summing the basic deduction amount and the additional deduction amount pursuant to each item of subparagraph 2, or the amount obtained by summing the basic deduction amount and the additional deduction amount pursuant to each item of subparagraph 3, shall be deducted from the income tax (limited to income tax on business income) or corporate tax for the taxable year in which the investment is made. In such cases, if the provisions of subparagraphs 2 and 3 can be applied simultaneously, only one of them shall be applied at the discretion of the taxpayer. <Amended on Dec. 28, 2021, Dec. 31, 2022, Apr. 11, 2023, Dec. 31, 2024, Mar. 14, 2025> 1. Assets Subject to Deduction a. Tangible assets used for business, such as machinery, etc. Provided, however, that assets prescribed by Presidential Decree shall be excluded. b. Tangible and intangible assets other than those falling under item 'a', as prescribed by Presidential Decree. 2. Deduction Amount a. Basic Deduction Amount: An amount equivalent to the amount obtained by multiplying the investment amount in the relevant taxable year by the ratio according to the following classifications. 1) Where investing in facilities prescribed by Presidential Decree for commercialization of new growth engines and source technologies (hereinafter referred to as "new growth commercialization facilities" in this Article) and research and testing facilities prescribed by Presidential Decree for research and development of new growth engines and source technologies (hereinafter referred to as "new growth R&D facilities" in this Article). a) For small and medium-sized enterprises: 12 percent b) For the taxable year ending within three years from the beginning of the taxable year in which a small and medium-sized enterprise first ceases to be classified as such, as prescribed by Presidential Decree: 9 percent c) For mid-sized enterprises not falling under item 'b': 6 percent d) Cases other than items 'a' through 'c': 3 percent 2) Where investing in facilities prescribed by Presidential Decree for commercialization of national strategic technologies (hereinafter referred to as "national strategic technology commercialization facilities" in this Article) and research and testing facilities prescribed by Presidential Decree for research and development of national strategic technologies (hereinafter referred to as "national strategic technology R&D facilities" in this Article) until December 31, 2029 [excluding cases falling under subparagraph 3]. a) For small and medium-sized enterprises: 25 percent b) For the taxable year ending within three years from the beginning of the taxable year in which a small and medium-sized enterprise first ceases to be classified as such, as prescribed by Presidential Decree: 20 percent c) Cases other than items 'a' and 'b': 15 percent 3) Where investing in semiconductor sector national strategic technology commercialization facilities and semiconductor sector national strategic technology R&D facilities prescribed by Presidential Decree until December 31, 2029. a) For small and medium-sized enterprises: 30 percent b) For the taxable year ending within three years from the beginning of the taxable year in which a small and medium-sized enterprise first ceases to be classified as such, as prescribed by Presidential Decree: 25 percent c) Cases other than items 'a' and 'b': 20 percent 4) Where investing in assets other than those in subparagraphs 1 through 3. a) For small and medium-sized enterprises: 10 percent b) For the taxable year ending within three years from the beginning of the taxable year in which a small and medium-sized enterprise first ceases to be classified as such, as prescribed by Presidential Decree: 7.5 percent c) For mid-sized enterprises not falling under item 'b': 5 percent d) Cases other than items 'a' through 'c': 1 percent b. Additional Deduction Amount: An amount equivalent to 10 percent of the excess amount, where the investment amount in the relevant taxable year exceeds the average investment or acquisition amount for the preceding three taxable years. Provided, however, that if the additional deduction amount exceeds the basic deduction amount, the limit shall be twice the basic deduction amount. 3. Temporary Investment Tax Credit Amount a. Basic Deduction Amount: An amount according to the following classifications. 1) For the taxable year including December 31, 2023: An amount equivalent to 3 percent of the investment amount in the relevant taxable year (7 percent for mid-sized enterprises, 12 percent for small and medium-sized enterprises). Provided, however, that in cases falling under any of the following, it shall be an amount according to the following classifications. a) Where investing in new growth commercialization facilities: An amount equivalent to 6 percent (10 percent for mid-sized enterprises, 18 percent for small and medium-sized enterprises). b) Where investing in national strategic technology commercialization facilities: The amount according to subparagraph 2 'a' 2). 2) For the taxable year including December 31, 2024: An amount equivalent to 1 percent of the investment amount in the relevant taxable year (7 percent for mid-sized enterprises, 12 percent for small and medium-sized enterprises). Provided, however, that in cases falling under any of the following, it shall be an amount according to the following classifications. a) Where investing in new growth commercialization facilities: An amount equivalent to 3 percent (8 percent for mid-sized enterprises, 14 percent for small and medium-sized enterprises). b) Where investing in national strategic technology commercialization facilities: The amount according to subparagraph 2 'a' 2). 3) For the taxable year including December 31, 2025: An amount equivalent to 1 percent of the investment amount in the relevant taxable year (7 percent for mid-sized enterprises, 12 percent for small and medium-sized enterprises). Provided, however, that in cases falling under any of the following, it shall be an amount according to the following classifications. a) Where investing in new growth commercialization facilities and new growth R&D facilities: An amount equivalent to 3 percent (8 percent for mid-sized enterprises, 14 percent for small and medium-sized enterprises). b) Where investing in national strategic technology commercialization facilities and national strategic technology R&D facilities [excluding cases falling under item 'c']: The amount according to subparagraph 2 'a' 2). c) Where investing in semiconductor sector national strategic technology commercialization facilities and semiconductor sector national strategic technology R&D facilities prescribed by Presidential Decree: The amount according to subparagraph 2 'a' 3). b. Additional Deduction Amount: An amount equivalent to 10 percent of the excess amount, where the investment amount in the relevant taxable year pursuant to each taxable year in items 'a' 1) through 3) exceeds the average investment or acquisition amount for the preceding three taxable years. Provided, however, that if the additional deduction amount exceeds the basic deduction amount, the limit shall be twice the basic deduction amount.

If a person who has received a deduction of income tax or corporate tax pursuant to paragraph ① re-appropriates the asset for another purpose within the period prescribed by Presidential Decree within five years from the date of completion of the investment, they shall pay the deducted tax credit amount, plus an amount equivalent to interest calculated according to Presidential Decree, as income tax or corporate tax. In such cases, the said tax shall be considered as the tax to be paid pursuant to Article 76 of the Income Tax Act or Article 64 of the Corporate Tax Act.

When applying paragraphs ① through ④, the method of calculating the investment amount, the method of calculating the average investment amount for the preceding three taxable years, the method of determining new growth commercialization facilities, new growth R&D facilities, national strategic technology commercialization facilities, and national strategic technology R&D facilities, and other necessary matters shall be prescribed by Presidential Decree. <Amended on Dec. 28, 2021, Apr. 11, 2023, Mar. 14, 2025>