Article 26 (Investment Tax Credit for Job Creation)

Where a domestic resident makes an investment (excluding investments in used goods, investments through leases as prescribed by Presidential Decree, and investments within the Seoul Metropolitan Area's over-concentrated development zone; hereinafter referred to as 'investment' in this Article) by December 31, 2017, and the number of regular employees in the relevant taxable year does not decrease compared to the preceding taxable year, the amount calculated by adding the amounts computed according to the following subparagraphs shall be deducted from the income tax (limited to income tax on business income) or corporate tax for each taxable year in which the investment is made. Provided, that in the case of small and medium-sized enterprises, Article 1 shall apply even if the number of regular employees in the relevant taxable year decreases compared to the preceding taxable year. In this case, the amount in Article 1 shall be reduced by 10 million won per person for the decrease in regular employees, and if the amount is negative, it shall be deemed zero. <Amended by Act No. 11587, Dec. 31, 2011, Act No. 11620, Jan. 1, 2013, Act No. 12002, Aug. 13, 2013, Act No. 12242, Jan. 1, 2014, Act No. 12889, Dec. 23, 2014, Act No. 14465, Dec. 20, 2016, Act No. 14772, Apr. 18, 2017, Act No. 17790, Dec. 29, 2020> 1. Basic deduction amount: In the case of small and medium-sized enterprises, it shall be an amount equivalent to 3/100 of the investment amount, and in the case of mid-sized enterprises, it shall be as prescribed in the following sub-items. a. Where investing within the growth management zone or the natural preservation zone as referred to in Article 6 (1) 2 and 3 of the Seoul Metropolitan Area Readjustment Planning Act (hereinafter referred to as "Seoul Metropolitan Area outside the over-concentrated development zone" in this Article), an amount equivalent to 1/100 of the investment amount. b. Where investing in areas outside the Seoul Metropolitan Area, an amount equivalent to 2/100 of the investment amount. 2. Additional deduction amount: Where investing within the Seoul Metropolitan Area outside the over-concentrated development zone, it shall be an amount equivalent to 3/100 of the investment amount (6/100 for small and medium-sized enterprises, 5/100 for mid-sized enterprises), and where investing in areas outside the Seoul Metropolitan Area, it shall be an amount equivalent to 4/100 of the investment amount (7/100 for small and medium-sized enterprises, 6/100 for mid-sized enterprises); however, where engaging in a service industry prescribed by Presidential Decree, an amount equivalent to 1/100 of the investment amount shall be added to each. Provided, that if the amount exceeds the sum obtained by adding the amounts in sub-items a through c in order and subtracting the amount in sub-item d, the excess amount shall be disregarded. a. The number of graduates from vocational education and training schools, such as high schools that operate customized curricula directly linked to industry demand as prescribed by Presidential Decree, among regular employees who have concluded a labor contract for the first time in the relevant taxable year × 20 million won (25 million won for small and medium-sized enterprises). b. The number of young workers, disabled workers, and workers aged 60 or over, among regular employees other than those in sub-item a who have concluded a labor contract for the first time in the relevant taxable year × 15 million won (20 million won for small and medium-sized enterprises). c. (Number of regular employees in the relevant taxable year - Number of regular employees in the preceding taxable year - Number of graduates under sub-item a - Number of young workers, disabled workers, and workers aged 60 or over under sub-item b) × 10 million won (15 million won for small and medium-sized enterprises). d. The amount carried forward and deducted pursuant to Article 144 (3) in the relevant taxable year.

Where a resident makes interim prepayment pursuant to Article 65 of the Income Tax Act and makes an investment to which paragraph ① applies during the interim prepayment period, they may report to the head of the competent tax office for their tax office jurisdiction during the period from November 1 to November 30, paying the interim prepayment tax after deducting the tax credit amount corresponding to the investment portion of the interim prepayment period calculated by applying paragraph ① (limited to the tax on business income among the interim prepayment tax). In this case, 'the relevant taxable year' shall be deemed 'the interim prepayment period'. <Amended by Act No. 11587, Dec. 31, 2011>

If the interim prepayment tax paid or reported pursuant to paragraph ② or ③ is less than 50/100 of the minimum tax amount for the preceding taxable year calculated pursuant to Article 132, the tax credit amount corresponding to the investment portion of the interim prepayment period equivalent to the deficient tax amount shall not be deducted. <Newly Amended by Act No. 11587, Dec. 31, 2011>

If the tax credit amount corresponding to the investment portion of the interim prepayment period for which credit has been received pursuant to paragraph ② or ③ exceeds the tax credit amount corresponding to the investment portion to which paragraph ① applies in the relevant taxable year, the amount equivalent to the excess portion shall be paid as income tax or corporate tax when filing the tax return for the taxable income of the relevant taxable year. <Amended by Act No. 11587, Dec. 31, 2011>

Domestic residents who intend to apply the provisions of paragraphs ① through ③ shall apply for tax credit according to Presidential Decree. <Amended by Act No. 11587, Dec. 31, 2011>