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S. Korea to expand tax incentives for R&D on carbon neutrality technology

11.01.2022

South Korea plans to provide tax incentives for research and development (R&D) on green technology designed to help cut carbon emissions in an effort to nurture new industries.

Currently, the country has picked 235 technologies in 12 sectors, including next-generation vehicles and bio health, as “new growth and original technologies” and provided tax incentives on R&D expenditures on such spending.

For such technology, the country has applied the tax credit rate of 30-40 percent for smaller firms and 20-30 percent for large companies.

The government has decided to add carbon neutrality-related technology into such a category and expand the total number of technologies subject to the tax breaks to 260, according to a revised enforcement ordinance to the tax code.

In detail, the country plans to offer tax incentives for R&D spending on 48 carbon neutrality technologies, including carbon capture, utilization and storage (CCUS), hydrogen and renewable energy.

South Korea has an ambitious goal of reducing greenhouse gas emissions to 40 percent by 2030 compared with 2018 levels. The target marks a sharp rise from its previous goal of 26.3 percent.

The country is pushing for reducing reliance on coal and building up the low-carbon economic structure in a bid to achieve the goal of carbon neutrality by 2050.