The Treasury Department said the measures would save companies more than $2.85 billion in taxes for 2024.
South Korea will offer large tax breaks for semiconductor companies and other technology companies investing in the country as part of efforts to ensure supply chain security.
Companies investing in the East Asian nation will be able to get a 35% tax deduction, saving companies more than 3.6 trillion won ($2.85 billion) in taxes for 2024, the finance ministry said. the country said in a statement on Tuesday.
The proposed tax relief comes as other economies, including Taiwan and the United States, introduce measures to boost their domestic chip industries.
Taiwan, home to the world’s largest contract chipmaker Taiwan Semiconductor Manufacturing Co Ltd, in November announced extensive tax breaks that would allow companies to reduce their tax bills by up to a quarter if the amount Their investment in research and domestic production reaches a certain level.
In August, US President Joe Biden signed the CHIPS and Science Actprovides billions of dollars in subsidies to U.S. chipmakers and limited support to companies that do manufacturing in China.
South Korea’s finance ministry said the proposed tax cuts must be approved by parliament, the party dominated by the Democratic Party, the center-left rival of South Korean President Yoon Suk’s People’s Power Party- yeol.
South Korea, Asia’s fourth-largest economy, is the world’s largest producer of memory chips, with local companies Samsung and SK Hynix together controlling about 70 percent of the global market.
