Korea Launches Domestic Production Tax Credit for Semiconductors and AI Until 2036

South Korea introduces a new tax credit for six key sectors, including semiconductors and AI components, valid until 2036. Credits scale with production volume and regional location, phasing down in final years.

Woofun AI reports that South Korea’s Ministry of Trade, Industry and Energy has unveiled a 2026 tax reform proposal featuring a new domestic production tax credit. This measure covers six sectors: solar power, wind power, secondary batteries, semiconductors, core materials, and AI robot components. Eligible companies meeting local production and sales criteria will receive credits based on production volume and baseline amounts, applicable until December 31, 2036. Regional coefficients will favor enterprises in local areas, while the credit amount will phase down to 75%, 50%, and 25% during the final three years. The credit cannot be combined with comprehensive investment tax credits. Relevant ministries will consult industry associations to refine product categories and conditions during parliamentary discussions.