Korea Introduces New Domestic Production Tax Credit Covering Semiconductors, AI Robot Components and More Until End of 2036

Odaily News – South Korea's Ministry of Trade, Industry and Energy stated on the 7th that the 2026 tax reform proposal has, for the first time, introduced a domestic production tax credit applicable to six sectors: solar power, wind power, secondary batteries, semiconductors, core materials, and AI robot components.

Companies that meet the conditions for local production and sales in South Korea will have their tax credit scale determined based on production volume and the baseline credit amount, with the applicable period running until December 31, 2036.

The Korean government will introduce coefficients based on production regions, granting greater preferential treatment to enterprises in local areas. During the final three years of the credit period, the credit amount will be phased down to 75%, 50%, and 25% respectively, and it will be excluded from overlapping application with the comprehensive investment tax credit.

The Ministry of Trade, Industry and Energy and the Ministry of Economy and Finance will consult with industry associations during subsequent parliamentary discussions and the preparation of enforcement regulations to refine the specific product categories, applicable conditions, and baseline credit amounts.