South Korea has launched a major initiative to provide tax breaks to various startups working in the fields of of innovative technologies – including blockchain technology – by committing to revise their current tax laws. By doing so, the South Korean government is providing a comfortable vantage point for start up companies associated with “the development of nascent technologies” to flourish according to a post on Coindesk.
During a meeting on July 18, 2018, a group of ministers from eight different government organizations devised a strategy for their new economic policy: a reduction in taxes for companies dealing with a range of 157 “new growth technologies” in 11 areas. It was also notified that the amount of final tax benefits will be further expounded on, during another meeting on July 26, 2018, with final implementation by first quarter of 2019.
According to the existing corporate tax laws in Korea, a company must allocate “more than 5 percent of the previous year’s gross sales to R&D and 10 percent of its R&D investment should focus on new growth technologies such as blockchain.” However, with the proposed policy the government aims to relax to these stringent laws by shedding light and acknowledging the fact that new companies usually are unable to generate enough sales to allocate enough money for investment purposes into their R&D. Henceforth, it was suggested that the percent amount required to R&D investment should be “changed to more than 5 percent of the current year’s gross sales” – not the previous year.
The Korean ministers have already announced their plans and strategies to promote blockchain technology in the country and also promised to reveal more information pertaining to the tax laws by the end of July. In a report news agency Yonhap reported that the new tax rule would apply to any blockchain company based in South Korea, irrespective of whether they are foreign or domestic.
However, this is not South Korea’s first venture to publicly support the integration of blockchain technology or cryptocurrencies in their society. Just last month, the Ministry of Science and ICT released their strategy to work on expanding the field of blockchain technology locally. Their plans included investing 10 billion Korean won – approximately 9 million USD for speeding up the efforts. With such an investment, the main goal is to “improve the information sharing efficiency and transparency in public services by using a blockchain based distributed network”.