The South Korean government intends to revise the current tax rules to introduce more benefits for companies developing blockchain and other nascent technologies, industry website Coindesk has reported.
Under the new plan, which was unveiled on Wednesday, taxes are to be reduced for businesses dealing with a range of 157 "new-growth technologies" in 11 areas. In addition, the government is considering changing the requirement for companies to be eligible for tax reduction benefits. Under the current tax regime, in order to get such benefits, a company must allocate over 5% of its the previous year's gross sales to research and development and 10% of the R&D investment should focus on new growth technologies.
This requirement, however, prevents start-ups that are in their first year to become eligible for tax deduction. In order to address that, the government proposed the requirement to be changed to more than 5% of the current year's gross sales.
The government will reveal more details about the plan on July 26. The changes are expected to take effect by the first quarter of next year.
Yesterday’s announcement followed a meeting of ministers from eight government agencies working on economic policy. This was the second such meeting in a week, as the ministers held discussions on the same topic on Friday. Local news agency Yonhap reported at the time that the new tax rule would apply to South Korea-based firms that focus on blockchain technology, regardless of whether they are foreign or domestic businesses.
The South Korean government has demonstrated that it is willing to support the development of blockchain technology, as part of its broader push for innovation growth. Last month, the Ministry of Science and ICT published a blockchain development strategy and revealed that the government plans to invest $9 million by the end of 2019 to support blockchain pilot programmes.