The South Korean government is extending a tax break to companies working on blockchain technology in order to promote innovation.
Reporting by The News Asia said blockchain was one of 16 fields government officials decided to add to the research & development (R&D) tax credit. Other fields included fine dust reduction technology and wearable robots.
The News Asia said the nation’s Ministry of Strategy and Finance “announced the proposed amendments to the enforcement decree of the 2018 tax law which is to be enforced starting this February.”
The new stipulations mean small enterprises can deduct 30-40% of research and development expenses, while large and medium-sized entitles can deduct 20-30%.
The figures represent a large jump from existing mandates. Large corporations can only deduct 0-2% for R&D, while medium enterprises can slash 8-15% off their tax bill.
South Korean Officials Interested In Blockchain
Officials in the Asian nation have expressed interest and support for the blockchain industry.
In September, Min Won-ki, the Second Vice Minister of Science and ICT met with several blockchain startups as part of a government effort to engage with key businesses.
In the same month, the South Korean Ministry of Science and Technology said it hosted its first lecture that focused on blockchain.
In late November, CryptoGlobe reported on an announcement by the Ministry of Science to build a blockchain-based voting system with the help of the National Election Commission.
The system will first be used by Seoul National University’s Blockchain Society and the Korea Internet and Security Agency to collect survey response. Officials will then decide if it could be rolled out to a bigger audience.
More Entities Interested In Research and Development Incentives
Tax breaks and other research & development incentives for cutting-edge companies has been a growing focus for entities such as Ernst & Young (EY).
The multinational professional services firm released its 2019 budget recommendations on Thursday. The report included recommendations for a fintech tax incentive, alongside R&D incentives for small and medium-sized enterprises.
EY said a fintech tax incentive with a 5-10% preferential rate could be used to promote activity by companies working in the blockchain, cloud computing, and authentication fields, among others.