GSFIC

Significant Expansion of the Scope of Clean Production Facilities Subject to Investment Tax Deduction

As of February 12, the scope of clean production facilities* for which manufacturers can receive investment tax reduction has expanded significantly.

* Clean Production Facilities: Environmentally friendly manufacturing facilities that reduce raw materials and energy used in manufacturing processes or the wastes and pollutants discharged after production

The Ministry of Trade, Industry and Energy announced that the scope of clean production facilities subject to investment tax reduction under the Restriction of Special Taxation Act will be greatly expanded from 74 facilities in 12 industries to 139 facilities in 16 industries and a notice** on the amendments would be issued.

** Amendment to the ‘Clean Manufacturing Facilities Subject to Tax Reduction and Funding (Attached Table 2)’ prescribed in the「Industrial Environmental Practices and Challenges (a notice issued by the Ministry of Industry)」under Article 4(3) of the「Act on the Promotion of the Conversion into Environment-Friendly Industrial Structure」(Amended on February 10, 2020)

Through this amendment, 20 facilities (environment-friendly semiconductor manufacturing facilities, energy saving facilities, etc.) in four industries including semiconductors and cements would benefit from the tax reduction, and 45 facilities in the existing 12 industries including automobiles, steel, and petrochemicals have been added.

* Major additional facilities include energy saving facilities, waste and wastewater reduction facilities, hazardous substance use reduction facilities, facilities that reduces the generation of air pollutants, etc.

In the case of clean production facilities added to the scope of facilities subject to the investment tax reduction, up to 3-10%*** of the investment amount is tax deductible, depending on the size of the enterprise.

*** SMEs 10%, Middle Market Enterprises 5% and Large Enterprises 3%

The ministry of Industry said that the expansion of the eligibility for the tax reduction would be a chance for companies to voluntarily invest and participate in eco-friendly manufacturing practices such as reduction of dust, fine dust, greenhouse gas and pollutants. It was part of the 'Manufacturing Industry Renaissance Vision and Strategy', which shedded light on environmental friendliness of manufacturing and productions.

※ For more details, please check the Ministry of Trade, Industry and Energy’s website at(http://www.motie.go.kr)!