KCCI: “Domestic production tax credit needs to be fast-tracked” ... urges National Assembly to act on 31 legislative priorities

[Financial News] The Korea Chamber of Commerce and Industry (KCCI) urged the National Assembly to expand tax support for domestic production facilities to cover the actual production stage and extend the carryforward period for unused tax credits to a maximum of 20 years. The aim is to speed up legislation supporting domestic investment and production in response to global supply-chain restructuring and the transition to artificial intelligence (AI).
KCCI said on the 27th that it had submitted to the National Assembly a report titled “KCCI Report on Legislative Issues Before the National Assembly.” The report contains 31 tasks and 100 detailed legislative proposals across five major areas, including advanced-industry competitiveness, economic security and greater predictability in corporate management.
KCCI said that bills related to 10 of the tasks had been introduced by both the ruling and opposition parties, and called for swift action, starting with the introduction of a domestic production tax credit, tougher penalties for acts that undermine economic security, reform of the breach-of-trust offense and enactment of a Digital Asset Basic Act.
KCCI first stressed the need to promptly introduce and improve the domestic production tax credit that the government is seeking to establish through its tax reform plan. It said tax support, which has previously focused on the investment stage, should be extended to the actual production stage to protect the domestic production base. At least 20 related bills, including the government’s bill, are currently pending before the National Assembly.
To make the system more effective, KCCI proposed expanding the products eligible for the credit to include finished goods and supply-chain-related items, and easing restrictions on claiming it alongside the Integrated Investment Tax Credit. It also called for considering measures such as direct refunds or transfers to third parties so that companies that incur losses after making large-scale investments can benefit, and for granting credits for eligible products made in Korea regardless of where they are sold.
KCCI also called for tougher penalties for the overseas leak of advanced technologies. According to the National Police Agency, the number of overseas technology-leak cases referred to prosecutors rose for the fifth consecutive year, from 9 in 2021 to 33 last year. Of the 103 cases referred during the same period, 55 involved advanced-technology fields such as displays, semiconductors, and electrical and electronic industries—more than half.
KCCI also identified as an issue to address the system under which support declines as companies grow. According to KCCI, the Ministry of Trade, Industry and Energy’s “2024 Basic Statistics on Mid-sized Enterprises” found that 3.5% of mid-sized enterprises had considered reverting to small- and medium-sized enterprise (SME) status. Those companies cited reduced tax support (61.2%) and reduced financial support (18.8%), among other reasons, for considering the move.
KCCI proposed supporting companies based on performance, including productivity and innovation, and introducing a “gradual graduation system” that would adjust support in stages for early-stage mid-sized enterprises that have outgrown SME status.
To improve conditions for long-term corporate investment, KCCI also asked that the tax-credit carryforward period be extended from the current maximum of 10 years to 15 years for general tax credits and 20 years for national strategic technologies. It said advanced industries take a long time to generate returns after large-scale investments, and that profits fluctuate significantly with business conditions.
KCCI called for a cautious approach to expanding class-action lawsuits. While it agreed with the aim of strengthening remedies for victims, it expressed concern that an “opt-out” system—in which a ruling applies to everyone unless victims request exclusion—could increase the burden on companies responding to litigation. KCCI’s position is that the existing consumer group litigation system should first be improved and put into operation, after which the introduction of class actions could be considered.
Kang Ho-jun, head of KCCI’s Corporate Policy Team, said, “As supply chains are restructured and the transition to AI rapidly reshapes the industrial landscape, it has become important to stimulate domestic investment and expand the production base.” He urged lawmakers to “fast-track growth-oriented legislation for which bills have been introduced by both the ruling and opposition parties, and listen to voices from the field so companies can prepare for new systems with predictability.”


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