From February, the South Korean government is planning to give blockchain companies a tax break to encourage and promote innovation in decentralized technologies.
According to The NewsAsia, the Korean Ministry of Strategy and Finance has announced that blockchain will be added in its amendments to the 2018 tax law, which sees companies receive benefits for innovating with certain technologies. The bill will come into force in February.
This implies businesses developing blockchain technologies will be entitled to deduct a part of their research and development (R&D) expenses from their tax bill.
Besides blockchain, 15 other areas including wearable robots and fine dust reduction technology will be added to the existing R&D tax amendments for new industries.
The amount of tax deduction will depend on the company’s size. Small businesses will be able to get the highest percentage, between 30 and 40 percent. Medium to large companies will get a tax deduction of between 20 and 30 percent of R&D spending.
This is a significant increase in comparison to the current tax breaks offered to businesses dealing with innovative technologies. Under current laws, small companies can only deduct up to 25 percent of R&D spending, medium businesses up to 15 percent, and large corporations up to two percent.
The news further demonstrates the South Korean government’s proactive approach to blockchain innovation and development. In 2018, the South Korean Ministry of Science and Technology started a specialized program to educate the next generation of blockchain experts.
Besides the educational program, the government pledged its support for domestic blockchain companies to promote the booming blockchain industry in the country further. It also backed six pilot projects as part of Korea’s “Blockchain Technology Development Strategy” and committed $9 million to the program. Applications include safe school food, used car history management, and social sharing.
Last month South Korea unveiled a blockchain pilot for tracking containers at the Port of Busan. The focus is mainly on moving containers from one ship to another.
A month ago the government unveiled plans for a blockchain-based virtual power plant. Essentially that’s an electricity grid where power comes from multiple sources.
And last June the government announced plans for a blockchain beef traceability project.