The South Korean government has taken steps towards providing tax relief to organizations in South Korea using the blockchain technology, according to reports.
Blockchain technology has been added to the list of departments given research and development tax credit in South Korea along with 15 other departments. The South Korean government has implemented this reform in support of the companies operating with blockchain technology through government designed incentives such as hybrid R&D tax credit and volume-based investment credit.
The R&D tax credits are government designed tools used to promote innovation in a country. The method is being followed in South Korea in order to nurture the blockchain technology in the country. The aim of such implementation is to reward the organizations using this technology for the greater good of the country, that is positively affecting a country’s economy.
Promoting innovation is always a positive sign for businesses when it is done on a national level, as currently done in South Korea, providing businesses an opportunity to make a name for themselves using the blockchain technology. This opportunity however, is limited to a certain number of companies that are actively using the blockchain technology in their processes. The idea is to not only reward the organizations using the blockchain technology but for the country to benefit from the outcome as well.
As announced by the Ministry of Strategy and Finance, the ‘proposed amendments to the enforcement decree of the 2018 tax law’ are expected to come into play from February of this year. The regulatory authority reported that blockchain technology will be one of the 16 fields added to the research and development tax credit government incentive along with fine dust reduction technology and wearable robots as potential growing industries in South Korea.
Currently the R&D tax deduction rate of large corporations is somewhere between 0-2%, for the medium sized enterprises, the rate of R&D tax reduction is around 8-15% and for the small sized enterprises, the research and development tax deduction rate is approximately 25%.
After the implementation of tax relief for organizations using the blockchain technology, the expected tax deduction rate for the small sized enterprises will be 30-40% and around 20-30% of tax deduction rate will be imposed on the large and medium sized corporations.
A few months earlier, the South Korean government also stood up in support of the domestic blockchain companies to give the growing blockchain technology an uplift in the country. Government officials conducted meetings with numerous blockchain operating start-ups in order to directly engage with businesses in the 10 key ICT sectors of the Fourth Industrial Revolution for the growth of the blockchain technology in the country.
This gives the businesses motivation to bring new innovations in the country as a result of which the nation benefits as a whole and the government of South Korea realizes this particular outcome for which they have promoted the technology on different occasions and on different levels.
To seek support from regulatory authorities is a massive boost in itself, giving confidence to start-ups to conduct their processes more freely and giving out positive results for both the company and the country. South Korea’s efforts to promote businesses operating in blockchain technology has outburst positive reactions in the industry that looks to be a success for both the parties.