South Korea Considers Tax Breaks For Blockchain Startupsbr>
The South Korean government is planning to revise the current tax rules in order to promote job creation and support emerging technologies, including blockchain.
During the 4th Vice Ministerial Meeting on “Growth through Innovation,” ministers from eight government agencies discussed plans to reduce taxes for companies dealing with a range of 157 “new-growth technologies” in 11 areas. The ministers pledged to make it easier for blockchain businesses to enter the market.
Currently, the government grants tax deduction to firms if they designate 5 percent of the previous year’s gross sales to research and development (R&D). 10 percent of the companies R&D investment should focus on emerging technologies such as blockchain.
Since many startups are not profitable enough to reach the current 10 percent R&D tax incentive threshold, the ministers proposed that the R&D investment requirement should be changed to 5 percent of the current year’s gross sales. According to local reports, the new tax rule would apply to foreign and domestic blockchain companies that are operating in the country.
Further information concerning the matter will be announced on July 26, with the changes expected to be implemented by the first quarter of 2019.
Earlier this month, the government announced that it was working on a classification system related to blockchain technology to help guide relevant regulatory policy. The classification system is expected to include categories such as blockchain systems, decentralized applications (DApps) development, and cryptocurrency exchanges and transactions, among others.