1. The early period tax incentive system
In the 1960s, the system of tax exemptions for foreign introduction of techniques was the first tax system for support in technique innovation of private introduction. In the 1970s, economic development strategy, strived for industrial structure development, exporting heavy and chemical industry products, and this was pursued by promoting heavy chemical industry The goal of the tax system for technology development activities support was to promote industrial technology development and technology development related tax support systems performed by the government were developed to about 20 systems including the deferred processing system of test research cost performed since before the 1970s, the tax break system for technology, depending on company’s technological innovation stage, variety of support was provided. These various forms of technology development support tax systems for technology can be summarized as tax break law, customs law, foreign capital Induction law, ground tax law, special consumption tax law and tax relief laws.
2. Global Competition and tax incentive system for R&D
At the conclusion of UR negotiations, the launch of the WTO (1995.1), Korea joined as the 29th member country of the OECD (1996.12), an era of technology hegemony coming with unlimited global competition due to expediting new trade rules and accelerating the movement of globalization and regionalism, and the need for the maintenance of various government support policy to meet international standards. According to changes in the international environment and accelerated opening in the domestic market, an urgent challenge emerged to secure competitiveness of technology, then the government policy, for the purpose of development and securing of its own technology, focus on policies and institutions for the development of the subject to perform research and development of industry-academia-research. After 1997 financial crisis, the government declared reform in four sectors (government reform, financial reform, business reform and labor reform) and promoted the activation policy of venture enterprises as new growth engines. Also the technology tax support system was revised by reducing tax support to secure tax revenue. Tax incentives for large enterprises continued decreasing. During this time, tax benefit systems for technical innovation generally declined but support for small and medium enterprises (SMEs) and ventures were strengthened.
[Tax Incentive System for Technology and Innovation]
Source: Korea Industrial Technology Promotion Association, 1992.