Korean Gov’t to Give Tax Breaks to Korean Visual Content Industry

The Korean government will grant tax benefits to investments in video content production equivalent to investments in the nation’s strategic technologies such as semiconductors. This is aims to grow Korean content as an export-oriented industry and help Korea take off to become one of the world’s four content powerhouses by 2027.

The Korean Ministry of Strategy and Finance announced a plan on July 4 to support the development of Korean content and films by giving them tax breaks in its economic policy direction for the second half of 2023.

The government will expand tax support for video content production costs, which currently range from 3 to 10 percent, to the level of those for investment in national strategic technologies.

Currently, the tax credit for investment in national strategic technologies such as semiconductors ranges from 15 percent (large enterprises) to 25 percent (small and medium-sized enterprises), which is at least 2.5 times higher than the tax credit for visual content investment. Including a temporary investment tax credit (10 percent) applied only in 2023, the tax credits for visual content will become even wider.

The United States, a global content powerhouse, already provides tax incentives to revitalize the production of visual content. In the case of California, a 20 to 30 percent tax credit is granted if a certain percentage of production costs are spent within the state. France, another global cultural powerhouse, also provides 20 to 30 percent tax support for visual content produced in the country, according to the Korean government.

“The tax benefits for visual content are likely to be set at a level slightly higher or lower than the level of tax credits for Korea’s national strategic technologies, excluding the temporary investment tax credit,” said an official of the Ministry of Strategy and Finance. “We are also considering adding the temporary investment tax credit rate (10 percent) to the tax benefits for visual content.”

Earlier, Deputy Prime Minister and Minister of Strategy and Finance Choo Kyung-ho announced policy support at a meeting with representatives of visual content-related associations and the content industry held in June, saying, “The global content market is a large market that can rival the global automobile market. We will strive to grow Korea into one of the world’s four major content powerhouses.”

As of 2021, Korea’s content market was valued at US$70.2 billion, leaving wide gaps with content powerhouses. The United States, ranked first, is 14 times larger than Korea at US$979.8 billion in terms of content market size. Korea lagged behind China (US$446.1 billion), Japan (US$208.2 billion), the United Kingdom (US$120.3 billion), Germany (US$113 billion), and even France (US$77.3 billion).