R&D Center
1. Overview,
The Korean government offers various tax benefits and financial support to companies which reports, sets up, and accepts a corporate R&D center by the Korean Government or the Research Division in charge to induce the nationwide R&D investment. The company will be able to promote basic technology capabilities with the governmental support while contributing to the development of technology.
2. Legal Grounds
(1) Corporate R&D Center:
A research institute annexed to a company or a department exclusively dedicated to research and development in a company, which meets the standards prescribed by Presidential Decree for research personnel and facilities
- Article 14-①-2 BASIC RESEARCH PROMOTION AND TECHNOLOGY DEVELOPMENT SUPPORT ACT
(2) The Research Division in charge:
- Article 16-① Enforcement Decrees of the Act
3. Corporate R&D center establishment procedures
(1) Application for the establishment of a corporate R&D center can be made online with an accredited certificate.
(2) Supplementary documents for the application must be submitted within 7 days. If documents are not submitted by the deadline, the application will be automatically rejected.
(3) If the application is properly made and approved by the government, a letter of confirmation will be issued within 7 days after the application is made.
(4) Requests for revisions can be made via email or on the R&D management website.
4. Major Tax Benefits and Credits
(1) Inclusion of reserves for research and human resources development in deductible expenses
(Article 9 of the Act on Restriction of Special Taxation)
The future investment amount to be spend on research and human resources development (in R&D, technology information and training, research facility, etc.) can be included in deductible expenses before the investment is made and it should be spent within the following 3 years.
(2) Tax credits for research and human resources development
(Article 10 of the Act on Restriction of Special Taxation)
- If proved, 20% (30% for SMEs) of research and human resources development expenses incurred for new growth engines or source technologies will be deducted as tax credits.
- However, general research and human resources development expenses not specified above, or incurred by a national who does not select the above, either of the following amounts that the national selects will be deducted.
(a) For SMEs: whichever is greater will be applied
① Total amount threshold: Current year's expenses x 25%
② Increase amount threshold: Increase threshold: (Current year's expenses - Previous year's expenses) x 50%
* For the 3 years from the start of the relevant tax year: 15%, and 10% for the following 2 years
(b) For middle-standing enterprises: whichever is greater will be applied
① Total amount threshold: Current year's expenses x 8%
② Increase amount threshold: Increase threshold: (Current year's expenses - Previous year's expenses) x 40%
(3) For large enterprises: select any of the followings for tax deduction
① Total amount threshold: Current year's expenses x 2~3%
② Increase amount threshold: Increase threshold: (Current year's expenses - Previous year's expenses) x 40%
* Total amount threshold deduction rate (basic 2%, maximum 3%) = 2% + (research and human resources development expenses/total revenue) ~ 0.5
* However, the deduction rate is limited to 3%, and total revenue refers to revenue calculated according to corporate accounting standards.
Local Compliance InformationVentures & Start-upsDedicated R&D Unit 
