Tax Reduction on Machinery Investment to be Extended

'Temporary Tax Reducing System for Investment', which provides tax cuts of up to 10 percent on investment in machinery and to a lesser extent on facilities by manufacturers, is likely to be extended.
The Ministry of Finance and Economy announced on May 9 that it decided to extend the time limit on the cut, which had been scheduled to end next month. The ministry came to the conclusion that enticements for investment were still needed as investment recovery of firms has been insufficient.
According to the decision, the ministry is discussing whether to sustain the current tax reduction level, how long to extend the system, and which industries should it be applied to.
However, according to sources the tax cut will be lowered to the 7 or 8 percent level.
A senior official in the ministry said, 'Even though the economy has shown a fairly rapid recovery, and investment on facilities rose by 10.6 percent during the first quarter, the absolute scale is only at the level of 70 percent compared to normal years. So investment-attracting policies are unavoidable for business recovery.'
Jooan Kang : jooan@joongang.co.kr