Deputy Prime Minister and Minister of Economy and Finance Koo Yoon-cheol announced on July 7 that the government is preparing a property tax reform plan targeting release by the end of this month, and is reviewing differential income tax support for workers in regional AI and semiconductor clusters. Speaking on MBC Radio's 'Kim Jong-bae's Focus,' Koo stated the tax system will be designed to establish a housing market centered on actual residents under the principle that 'a house is not for buying but for living.' The government is considering greater income tax deductions for regional workers compared to Seoul to compensate for inferior working conditions and promote regional investment in strategic industries.
Koo Announces Property Tax Reform Plan Release by Month-End
Deputy Prime Minister Koo stated the government is reviewing the tax system to establish a housing market centered on actual residents. He explained, "Rather than the government deciding unilaterally, we are listening broadly to public opinion and trying to reflect it as much as possible." Regarding the adjustment direction of property holding tax and transaction tax, Koo said "the two must be balanced" but declined to elaborate on specific methods.
![Deputy Prime Minister and Minister of Economy and Finance Koo Yoon-cheol]()
Deputy Prime Minister and Minister of Economy and Finance Koo Yoon-cheol [Source: Yonhap News file photo]
Government Reviews Greater Income Tax Deductions for Regional AI and Semiconductor Workers
The Deputy Prime Minister announced the government is reviewing differential income tax support for workers in regional AI and semiconductor clusters. The policy aims to promote regional investment and labor supply by compensating for working conditions inferior to the Seoul metropolitan area through tax support. Koo stated, "Considering the various poor environments when working in regional areas, we will provide more income tax reduction than Seoul," adding "we are reviewing the deduction part."
Addressing potential fairness concerns, Koo explained, "People mainly want to work in the metropolitan area, and regional areas have difficult conditions with poorly established infrastructure." He clarified, "We are not saying we will continue this indefinitely, but are considering support until the infrastructure is established to some extent." Koo also stated that support for children's education expenses is "reviewable depending on the circumstances."
Deputy Prime Minister Describes Three Mega-Projects as More Significant Than Past Economic Initiatives
Deputy Prime Minister Koo evaluated the three mega-projects as having "far greater civilizational significance than the Gyeongbu Expressway construction and heavy chemical industry development during President Park Chung-hee's era, and the IT revolution during President Kim Dae-jung's era." The government announced plans to develop the Seoul metropolitan area as the first semiconductor production base and the Honam region as the second production base. The Chungcheong region will specialize in packaging, while the Yeongnam region will focus on materials, parts, and equipment for AI and physical AI.
A pan-government support system will be activated. Koo added, "A comprehensive support organization will be established in the Blue House, and all ministries will create support organizations." The Ministry of Economy and Finance will comprehensively pursue policy coordination, tax support, and regulatory easing. Regarding regulatory easing, Koo stated, "If there are parts that take unnecessarily long in environmental impact assessments or traffic impact assessments, we will speed them up, and we will look into whether procedures that were conducted sequentially can be conducted simultaneously," adding "we will review quickly even if it means reinforcing personnel." Regarding financial support, he said, "If necessary, we plan to actively review it."
Future Response Fund to Use Semiconductor Tax Revenue for Strategic Industries
The Deputy Prime Minister revealed plans for a future response fund utilizing increased tax revenue from the semiconductor boom. Koo stated, "Samsung Electronics and SK Hynix alone are expected to have operating profits of nearly 600 trillion won," adding "even if we only assume an average corporate tax of 20%, it's an enormous amount of money." He said the fund will be used "in areas that make South Korea an 'irreplaceable South Korea,'" mentioning not only electricity and water infrastructure but also research and development (R&D) and infrastructure support for robots, physical AI, shipbuilding, and aviation.
Youth support could also be a major theme. Koo stated, "AI education for young people and support for youth startups are also future responses." Regarding the announcement timing of the future response fund, he said "it seems it will come out quickly," revealing "speed is necessary to the extent that related legislation must be done in this regular session of the National Assembly."
Government Injects 1 Trillion Won to Manage Inflation Below 3%
Regarding the direction of next year's budget compilation, Koo stated, "We plan to massively support areas that can solve problems facing the nation and society as quickly as possible and advance us to a global leading nation." Regarding inflation response, he conveyed, "We recently injected about 1 trillion won in fiscal resources and are responding with full force with the attitude of managing it within 3% in the second half."
Regarding the maximum oil price system, Koo stated, "There is an estimate that it had the effect of easing June inflation by 0.4 percentage points (p)," adding "there has been no collusion among oil refiners since the implementation of the maximum price system."
FAQ
What tax support is the South Korean government reviewing for regional AI and semiconductor workers?
The government is reviewing differential income tax support for workers in regional AI and semiconductor clusters, with greater income tax deductions compared to Seoul. Deputy Prime Minister Koo stated on July 7 that this aims to compensate for inferior working conditions outside the metropolitan area and promote regional investment. The support is intended to continue until regional infrastructure is established to some extent.
When will South Korea's property tax reform plan be announced?
Deputy Prime Minister Koo Yoon-cheol announced on July 7 that the government is preparing a property tax reform plan targeting release by the end of this month. The reform will be designed to establish a housing market centered on actual residents under the principle that "a house is not for buying but for living."
How much tax revenue is expected from Samsung Electronics and SK Hynix?
Deputy Prime Minister Koo stated that Samsung Electronics and SK Hynix alone are expected to have operating profits of nearly 600 trillion won. Assuming an average corporate tax rate of 20%, this would generate substantial tax revenue to be used for a future response fund supporting strategic industries including AI, robotics, shipbuilding, and youth education.
