South Korea is planning to amend current tax legislation in order to boost blockchain startups

The government of South Korea announced its plans to amend current tax rules in the part that concerns innovative companies – including, but not limited to, blockchain and crypto startups.

During a meeting of ministers from government agencies, a decision was made to expand tax benefits for companies that focus their research and development (R&D) on modern technologies. This move was made as a part of South Korea’s push for "innovation and growth".

The amendments will soften the requirements for companies to be eligible for tax benefits. In the past, companies had to distribute 5% of their previous year’s gross sales to R&D and 10% of this investment was to be focused on new growth technologies. This requirement was amended so that companies would need to dedicate 5% of the current year’s gross sales to their R&D.

The reason for these changes was the ministers’ recognition that a lack of sales in the first year of operations made it difficult for startups to apply for existing tax benefits. New rules will apply to any company based in South Korea, whether they are a foreign or domestic unit.

For now, the government has yet to reveal how much the tax deduction will amount to. As it stated in the latest South Korean press release the changes are expected to take effect by the first quarter of 2019.

This tax perk will benefit many newly-created blockchain companies, thus assisting the industrial development.

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