Corporate R&D Center Tax Credit in Korea — 2026 Guide

1. R&D Tax Credit Overview

Companies with a corporate research lab or R&D department recognized by the Minister of Science and ICT (applications handled by KOITA, the Korea Industrial Technology Association) can claim corporate or business income tax credits on qualifying R&D expenses under the Tax Special Cases Control Act.

2. Credit Rates

• SMEs: 25% of current-year general R&D expenses, or 50% of the amount exceeding the previous tax year
• Mid-sized companies: 8% (current-year method) or 40% (incremental method)
• Other companies: up to 2% (current-year method) or 25% (incremental method)
• The incremental method cannot be chosen if no general R&D expenses arose in the previous 4 years, or if the amount for the previous tax year is below the 4-year annual average. Separate rates apply to new growth/source technology and national strategic technology R&D. Rates depend on company size, expense category and tax year, so confirm them with a licensed tax accountant.

3. Eligible R&D Expenses

• Salaries of researchers and research assistants in the recognized lab or department, plus the employer share of social insurance (retirement-related amounts and certain controlling-shareholder executives excluded)
• Samples, parts, raw materials and reagents used for research
• Rental of research and testing facilities
• Contract research fees paid to universities, research institutes and other designated organizations

4. Non-Eligible Expenses

• General administrative costs
• Marketing and sales expenses
• Equipment not exclusively used for R&D

5. How to Claim

1. Keep R&D expense records segregated from general accounts
2. Prepare the R&D expense statement for the tax year
3. Submit the tax credit application, the R&D expense statement and supporting documents with the annual tax return to the competent tax office
4. Have the application and calculation checked by a licensed tax accountant

6. Audit Preparation

• Prepare and keep R&D plans, R&D reports and lab notebooks, together with test reports and researcher time records
• Ensure facility and personnel match what was reported to KOITA, and file change reports within 30 days
• Separate R&D bank account is recommended for clarity