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2026-02-258 min3

2026 R&D Tax Credit Expansion: New AI and National Strategic Technology Deductions for SMEs

A comprehensive breakdown of the new AI and national strategic technology R&D tax credit categories introduced under the 2026 tax law amendment, with practical strategies for SMEs to maximize their tax savings.

KITIM Consulting Team

Background: Why the 2026 R&D Tax Credit System Was Overhauled

The South Korean government enacted sweeping changes to the Special Tax Treatment Control Act (STTCA) in 2026, completely revamping the R&D tax credit system. The key objectives were to significantly raise credit rates for national strategic technologies such as AI, semiconductors, and bio, and to simplify the previously complex credit structure.

The most critical change is the establishment of artificial intelligence (AI) R&D expenses as a separate tax credit category.

2026 Key Tax Credit Rates Compared

General R&D Expense Credits

  • SMEs: Current-year method 25%, incremental method 50% (up from 40%)
  • Mid-sized: Current-year 8%, incremental 25%

    • AI-Specific R&D Credits (New)

  • SMEs: Current-year 35%, incremental 60%
  • Companies must obtain a prior technology confirmation certificate from KEIT or NIPA

    • National Strategic Technology R&D Credits

  • SMEs: Current-year 40%, incremental 70% (new maximum)

    • What Qualifies as AI R&D Expense?

  • AI model training servers and GPU rental fees: Including cloud GPU usage fees
  • AI research personnel labor costs: For developers spending 80%+ of their time on R&D
  • Training data purchase and construction costs: Labeling costs, dataset purchases
  • Open-source AI framework customization costs
  • AI patent filing and maintenance costs

    • Important: Subscriptions to finished AI SaaS tools or general software licenses do NOT qualify.

    Tax Savings Points SMEs Often Miss

  • Prioritize the incremental method: If your R&D spending grows year over year, the incremental method yields higher deductions.
  • Include outsourced research costs: Fees paid to external research institutes or universities are also deductible.
  • Maximize labor cost ratios: Formally designating and tracking R&D-exclusive personnel is critical.
  • Avoid double-counting with subsidies: Expenses covered by government R&D grants cannot also be claimed for tax credits.

    • KITIM R&D Tax Credit Consulting

    KITIM offers specialized R&D tax credit consulting aligned with the 2026 amended tax law. We support AI technology certificate applications, R&D cost classification, and full optimization of your corporate tax filing. Contact KITIM today.

    R&D Tax CreditAI Tax CreditStrategic TechnologyTax IncentiveSME Tax Savings

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