The competition in artificial intelligence (AI) is shifting from model performance to securing large-scale computing infrastructure, prompting calls for tax incentives to boost investments in AI data centers. Although the government has designated AI data centers as national strategic technology commercialization facilities eligible for a maximum 15% investment tax credit, industry representatives argue that this is insufficient compared to the 20% credit available for semiconductors.
During a policy forum on AI data center construction held at the National Assembly Library on August 26, hosted by the Korea Internet Corporations Association, speakers emphasized the need to overhaul the investment environment, including tax policies and power networks, viewing AI data centers as critical national infrastructure.
Cho Young-im, a professor of computer engineering at Gachon University, stated, "The demand for AI data centers is projected to structurally reach 290 GW by 2030, with an annual growth rate of about 14%. The decision on when to invest in land, power, and permits has become crucial."
“15% Tax Credit, No One Can Actually Claim It”
The primary concern raised by companies is the tax credit rate applicable to AI data centers. Under the current Tax Special Cases Limitation Act, the investment tax credit for national strategic technology commercialization facilities is 15% for large and medium enterprises and 25% for small businesses. In contrast, the semiconductor sector enjoys a 20% credit for large and medium firms and 30% for small businesses, which is 5 percentage points higher than for AI.
Lee Yong-tak, vice president of external cooperation at SK Telecom's AI Data Center Integration Promotion Team, pointed out that the current tax credit level is inadequate given the scale of investment required for AI data centers. He remarked, "They are significantly larger than conventional data centers. Ultimately, it comes down to financial considerations. While the government’s recent reforms to support the development of Korea's AI ecosystem are encouraging, not a single entity has been able to claim the 15% tax credit, and none will in the future."
The issue lies in the business structure of AI data centers. Even if the investment qualifies as a national strategic technology commercialization facility, how the operator utilizes the facility is critical.
He explained, "The goal is to provide what I produce to others, and self-consumption is not allowed. To qualify for the current 15% tax credit, I must purchase the GPU, install it, and use it myself." This means that if an AI data center operates by providing GPU computing resources to other companies, it may struggle to meet the tax credit requirements.
Kim Se-woong, vice president of AI synergy at Kakao, also highlighted the difficulties in applying for the tax credit alongside the rate itself. He stated, "Kakao is also working internally to receive tax benefits, but proving that we are using it for our own purposes is extremely challenging."
Cloud Services at 1%... A Tax Support Blind Spot for AI Infrastructure
There are also calls to expand tax support for cloud services, which are considered essential to AI infrastructure alongside AI data centers.
Kim Jin-ki, a professor of business administration at Korea Aerospace University, noted, "Cloud services are a core infrastructure that enables AI development, learning, and service deployment, acting as an accelerator. As AI models become more advanced, the volume of data and computation increases, making integration with cloud services essential."
He emphasized that while cloud services are recognized as new growth and core technologies, they are not designated as commercialization facilities, resulting in only a 1% general deduction for facility investments. "Investments in cloud services play a crucial role in facilitating AI development and utilization, so policy support is needed to ensure sufficient capacity is secured," he added.
“It’s Difficult to Match Semiconductor Levels”... Government Remains Cautious
Industry representatives are demanding that the tax credit rate for AI data centers be raised to match that of semiconductors and that essential equipment for constructing data centers, such as power and cooling systems, be included in the deduction criteria. However, the government is taking a cautious stance on expanding tax credits.
Cho Mun-kyun, an official from the Ministry of Economy and Finance's Tax Special Cases Division, stated, "There are various methods of tax support, so it’s difficult to discuss this solely in terms of percentages. The semiconductor sector was granted a higher deduction rate for exceptional reasons, so it’s not easy to raise it that high within a year." He added that since AI data centers already qualify for the national strategic technology commercialization facility tax credit, it is not straightforward to assess the support level based solely on a comparison of deduction rates.
* This article has been translated by AI.
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