“Up to 29 times the ripple effect”… Broadcast video content tax credit should be expanded

There are many voices calling for the expansion of the tax credit for broadcasting and video content, which is worth 9.8 billion won per year. The reason is that the amount of tax credit, which is only one-tenth of that of major overseas countries, is not sufficient to invest in new content.

Professor Sang-gyu Byeon of Hoseo University, at a special seminar of the Korean Journalism Society held at the Korea Press Center in Jung-gu, Seoul on the 28th, said, “It is important to maximize the results such as promoting the development of the broadcasting and film industry by producing sufficient broadcast video content, increasing the export of consumer goods through the strengthening of the Korean Wave, and enhancing the industrial ripple effect. We need government support for this,” he said.

The purpose is to raise the production cost tax deduction rate to a level equivalent to that of major countries in order to prevent the deepening crisis of domestic platform companies and global subcontracting of the K-contents industry through aggressive investment by global online video service (OTT) operators.

Professor Byun said, “According to the ‘cost pressure theory’ of Bomol, performance art is difficult to increase productivity, but the quality of the labor force determines the quality, making it difficult to reduce input costs and difficult to raise prices. The deduction rate should be increased as it has been confirmed that the company produces up to 29 times the performance,” he emphasized.

According to the National Tax Service’s National Assembly report, the amount of tax credit for broadcasting and video content as of 2020 was 9.86 billion won. It generated 288.3 billion won in production, 103.2 billion won in added value, and 1444 jobs. The result was 10.5 to 29 times better with the tax credit. Financial resources secured through tax credits lead to content reinvestment, increasing the production of new content, and creating new economic effects along the value chain formed inside and outside the industry.

K-OTT and broadcasting channel users (PPs) receive an average of 20-30% tax credit and compete with global OTT that produced ‘The Lord of the Rings’ with a budget of 80 billion won and ‘Game of Thrones’ with an investment of 27 billion won. In order to do this, the industry and experts share the belief that additional financing for production and expansion of the tax credit rate are essential.

Professor Byun said, “The tax credit for the broadcasting and video content industry is an efficient business that can achieve high performance compared to the amount of deductions. In particular, in the video content industry, there are few R&D tax credits, so the production cost tax credit is the only tax support benefit.

According to the results of an industry survey shared at the ‘Improvement of the Video Content Tax Support System’ seminar held at the National Assembly last month, the appropriate deduction rates were found to be appropriate for large enterprises 10%, mid-sized enterprises 22.5%, and SMEs 23.8%. Currently, 3% of corporate tax for large corporations, 7% for medium-sized companies, and 10% for small and medium-sized enterprises are deducted respectively.

Reporter Jongjin Park [email protected]

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