Tax break offered to firms signing 3-year contracts with domestic coastal carriers

Companies that sign long-term shipping contracts of three or more years with domestic coastal carriers will be able to deduct 1 percent of their transportation costs from corporate or income taxes under a new tax support measure the government is pursuing. The initiative aims to expand a stable cargo transport base for coastal shipping and encourage long-term cooperation between carriers and shippers.

The Ministry of Oceans and Fisheries said Friday it plans to revise the Enforcement Decree and Enforcement Rules of the Shipping Act by year's end to establish a certification system for outstanding coastal carriers and shippers, with implementation set for early next year.

The government's 2026 tax reform plan includes a provision allowing shipper companies that receive the outstanding carrier-shipper certification to deduct 1 percent of transportation costs — paid under contracts of three or more years with domestic coastal freight operators — from their corporate or income taxes.

Only shipper companies holding the outstanding carrier-shipper certification will be eligible for the tax deduction. The ministry expects about 160 companies nationwide that produce or manufacture oil, steel, cement and similar goods to benefit. The tax reform plan will go through a public comment period until Aug. 20, clear a Cabinet meeting and then be submitted to the regular National Assembly session in early September.

The government expects the new system to drive expansion of long-term shipping contracts between coastal carriers and shipper companies. Coastal shipping is regarded as a highly eco-friendly and cost-efficient mode of transport — moving one ton of cargo by sea instead of road cuts social costs by 112.17 won per kilometer.

The ministry said expanding long-term contracts would help build a stable supply chain for key raw materials and contribute to a shift toward eco-friendly logistics while strengthening the competitiveness of the shipping industry.

"It is important to establish a stable transport system for key raw materials amid the supply chain crisis that has persisted since the Middle East war," said Kim Hye-jeong, director general of the ministry's maritime logistics bureau. "We will work to extend the spirit of mutual growth between carriers and shippers — already under way in international shipping — to the domestic coastal sector, ensuring a stable supply of essential goods closely tied to people's daily lives."