Strategic tech investment tops W45.9tr, but AI data centers pass 0 tax reviews

Corporate investment in national strategic technologies reported last year surpassed 45.9 trillion won ($34.3 billion), up about 26 percent from the previous year.

However, not a single AI facility investment — including AI data centers — has passed the technology review required to qualify for tax credits. Observers say the current tax system fails to reflect the business structure of AI data centers, which mostly operate on a leased basis.

Democratic Party of Korea lawmaker Hwang Jung-a, a member of the National Assembly's Science, ICT, Broadcasting and Communications Committee, obtained the data from the National Tax Service. Corporate investment in national strategic technologies totaled a provisional 45.91 trillion won, based on 2025 corporate tax filings, as of Friday.

Facility investment totaled 32.28 trillion won, while research and development investment came to 13.62 trillion won. Combined investment rose 25.7 percent from 36.53 trillion won the previous year, with facility investment up 17 percent and R&D investment up 52 percent.

Expanded tax support appears to have driven the increase in corporate investment, including a higher tax credit rate for semiconductor investment and the addition of AI to the list of national strategic technologies. The Restriction of Special Taxation Act, revised last year, raised the tax credit rate for semiconductor commercialization facilities by 5 percentage points for investments made from January 2025. The revisions also introduced a new tax credit for AI commercialization facilities such as data centers.

Research and workforce development spending on national strategic technologies qualifies for a 40 percent tax credit for small and medium-sized enterprises and 30 percent for larger companies. For commercialization facility investment, the credit rate is 25 percent for small and medium-sized enterprises and 15 percent for larger companies. For semiconductor commercialization facilities, the rates rise to 30 percent and 20 percent, respectively.

However, tax support tied to AI data centers has yet to translate into actual investment. According to data Hwang's office obtained from the Korea Institute for Advancement of Technology, no AI facility investment has passed review by the Research and Development Tax Credit Technology Review Committee, which examines applications for the national strategic technology tax credit.

Only one application has been filed for review — a 273.8 billion won investment — and even that case remains under review, with no cases completed so far. Companies can apply for tax credits before completing the technology review, however, so it is possible that some AI data center investments have already received tax benefits. Because the National Tax Service does not separately track tax credit performance for AI data centers, the exact scale of such benefits is difficult to confirm.

Industry sources point to unclear eligibility criteria as the reason for the low number of applications. Under the current Restriction of Special Taxation Act, leased assets are excluded from the integrated investment tax credit. AI data centers operated on a colocation basis — leasing server and computing space to companies — may be classified as leased assets and therefore denied tax credits even for large-scale investments.

The industry estimates that building AI data centers requires about 70 trillion won in investment per gigawatt. Constructing the 18.4 gigawatts of AI data center capacity envisioned under the government's three megaprojects would therefore require more than 1,000 trillion won in investment. Concerns are growing that if the current criteria remain unchanged, companies could make massive investments without receiving any tax support.

"AI data centers will go beyond the level of a mere server room to become 'AI factories' — strategic assets that create new industrial and economic value," Hwang said. "To drive the buildout of national strategic assets and investment in the three megaprojects, we must remove the uncertainty in tax support for AI factories."

Hwang last month sponsored a bill to revise the Restriction of Special Taxation Act, proposing to amend the current rule that classifies AI data centers as a rental business and to introduce a production tax credit for intelligent token production.