Korean Gov Policy Update — 2026-08-03
The government is launching a new tax credit for domestic production in six strategic sectors, including semiconductors, batteries, and solar energy. Meanwhile, the Democratic Party is pushing to speed up the fast-track process in the August extraordinary parliamentary session to push through key legislation.
Korean Gov Policy Update — 2026-08-03
1. New Tax Credit for Domestic Strategic Production
Responsible Ministry: Ministry of Economy and Finance Policy Name: 2026 Tax Reform - Domestic Production Tax Credit
The government is launching a new tax credit for domestic production in six sectors that are strategically vital for global economic security and the green transition. The scope includes solar power, wind power, secondary batteries, semiconductors, core materials, and AI-driven robot components. This measure is designed to boost competitiveness and spur domestic investment in these strategic fields.
2. Criminal Justice System Reform Passed
Responsible Ministry: Ministry of Justice Policy Name: Revision of the Criminal Procedure Act
A revision to the Criminal Procedure Act, which completely separates investigation and prosecution, has passed the National Assembly. This marks the first major overhaul of the criminal justice system in 72 years and will take effect in October. The reform eliminates the dual-investigation system where police investigate and the prosecution then re-investigates.
3. Democratic Party Pushes to Amend National Assembly Act
Responsible Agency: National Assembly Policy Name: Fast-track Period Reduction
The Democratic Party of Korea is set to push for the "Working National Assembly Act" during the August extraordinary session, which aims to significantly shorten the fast-track period for bills. The goal is to speed up the processing of major national agenda items and contentious legislation.
Regulatory Improvements and Administrative Changes
1. Regulatory Innovation Restructuring
Responsible Ministry: Ministry of Economy and Finance Details: Reviewing the business ecosystem
The government is conducting a comprehensive review of regulations related to high-tech strategic industries, company-size-based regulations, and support systems for SMEs to create an ecosystem that encourages active corporate investment and sustainable growth.
2. Multi-layered Regulatory Rationalization
Responsible Ministries: Respective Ministries (Regulatory Innovation) Details: 5-point structural reform
The government is pursuing regulatory structural reform across five directions: proactive, flexible to environmental changes, performance-oriented, citizen-centric, and field-oriented regulatory rationalization.
Policy Impact and Future Schedule
1. Expectations for Strategic Industry Investment
The new domestic production tax credit is expected to expand investment in core strategic industries like semiconductors and batteries, which should help bolster Korea's economic security amid the restructuring of global supply chains.
2. Implementation of Criminal Justice Reform
With the criminal procedure reform taking effect in October, the separation of investigation and prosecution is expected to improve the efficiency and transparency of criminal justice procedures.
3. Acceleration of the August Parliamentary Schedule
With the Democratic Party’s push to shorten the fast-track period, the speed of legislation is expected to increase starting in the August session, with a goal of finalizing key national agenda items by the end of the year.
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