The Treasury Department says the measures will save businesses more than $2.85 billion in tax payments by 2024.

South Korea will implement large tax breaks for semiconductor and other technology companies investing domestically as part of efforts to ensure the security of supply chains.

Companies investing in the East Asian country will be able to take advantage of a 35 percent tax deduction, which could save companies more than 3.6 trillion won ($2.85 billion) in tax payments for 2024, the finance ministry said. the country in a statement Tuesday.

The proposed tax cut comes as other economies, including Taiwan and the United States, take measures to boost their domestic chip industries.

Taiwan, home to the world’s largest contract chip maker Taiwan Semiconductor Manufacturing Co Ltd, announced comprehensive tax breaks in November that would allow companies to cut their tax bill by up to a quarter if their investment in domestic research and manufacturing reaches a certain level.

In August, US President Joe Biden signed the CHIPS and Science Actwhich provides billions of dollars in subsidies to US chipmakers and limits aid to companies that manufacture in China.

South Korea’s finance ministry said the proposed tax cut plans must be approved by parliament, which is dominated by the Democratic Party, the center-left rival of South Korean President Yoon Suk-yeol’s People Power Party.

South Korea, Asia’s fourth-largest economy, is the world’s largest producer of memory chips, with local firms Samsung and SK Hynix together controlling about 70 percent of the global market.

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