People Power Party lawmaker Kim So-hee [Yonhap]
People Power Party lawmaker Kim So-hee [Yonhap]

By Jung Seok-jun, The Herald Business

People Power Party lawmaker Kim So-hee on Thursday introduced a bill to amend the Restriction of Special Taxation Act, seeking to extend enhanced tax incentives — matching those applied to the semiconductor industry — to research, development and facility investment in the small modular reactor sector.

Power demand has been surging, driven by the construction of AI data centers and semiconductor national advanced industrial complexes, but building large-scale conventional power plants and long-distance transmission networks faces steep costs and community opposition that limit the timely delivery of electricity the AI era requires. SMRs, by contrast, can be built directly adjacent to AI data centers or semiconductor industrial complexes, removing the burden of transmission infrastructure, and can supply carbon-free electricity around the clock regardless of weather conditions — qualities that draw attention as markers of an essential next-generation energy source for the AI era.

An SMR is a reactor with an output of 300 megawatts or less, integrating components such as the reactor core, pumps and steam generators into a single vessel and assembled on-site from factory-prefabricated modules. The modular design shortens construction timelines, the smaller capacity compared with large nuclear power plants makes SMRs well suited for distributed power generation, and the fully integrated module configuration reduces the risk of accidents.

Major economies including the United States and European nations are supporting their industries at the government level to secure a leading position in the SMR market. The US has enacted legislation including the Energy Act and the Infrastructure Investment and Jobs Act to establish a legal basis for budget support for SMR demonstration projects. China is pursuing sweeping SMR support policy grounded in its National Five-Year Development Plan, the country's highest-level national blueprint.

In South Korea, a special act to promote and support small modular reactor development — covering the designation of SMR system research and development zones, development and demonstration support, and workforce training — was enacted in March and is set to take effect in September. Even so, calls have emerged for stronger practical support, including tax incentives, that companies urgently needing large-scale facility investment and technology development to capture the SMR market can actually feel.

The amendment Kim introduced aims to help South Korea secure competitiveness in the global SMR market by raising the tax credit rate for SMR research and workforce development expenses, as well as the integrated investment tax credit rate for facility investment, to the level currently applied to the semiconductor sector. The existing Restriction of Special Taxation Act provides tax credits for research and workforce development costs and for facility investment — including commercialization and research and development facilities — to strengthen competitiveness in new-growth, source and national strategic technologies, with particularly enhanced credit rates applied to the semiconductor sector.

"SMRs are a carbon-free power source needed to achieve carbon neutrality goals, and at the same time an essential energy source and national strategic asset for South Korea's AI and semiconductor industries, which will determine the country's future — they need intensive cultivation and support alongside the semiconductor sector," Kim said. "As countries around the world are going all-out to capture the future energy market, including SMRs, South Korea must also accelerate SMR technology development and facility investment through bold semiconductor-level tax support and rapidly elevate our global competitiveness," she added.


mp1256@heraldcorp.com