South Korea Introduces Tax Credit Bill to Boost Game and Music Production

A fresh wave of fiscal support is set to roll out across South Korea’s booming game and music scenes, as Democratic Party lawmaker Cho Seung‑rae (조승래) filed amendments to the Restriction of Special Taxation Act on Monday. The changes aim to extend the production‑cost tax‑credit system—long a staple for broadcasting, film, and more recently webtoons—to the country’s two fastest‑growing export sectors.

Under the current law, companies that spend on producing “video content” can deduct a fixed percentage of those costs from both income and corporate tax. In 2025 the definition was widened to include webtoons, but games and music remain excluded. Cho’s proposal would replace the phrase “video content” with “cultural content” and explicitly list games, records, music files and music videos as eligible categories.

The bill follows a prior attempt by Cho last year, when he raised the issue with the Ministry of Economy and Finance during a parliamentary audit. The clause was removed from the draft legislation, and the bill was abandoned when an alternative measure was adopted, leaving a gap that critics say disadvantages two of South Korea’s fastest‑growing export sectors.

Industry analysts note that the game sector alone accounted for more than 10 % of South Korea’s cultural exports in 2024, while the music industry generated roughly ₩1.2 trillion in revenue that year. Both sectors have been cited as key drivers of the Korean Wave, or hallyu, and have contributed significantly to the country’s trade balance.

“Excluding games and music from the tax‑credit system is a relic of past industrial structures,” Cho said. “The current framework does not reflect the export‑oriented nature of these industries, and a revised policy would restore a growth ladder across the broader K‑content industry and help secure global competitiveness for game and music content.”

If passed, the amendments would let companies that spend on game development, music production, and related media claim tax credits that reduce their taxable income. The credits would be calculated at the same 30 % rate that applies to film and broadcasting, and the change would align the tax regime with the incentives already available to webtoon creators.

Proponents argue that the extension would level the playing field for smaller studios and independent music producers, who often struggle with high development costs and limited access to research‑and‑development subsidies. Opponents have not yet issued formal statements, but some industry groups have expressed concern that the bill could increase the tax burden on companies that already face tight margins.

The National Assembly will consider the amendments in the coming weeks. If approved, the changes would be retroactive to the 2025 fiscal year, allowing companies to claim credits for costs incurred in 2024 and earlier. The Ministry of Economy and Finance has not yet released a formal response.

The bill’s passage would mark the first major expansion of South Korea’s content‑production tax incentives beyond film and broadcasting in over a decade. It would also signal a broader policy shift toward supporting the country’s cultural export industries, which have become integral to South Korea’s economic strategy.

At present, the legislation remains in the committee stage. No vote has been scheduled, and the bill’s future will depend on the outcome of committee hearings and the broader political climate in the National Assembly.

The proposal is part of a wider trend of governments around the world revisiting tax incentives for creative industries. In the United States, for example, the 2022 Tax Cuts and Jobs Act introduced a 100 % deduction for qualified film production costs. South Korea’s move would bring its incentives in line with international best practices.

In summary, the bill seeks to broaden the scope of production‑cost tax credits to include games and music, thereby providing a fiscal tool that could help sustain growth in two of South Korea’s most dynamic export sectors. The National Assembly’s decision in the coming months will determine whether the policy change is adopted, and whether it will have the intended impact on the country’s cultural economy.