At the same time, the nation's trade minister moaned that the criteria for Korean companies to access US funding are unpalatable in a possible sign of growing protectionism.
To bump up the level of tax breaks, the Korean National Assembly revised the Restriction of Special Taxation Act. The reductions will be given to companies investing in the country's semiconductor production and other strategic industries.
These tax breaks appear to be largely in line with earlier reports regarding the Korean government's plans and will see large corporations such as Samsung Electronics and SK Hynix offered tax credits of up to 15 per cent on investments into strategic technologies such as semiconductor manufacturing, up from eight per cent previously.
Raising the deduction rate from eight per cent to 15 per cent would save $1.9 billion) in taxes for the local chip industry, according to The Korea Herald.
Samsung said it aimed to invest $230 billion over the next 20 years to build five new local semiconductor plants. South Korea is not the only nation offering such tax breaks.
In January, Taiwan passed similar legislation that will allow its domestic chipmakers to turn up to 25 per cent of their annual research and development expenses into tax credits in efforts to ensure the country's continued leadership in chip manufacturing.