South Chungcheong Province announced on the 3rd that it will actively reduce local taxes for companies undergoing business restructuring within the Daesan Petrochemical Complex through ordinance revisions.
The support follows the Ministry of Trade, Industry and Energy's approval of the "Petrochemical Industry Business Restructuring Project No. 1 (Daesan No. 1)," providing reductions in acquisition taxes and registration license taxes for eligible companies.
The government is pursuing structural reforms to resolve overcapacity in the petrochemical industry and shift toward high-value-added products. The Daesan No. 1 project involves spinning off Lotte Chemical's Daesan operations and merging them with Hyundai Chemical to integrate and operate naphtha cracking center (NCC) and downstream facilities.
Key objectives include easing overcapacity through the shutdown of a 1.1-million-ton naphtha cracking facility and establishing refinery-petrochemical vertical integration to enhance cost competitiveness and operational efficiency.
The portfolio transformation toward high-value-added and eco-friendly products—including high-elasticity lightweight materials, secondary battery core materials, and bio-naphtha-based eco-friendly products—is expected to boost regional industrial competitiveness.
As a large-scale project involving approximately 1.2 trillion won in corporate self-rescue efforts along with facility reductions and business transformation toward high-value-added and eco-friendly operations, the government has prepared a comprehensive support package worth approximately 2.1 trillion won, covering financing, taxation, permits, costs, employment, and technology development.
The taxation component is designed to alleviate local tax burdens arising during the restructuring process.
Accordingly, the province plans to provide local tax support not only through reductions on local taxes incurred during corporate spin-offs, mergers, and asset acquisitions, but also to facilitate smooth facility integration and business restructuring.
"The restructuring of the petrochemical industry is a critical task that will determine the sustainability of regional industry," said Shin Hyun-seob, head of the provincial tax administration division. "As Daesan Complex is a key hub for South Chungcheong's core industries, the stable implementation of business restructuring is expected to have positive ripple effects on regional economic revitalization and employment stability."