Check 2026 dedicated-researcher thresholds, incremental staffing and setup cost, usable general R&D tax credit, NPV, ROI, and payback for a Korean corporate research institute or dedicated department.
Compare planned qualified staff with the route-specific minimum under the 2026 decree.
Two researchers through the third founding anniversary
Count only people whose qualification and dedicated status are already verified.
Include new hires and eligible employees moving into dedicated R&D roles.
Use a planning rate for employer contributions, benefits, and recurring equipment costs.
Recognition-linked benefits enter cash flow only after every non-headcount condition is checked.
The official recognition application fee is KRW 0. Enter incremental cost from your actual space, equipment, and staffing plan.
Include space, equipment, internal time, and optional consulting. The official recognition fee is KRW 0.
Recurring non-payroll cost such as lab notebooks, accounting, safety, and space.
Separate the generated current-year general R&D credit from the amount usable now. Recognition alone creates no automatic benefit.
Used to calculate the current-year rate for other enterprises.
Enter only net Annex 6 eligible expense that creates a new credit versus the no-institute baseline.
Use the capacity verified after tax liability, minimum tax, and other reliefs and credits.
For added sales, enter contribution after variable costs rather than gross revenue.
This is a static scenario with level annual cost and benefit occurring at each year-end.
Enter an integer from 1 to 10 years.
Applied to year-end cash flows.
Recognition readiness self-check
Checks complete
Minimum 2 · planned 2
Net present value
-KRW 301,972
5 years · 5% discount
Present-value ROI
-0.11%
1x benefit-cost ratio
Simple payback
53.6 months
Recovered within the horizon
| Item | Result |
|---|---|
| Current-year credit rate | 25% |
| Potential generated credit | KRW 12,000,000 |
| Expected usable this year | KRW 12,000,000 |
| Generated but unused this year | KRW 0 |
| Tax saving included in cash flow | KRW 12,000,000 |
Headcount is only the first gate. Individual qualifications, dedicated R&D duties, independent space, and equipment are also required.
| Recognition route | Application note | Minimum |
|---|---|---|
| Small enterprise within three years of founding | Two researchers through the third founding anniversary | 2 people |
| Small-enterprise institute | Three researchers under the standard small-enterprise rule | 3 people |
| First year after small-to-medium transition | Three researchers during the first transition year | 3 people |
| Medium-enterprise institute | Five researchers for a medium enterprise under SME rules | 5 people |
| Venture or researcher-founded R&D SME | Two researchers only when the special status is met | 2 people |
| Mid-sized-enterprise institute | Seven researchers | 7 people |
| Other-enterprise institute | Ten researchers, including the general large-company route | 10 people |
| Overseas corporate research institute | Five researchers for an overseas institute | 5 people |
| Dedicated R&D department | One researcher for a dedicated department | 1 people |
The first visible threshold for establishing a recognized corporate research institute in South Korea is the number of dedicated researchers.
A small enterprise within its first three years can begin with two qualified researchers, while the ordinary minimum rises to three for a small enterprise, five for a medium enterprise under Korean SME rules, seven for a mid-sized enterprise, and ten for another enterprise.
A dedicated R&D department can use a one-person route, but that route should not be assumed to receive every form of support available to a corporate research institute.
Headcount alone does not answer whether the project creates value.
The business also needs to budget added salary, employer on-cost, independent research space, equipment, internal preparation, and recurring compliance work.
It then needs to distinguish a potential research and human-resources development tax credit from the smaller amount that can actually reduce current-year tax after tax liability, minimum tax, and other reliefs are considered.
This calculator joins those questions in one Korea-specific model.
It compares current and planned qualified researchers with the statutory minimum, gates recognition-linked benefits behind a qualification, dedicated-duty, and facility self-check, and calculates the current-year general R&D credit under Article 10 of the Restriction of Special Taxation Act.
Separately verified benefits can then be compared with incremental cost through net present value, ROI, a benefit-cost ratio, simple payback, and an annual break-even target.
From February 1, 2026, the direct recognition framework is the Act on Support for Research and Development of Corporate Research Institutes and its subordinate legislation.
Older guidance may still identify the former Basic Research Promotion and Technology Development Support Act, so the law in force on the filing date matters.
The official legal, Korea Industrial Technology Association, and National Tax Service sources used here were checked on August 8, 2026.
Article 6 of the Enforcement Decree sets a different minimum for each enterprise status and recognition route.
The Korean statutory classifications matter: a small enterprise and a medium enterprise in this table are subdivisions within the SME framework, while a mid-sized enterprise is a separate legal category.
Confirm the classification date, founding date, transition date, and any special status before selecting a route.
| Recognition route | Minimum | Boundary to verify |
|---|---|---|
| Small-enterprise institute through three years from founding | 2 people | Recheck the ordinary small-enterprise minimum after year three |
| Small-enterprise institute | 3 people | Confirm small-enterprise status under the Korean SME rules |
| First year after transition from small to medium enterprise | 3 people | Recheck the five-person threshold when the transition year ends |
| Medium-enterprise institute under the SME framework | 5 people | Confirm the statutory SME subdivision rather than relying on an informal label |
| Qualifying venture or researcher-founded R&D SME institute | 2 people | Verify current venture status or every condition of the founder special route |
| Mid-sized-enterprise institute | 7 people | Confirm status under the mid-sized-enterprise legislation |
| Other-enterprise institute | 10 people | Use when no smaller-enterprise or special threshold applies |
| Corporate research institute located outside Korea | 5 people | Review the territorial scope of each Korean tax benefit separately |
| Dedicated R&D department | 1 person | Compare the support scope with a corporate research institute |
Meeting the numerical minimum does not establish recognition.
The filing also needs evidence of employment status, individual education or professional eligibility, exclusive R&D duties, organizational assignment, an independent research space, equipment, and qualifying research activity.
The green readiness result in the calculator is a planning self-check, not a decision by the Ministry of Science and ICT or its delegated recognition body.
Check each dedicated researcher against the education, professional licence, or experience standards in Article 2 of the Enforcement Rule.
Some routes for an SME can recognize particular associate-degree and experience combinations, and industrial-design staff have their own relevant standards.
A job title containing the word researcher does not by itself make the employee eligible.
A dedicated researcher must conduct research and development continuously without also performing sales, production, purchasing, or general management work.
The organization chart, appointment record, job description, and actual day-to-day work should tell the same story.
Counting a person who regularly moves between research and production can create recognition and post-recognition compliance risk.
The organization needs an independent research space, research equipment, and supporting facilities suitable for its R&D activity.
Any exception allowing a partitioned small research area must be checked against the space and site facts.
Placing desks somewhere inside a general business site does not automatically satisfy the facility requirement.
The calculator requires all three boxes plus the headcount minimum before recognition-linked benefits enter the cash-flow result.
A failed gate does not erase the separately displayed potential tax credit calculation; it prevents an unready recognition plan from treating that amount as realized project value.
This conservative separation makes an unresolved eligibility condition visible instead of hiding it inside a high ROI.
The official Corporate Research Institute and Dedicated R&D Department Recognition Management System states that recognition carries no fee or separate official charge.
The calculator therefore shows an official application fee of KRW 0 and does not invent a statutory filing fee.
A fee quoted by an outside adviser is consideration under an optional service contract rather than money payable to the government for recognition.
Real setup cost can still include partitions or relocation for an independent laboratory, incremental rent, research equipment and furniture, security and safety work, internal documentation time, and optional advisory support.
Lab notebooks, separate project and tax accounting, researcher training, change reporting, safety management, and continued evidence maintenance can create recurring annual cost.
Use actual quotations and internal budgets rather than a generic market package because the recognition body does not publish a required setup price.
The correct decision baseline is the business without the new recognition project.
If equipment, staff, or rent would be incurred in either case, include only the amount that changes because of the institute plan.
Counting a common cost as incremental understates ROI, while omitting a genuine replacement hire or lost operating capacity overstates it.
Annual gross salary equals planned added researchers multiplied by monthly gross salary and twelve months.
Annual personnel cost then applies the employer on-cost rate for employer insurance contributions, benefits, and deliberately grouped recurring support cost.
When an existing employee moves into a dedicated role, the true incremental cost can be a replacement employee or foregone operating work rather than the transferred salary in full.
Annual incremental cost combines added personnel cost and annual fixed operating cost.
Nominal total cost adds the one-time setup amount to annual incremental cost multiplied by the selected number of years.
Present-value cost discounts each year-end recurring amount, so it differs from the undiscounted nominal total whenever the discount rate is positive.
Article 10 of the Restriction of Special Taxation Act provides current-year and incremental methods for general research and human-resources development expense.
This establishment model deliberately uses only the current-year method so that it can estimate one transparent and conservative credit effect without asking for four years of historical expenditure.
The dedicated Korean R&D Tax Credit Calculator remains the appropriate tool for comparing the current-year and incremental methods, new-growth and original technology, national strategic technology, and detailed histories.
| Tax company class | Current-year rate | Planning boundary |
|---|---|---|
| SME | 25% | Apply to separately reviewed eligible general R&D expense |
| Years 1–3 after SME graduation | 20% | Verify the tax graduation year and transitional status |
| Years 4–5 after SME graduation | 15% | Verify the tax graduation year and transitional status |
| Mid-sized enterprise | 8% | Confirm the tax-law definition |
| Other enterprise | Up to 2% | Use half of the eligible-expense-to-revenue ratio, capped at 2% |
The input is not total accounting R&D expense and it is not automatically equal to added payroll.
Enter the net amount reviewed under Annex 6 of the Enforcement Decree that creates a new credit effect compared with the no-institute baseline.
Remove expenditure funded by government contributions and non-qualifying production, sales, ordinary quality control, routine improvement, and other excluded activity.
If the entered eligible base exceeds annual incremental project cost, the calculator allows the scenario but warns that a credit already available without the institute may have been counted twice.
Multiplying eligible expense by the applicable rate produces a potential generated credit, not an automatic cash refund.
Current-year use can be limited by corporate tax liability, minimum tax, sequencing with other reductions and credits, and the final filed facts.
Enter only the usable capacity reviewed for that tax year, and the model takes the smaller of generated credit and that capacity as the expected current tax saving.
Article 144 can permit eligible unused credit to be carried forward for ten years, but the timing and use are uncertain, so the deferred amount is disclosed and excluded from NPV and ROI.
Recognition can be relevant to public support programmes, technical workforce arrangements, financing review, procurement, and other business opportunities, but the recognition certificate does not guarantee selection or payment.
Use the annual-other-benefit and one-time-benefit fields only after identifying the specific programme or transaction, its current eligibility rules, the amount attributable to recognition, and the expected cash-flow date.
Leave an unresolved opportunity outside the base case and show it in a separately documented upside scenario.
For a grant, count the amount expected to remain available after matching funds, excluded expenditure, tax treatment, reporting cost, and any cost already included elsewhere in the model.
For added sales or procurement, use contribution after materials, outsourcing, platform charges, commissions, fulfilment, and other variable costs rather than gross contract revenue.
For financing, use the interest or guarantee-fee difference on an expected outstanding balance rather than entering the loan principal as a benefit.
A benefit should also be incremental to the recognition project.
If the business would win the same grant, order, or financing terms without the institute, the common amount belongs in neither side of the decision model.
Keep the source notice, calculation sheet, probability assumption, and owner responsible for refreshing each benefit so that management can audit the result later.
The potential generated tax credit is calculated for information even when the readiness self-check fails.
The tax saving used in cash flow, other annual benefit, and one-time benefit are all set to zero until headcount, qualification, dedicated duty, and facility are checked.
Costs remain in the model because the company can incur preparation and staffing cost even when recognition has not yet been secured.
The model assumes level annual incremental cost and benefit at the end of each selected year.
It sums the discount factors from year one through the horizon, adds setup cost at time zero, and adds any recognized one-time benefit at time zero.
NPV equals present-value benefit minus present-value cost, ROI divides NPV by present-value cost, and the benefit-cost ratio divides present-value benefit by present-value cost.
ROI and the ratio are unavailable when present-value cost is zero because a finite percentage would be misleading.
Simple payback first subtracts recognized one-time benefit from setup cost, then divides the remaining amount by positive annual net benefit and converts the result to months.
It is unavailable when recurring annual benefit does not exceed recurring annual cost.
The annual break-even result solves for the level annual total benefit that makes NPV zero, then subtracts expected usable tax credit to show the remaining annual non-tax benefit required.
Payback is undiscounted, while the break-even annual benefit uses the selected discount rate.
Consider a small enterprise within three years of founding that has one qualified dedicated researcher and plans to add one more.
With monthly gross salary of KRW 4 million and a 25% employer on-cost, added annual personnel cost is KRW 60 million.
Assume KRW 10 million of one-time setup cost, no separate annual fixed operation cost, KRW 48 million of incremental eligible general R&D expense, and sufficient tax capacity to use the full SME credit of KRW 12 million.
If separately verified annual contribution is KRW 68 million, annual total benefit is KRW 80 million and annual net benefit is KRW 20 million.
| Example measure | Result | Interpretation |
|---|---|---|
| Annual incremental cost | KRW 60,000,000 | Added researcher payroll including employer on-cost |
| Annual total benefit | KRW 80,000,000 | Usable tax credit plus separately verified annual benefit |
| Three-year present-value cost | KRW 190,000,000 | Zero discount rate and setup cost included |
| Three-year present-value benefit | KRW 240,000,000 | Level annual benefit received three times |
| Net present value | KRW 50,000,000 | Present-value benefit less present-value cost |
| ROI | 26.32% | NPV divided by present-value cost |
| Simple payback | 6 months | Setup cost divided by annual net benefit |
If the facility box is cleared while every financial input remains the same, recognized benefit falls to zero, present-value cost remains KRW 190 million, and NPV becomes negative KRW 190 million.
The result does not claim that the benefit can never arise; it says that an unresolved recognition prerequisite should not be treated as a completed cash-flow benefit.
Restoring the facility only after the space and evidence are ready makes the transition in the model explainable to management and advisers.
The official recognition management system states that recognition carries no fee or separate official charge, so the statutory application fee in the calculator is KRW 0.
Space, equipment, internal preparation, and optional consulting remain real business costs and should be entered from actual quotations and budgets.
No.
Individual eligibility, dedicated duties, independent space, equipment, qualifying R&D activity, organization records, and filing evidence must also satisfy the rules.
The calculator provides a self-check and cannot replace review by the recognition body.
No salary becomes eligible merely because the employee works near a research institute.
Verify dedicated-researcher and department conditions, qualifying R&D activity, Annex 6 cost categories, government-funded amounts, and excluded activities.
That is why the staffing-cost input and tax-eligible-expense input are separate.
The statutory rate calculates a potential credit before the actual corporate-tax liability, minimum tax, and ordering of other reliefs and credits are applied.
Article 144 can allow an eligible unused amount to carry forward for ten years, but the future use date is uncertain.
The calculator therefore includes only the user-verified current capacity in cash flow and reports the difference separately.
The one-person dedicated-department route can reduce the initial staffing threshold and may suit an early organization.
The support scope is not necessarily identical to institute status, and a later transition needs its own staff, facility, and change-reporting preparation.
Compare the two routes using benefits that have been checked for the exact organizational form.
The staffing threshold and the tax-credit rate arise under different statutes, definitions, and measurement dates.
An automatic mapping could silently apply the wrong rate during an enterprise-size transition or after SME graduation.
Confirm each classification independently and keep the supporting date in the model file.
Use at least a base case and a conservative case.
The conservative case can increase salary and on-cost, delay or remove unconfirmed benefits, reduce tax capacity, and raise the discount rate.
A project that remains acceptable after those changes is easier to defend than one whose positive NPV depends on every optimistic input arriving immediately.
The calculator uses the official sources below for the recognition framework, staffing and facility standards, tax rates, carryforward boundary, and eligible-cost context.
Law, enterprise classification, programme budgets, and filing facts can change, so use the current source on the recognition and tax filing dates.
This calculator applies Korean recognition and tax concepts and is not a global laboratory-registration model.
It does not determine enterprise status, official recognition, researcher eligibility, qualifying expenditure, taxable income, minimum tax, credit ordering, grant selection, procurement success, or the eventual use of a carried-forward credit.
Obtain current recognition, legal, tax, accounting, employment, and programme advice for the actual business and filing period.
Keep the enterprise-classification date, qualification records, duty assignments, facility drawings, equipment list, Annex 6 tax reconciliation, usable-credit workpaper, benefit source, and scenario owner with the result.
Refreshing those inputs when staffing, law, or support facts change turns the model from a one-time certification estimate into a durable R&D organization decision record.