[DigitalToday reporter Hojeong Lee] Five domestic associations related to games and e-sports urged the government to newly introduce a tax credit for game production costs in its 2026 tax revision plan and to extend and expand a tax credit for e-sports tournament operating costs that is set to expire at the end of this year.

The Korea Game Developers Association, the Korea Game Industry Association, the Korea Mobile Game Association, the Korea Artificial Intelligence Game Association and the Korea e-Sports Association issued a joint statement on Aug. 14 and asked the Ministry of Economy and Finance, other parts of the government and parliament to establish a tax framework for sustainable growth in game production and the e-sports ecosystem.

◆"Games are 60 percent of K-content exports, but excluded from production cost tax credits"

The associations first pointed out that games account for about 60 percent of K-content exports but are excluded from the current production cost tax credit scheme.

Under the current Special Tax Treatment Control Act, tax credits apply to production costs for video content such as films, broadcasting and online video services (OTT), as well as webtoons. They said the latest tax revision plan supplemented support structures for video content and webtoons, but games still were not included.

The associations said including games in the production cost tax credit scheme is not a new special benefit. They said it is a step to correct an imbalance in tax support among content genres and to reasonably share production risks between the government and the private sector that stem from large upfront investment and high uncertainty over success.

They cited that games are an industry combining software, artificial intelligence (AI), graphics, music and storytelling, and that intensifying global competition is lengthening production periods and increasing development costs while also raising uncertainty over success.

A Korea Creative Content Agency survey showed the growth rate of the domestic game industry slowed to 1.1 percent in 2025 from 21.3 percent in 2020, and the game usage rate fell to 50.2 percent in 2025 from 74.4 percent in 2022.

They also argued it is difficult to replace support for game production costs with existing tax credits for research and workforce development costs or the integrated investment tax credit. They said those schemes are designed around technology development and investment in tangible assets, and do not sufficiently cover unique costs incurred in game production such as planning, scenarios, graphics and localization.

They also stressed the economic effects of introducing the tax credit. The Korea Creative Content Agency forecast that if a tax credit for game production costs is introduced, it would generate a production inducement effect of 225.5 billion won and create 15,513 jobs over the next 5 years. It estimated the benefit-cost ratio at 1.26 and net benefits at about 2.78 billion won.

The associations said major competitors such as Britain, France and Canada operate production cost deduction and refund schemes at around 25 to 30 percent or higher, though calculation criteria differ. They argued South Korea should expand production cost tax credit eligibility to cultural content and explicitly include games. They added that given the characteristics of games, where production continues after release, eligible costs and the timing of application need to be specified separately.

◆e-sports tournament tax credit "Should be extended and expanded, not ended"

On the tax credit for e-sports tournament operating costs, they demanded the government withdraw its plan to end it at the end of this year and expand the scope of support.

Under the current Special Tax Treatment Control Act, a domestic corporation that holds an e-sports tournament outside the Seoul metropolitan area can deduct 10 percent of operating costs from corporate tax. The scheme took effect in 2025 and is set to end at the end of this year.

The Ministry of Economy and Finance presented a plan in the tax revision proposal to end the tax credit and switch to fiscal spending.

The associations said ending a scheme introduced in 2025 after 2 years would make it difficult to sufficiently verify policy effects.

They said e-sports tournaments broaden the activity base of players and teams, create jobs in related industries such as match operations, broadcasting, media and content production, and also have spillover effects on local economies including accommodation and tourism through drawing spectators. They argued that unlike fiscal programs that support some tournaments through a public call and selection process, the tax credit is applied after the fact to companies that actually hold tournaments and incur costs, encouraging voluntary tournament hosting and investment by the private sector.

They proposed widening the support scope. They said the geographic eligibility, now limited to non-metropolitan areas, should be expanded nationwide, and the credit rate should be raised to 20 percent from 10 percent.

They said the expanded support is needed to boost efforts to attract international e-sports tournaments and to ease the burden of operating costs such as prize money, venue rental fees, equipment leasing fees and broadcasting costs.

They also cited improved fiscal conditions. The minister of the Ministry of Strategy and Budget recently said at the 2026 national fiscal strategy meeting that 2027 national tax revenue is expected to exceed the initial forecast of 412 trillion won and reach at least 500 trillion won. The associations said as fiscal conditions improve and there is more leeway to deploy tax expenditures to expand growth engines, now is the right time to establish a tax foundation to support sustained growth of the game and e-sports industries.

Specifically, the five associations asked the government to supplement the 2026 tax revision plan before submitting it to parliament to reflect a tax credit for game production costs.

They demanded that the tax credit for e-sports tournament operating costs be extended through 2030, that eligible regions be expanded nationwide, and that the credit rate be raised to 20 percent.

They also urged parliament to reflect the introduction of a tax credit for game production costs and the extension, nationwide expansion and higher credit rate for the e-sports tournament tax credit during deliberations on the tax law revision bill.

The associations said, "We ask for responsible judgment by the government and parliament so that games and e-sports can continue to grow as a leading export industry of our country and as a future cultural industry," and added, "We will faithfully provide necessary industry data and on-the-ground opinions and actively cooperate in discussions on improving the system."