South Korea Moves to Scrap Esports Tax Credits: 2026

South Korea will terminate two esports tax credits by December 31, 2026.

The government's 2026 tax reform plan proposes ending both the tournament-hosting credit and the team-operating credit. This is part of a broader initiative to improve tax expenditure efficiency.

Key Termination. The South Korean government plans to terminate both existing esports tax credits—one for tournament hosting and one for team operations—effective December 31, 2026.

The government aims to convert 17 tax relief provisions into direct budget spending.

The esports tax credits are included in this broader conversion.

Efficiency Drive. The government intends to convert these tax relief measures into direct budget spending, a move affecting 17 total tax provisions as part of a broader review of 241 expenditure items.

Industry research indicates the current tax credits were largely ineffective.

Many tournament organizers are foreign-owned branches without a domestic tax base. Esports clubs often operate at a deficit, leaving them with no taxable income to offset.

It's like offering a discount on a product to someone who isn't buying it.

The tournament-hosting credit is restricted to events held outside the capital region.

This restriction excludes major venues like Seoul's LoL Park from benefiting from the credit. The credit covers prize money and operational costs for eligible events.

The team-operating credit will include a grandfather clause for existing teams.

This clause applies to teams established on or before December 31, 2026. The credit covers salaries and training equipment for 12 designated esports titles.

Five major South Korean gaming industry bodies oppose the credit termination.

They have jointly requested the government withdraw the termination of the tournament credit. They also advocate for its extension through 2030 at an increased rate of 20%.

Legislative action to amend or extend credits must occur before September 1, 2026.

This is when the final cabinet meeting is scheduled for the bill to leave the Ministry of Economy and Finance. The window for changes is narrow.