[Weekpick Cloud] Push for AIDC Tax Credits and Production Tax Cuts Gains Steam... Local Governments Move to Restrict Data Center Construction in Residential Areas
IT DAILY ·
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Rep. Hwang Jeong-a has introduced a revision to the Restriction of Special Taxation Act that would include AI data centers and AI factories as eligible for the integrated investment tax credit.
The bill would create a new 20% production tax credit for cloud computing services based on domestic AI data centers, along with deductions from income tax and corporate tax.
Centered on Yeongdeungpo-gu in Seoul, discussions are also under way on restricting data center construction in residential areas, making architectural review mandatory, and revising ordinances and laws.
Policy and market trends surrounding AI data centers are unfolding in parallel. In [Weekpick Cloud], attention was drawn to a push to create AIDC tax credits and a production tax cut, as well as moves by local governments to regulate data center construction in residential areas. In domestic politics, a bill offering tax incentives for AI data centers was introduced, while local governments have begun working on regulations to restrict data center construction in residential areas.
At the National Assembly, legislation was advanced to expand tax support. Rep. Hwang Jeong-a of the Democratic Party of Korea introduced a revision bill to the Restriction of Special Taxation Act on the 12th. The bill is aimed at expanding tax support on the premise that AI data centers and AI factories are recognized as facilities for national strategic industries.
The revision bill includes a provision that explicitly designates AI data centers and AI factories as eligible for the integrated investment tax credit. It also applies an exception to the rule excluding leased assets for AI data centers and AI factories.
This reflects industry concerns that AI data centers, which have infrastructure leasing business structures, are excluded from tax credit eligibility. Those concerns were also reflected in the background of the revision bill.
In the market, positive earnings outlooks based on demand for AI infrastructure also emerged. In global markets, CoreWeave and Super Micro Computer (SMCI) presented favorable earnings outlooks based on demand for AI infrastructure.
The revision bill would create a new 'production tax credit' provision that grants a 20% deduction on production costs for cloud computing services based on domestic AI data centers, as well as deductions from income tax and corporate tax. The purpose of pushing the bill is to support the government's AI and data center investment projects.
This trend is in line with surging demand for AI data centers. However, as concerns over shortages of power and water grow and worries about harm to residential environments also increase, discussions are also under way to tighten restrictions on data center locations.
A proposal by Yeongdeungpo-gu, Seoul, to regulate data center construction was unanimously adopted at a regular meeting of the Seoul ward mayors' council. Under current law, data centers are classified as broadcasting and telecommunications facilities, and there are no current regulations restricting data center construction outside First-Class Residential Zones.
In response, the ward mayors' council called for mandatory architectural review. It also asked Seoul to revise the urban planning ordinance to restrict construction in Second- and Third-Class General Residential Zones, and plans to propose revisions to the Building Act so that local districts can autonomously decide whether to approve projects in quasi-residential and commercial zones.
Yeongdeungpo-gu said that construction of 8 data centers in the district is currently under way. The district judged that if additional construction proceeds, there could be disruptions to power supply from substations.
In the U.S. stock market, shares of related companies rose on the back of expanding demand for AI infrastructure. CoreWeave shares climbed more than 19%, and Nebius shares rose 23%. Super Micro shares gained 13%, Applied Digital shares rose 4%, and Iren shares increased 8%.
CoreWeave raised its full-year revenue outlook as demand for AI infrastructure increased. For the same reason, CoreWeave also raised its adjusted operating profit outlook and capital expenditure (CapEx) outlook.
CoreWeave's backlog for the second quarter rose to USD 104.2 billion from USD 99.4 billion in the previous quarter. Super Micro raised its revenue outlook for fiscal 2027 and posted a gross margin of 17.5% in the fourth quarter.
Bank of America said it plans to inject USD 250 billion into U.S. infrastructure financing by next July.
Source: IT DAILY · Kwon Yeong-seok
Original: https://www.itdaily.kr/news/articleView.html?idxno=241002
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Source: IT DAILY
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