Insights
Insights
KPMG reports, M&A trends, and owner exit stories — read the market with our specialists.
One Big Beautiful Bill — At the Intersection of Opportunity and Risk for Korean Companies
The US tax landscape is once again shifting significantly.
The “One Big Beautiful Bill Act (OBBBA),” signed by President Trump in July 2025 and now taking effect, is the largest US tax overhaul since TCJA in 2017. This report from Samjong KPMG Global Tax analyzes the core provisions across five axes — tax cuts, industry, welfare, defense, and supply chain — and outlines strategic considerations for Korean companies operating in the US.
Tax-cut highlights: making the 21% corporate rate permanent and strengthening investment incentives. Starting in 2026, the 21% corporate rate introduced under TCJA becomes permanent. Particularly favorable provisions include immediate full expensing for equipment investment and permanent immediate expensing of US R&D costs. The interest expense deductibility standard is also eased from 30% of EBIT to 30% of EBITDA — broadening interest deductibility for manufacturing companies with high depreciation. The environment becomes broadly favorable for Korean companies with US production facilities or R&D bases.
Industrial policy pivot: expansion for semiconductors, contraction for clean energy. OBBBA raises the investment tax credit rate for US semiconductor facilities from 25% to 35%. By contrast, the IRA-based EV purchase tax credit (up to USD 7,500 for new vehicles) ends early on September 30, 2025. Wind, battery, and solar-related tax credits are scheduled for phased reduction, forcing companies that have aggressively invested in green sectors to reassess economics.
Supply-chain risk: ripple effects of the Prohibited Foreign Entity (PFE) rules. If sourcing of raw materials or components from a “Prohibited Foreign Entity (PFE)” — entities tied to China, Russia, Iran, etc. — exceeds regulatory thresholds, tax credit benefits are denied. This means Korean firms with heavy China supply-chain exposure must restructure supply chains as a prerequisite to fully enjoying OBBBA benefits. In addition, the BEAT rate rises slightly from 10% to 10.5%, modestly increasing tax burden for multinationals with high overseas affiliate payments.
What this means for M&A. OBBBA has compound implications for M&A strategy at Korean companies operating in the US. First, immediate expensing and permanent R&D expensing improve the after-tax IRR of US manufacturing and R&D assets, raising the economics of US facility investment and corporate acquisitions. Second, EV and clean-energy tax credit reductions may re-rate related valuations and trigger carve-outs or asset sales in batteries and ESS. Third, tightened PFE requirements will stimulate strategic bolt-on demand for alternative materials and component companies decoupled from Chinese supply chains.