Hyperscale AI Data Centers Could Generate an Estimated 800 Billion Won in Annual Corporate Tax Revenue ... Could They Become a New Engine for Regional Economies?

Estimated tax revenue effects of a 1-GW AIDC
Expected to boost regional economies
Specific effects remain uncertain amid upfront investment and operating losses

A 1-gigawatt (GW) artificial intelligence data center (AIDC) could generate 828.1 billion won in annual corporate tax revenue and 82.8 billion won in corporate local income tax revenue, according to projections.

Reference photo of a data center.

A response to a research inquiry titled "Tax Revenue Effects of Hyperscale AIDCs," which Hwang Jeonga, a Democratic Party of Korea lawmaker on the National Assembly's Science, ICT, Broadcasting and Communications Committee, received from the National Assembly Budget Office, estimated the figures on the 18th.

The estimates were benchmarked against the first-half results this year of Elice Group, a domestic AI infrastructure company. The company annualized its AI cloud revenue for the first half of this year and scaled it up to 1 GW based on its estimated IT power capacity, calculated from its publicly disclosed GPU configuration and power specifications. This yielded estimated annual revenue of 11.1 trillion won.

The estimate then applied Elice Group's operating margin of 30.1% to calculate operating profit of approximately 3.35 trillion won, which was used as the tax base. The current top corporate tax rate of 25% was then applied.

The analysis noted that 82.8 billion won is equivalent to about 12% of Donghae City's 2026 main budget of 692.4 billion won. Donghae, in Gangwon Province, is where GS Group plans to build a gigawatt-scale AIDC campus. The amount would also represent more than one-tenth of a small city's annual budget.

The National Assembly Budget Office said, however, that the AIDC industry's characteristics make it difficult to estimate specific tax revenue effects. The related industry is still in its nascent stage, with market conditions changing rapidly. Although revenue is growing, companies are at a stage where large investments in construction, capacity expansion and research and development mean they are not yet generating operating profits.

Nebius, an overseas neocloud company, reported revenue of $981.3 million (approximately 1.3098 trillion won) in the first half of this year, surpassing its revenue of $529.8 million (707.1 billion won) for all of last year. However, the company has posted operating losses every year since 2022 because of the cost burden of investments in GPUs and data centers, as well as research and development. In the first half of this year, depreciation and amortization accounted for 26.7% of its operating expenses, and its operating loss was $303.9 million (405.6 billion won).

The National Assembly Budget Office expected AIDCs to have a greater impact on regional economies than their tax revenue effects, taking into account the production induced by their construction and operation, jobs, and the concentration of related industries such as power, cooling and networking.

According to a response to a research inquiry from the National Assembly Research Service released by Hwang, one 100-megawatt (MW) AIDC is expected to induce production of between 500 billion won and 3.5 trillion won across the industry. Each direct data center job was found to generate an additional 2.5 to 4.5 indirect and related jobs, putting the employment multiplier at 3.5 to 5.5. Industry players estimate that a 1-GW AIDC would directly employ at least about 1,000 people.

In the United States, tax revenue related to the data center industry rose 24% year over year to $204.4 billion (272.8199 trillion won) in 2024. Virginia's data center-related tax revenue of $2.677 billion (357.3 billion won) was enough to cover about one-quarter of the state's higher education spending.

"AIDCs are a national backbone industry in the AI era and a growth engine that brings both substantial tax revenue and quality jobs to regional areas," Hwang said. "We must get ahead in the competition to attract AIDCs through a concerted, nationwide effort."

She added, "Since this is a stage where large-scale investments come first, institutional support is needed to ease the burden of initial investment. We must pursue institutional improvements, including tax incentives for AIDC investment, support for infrastructure such as power grids and water supply, and faster permitting."

This content was produced with the assistance of AI translation services.