[2021 Economic Policy] When Will Additional Support for Small Business Owners Be Decided?... Debates Over the 'Rent Freeze Act' Continue

Government Announces '2021 Economic Policy Directions'

[Image source=Yonhap News]

[Sejong=Asia Economy Reporter Kim Hyunjung] The government has promised customized support worth '3 trillion won + α' for workers and groups in industries hit hard by the COVID-19 pandemic, but the specific targets and scale have yet to be finalized. This is because there is a need to more closely monitor the third wave of resurgence, with daily confirmed cases exceeding 1,000. The tax credit period for 'Good Landlords,' which started voluntarily, has also been extended until June next year, but there are criticisms that the incentives for participation are insufficient and that it falls short in addressing the prolonged sales damage.

Through the '2021 Economic Policy Direction' released on the 17th, the government's support plan for small business owners includes ▲ customized support of '3 trillion won + α' ▲ expansion of policy fund support and tax support for Good Landlords ▲ expansion of non-face-to-face business loans. The direct support amount, similar in nature to the second disaster relief fund (Small Business New Hope Fund), is planned to be implemented within the '3 trillion won + α' budget, but the government only stated, "We will prepare detailed implementation plans regarding the timing, targets, scale, and methods of support, considering the development of COVID-19." Since the third wave is ongoing, the government has not yet decided which small business sectors will be targeted and how much financial support will be provided.

[Image source=Yonhap News]

Additionally, the government plans to extend the 'Good Landlord Movement,' which offers income and corporate tax credits to landlords who voluntarily reduce rent, until June next year, and provide policy funds to these landlords. This means temporarily including landlords who reduce rent by a certain level in the target sectors for small business policy funds from the Korea Credit Guarantee Fund and Industrial Bank of Korea. Along with this, support for rent reduction on state-owned and public institution-owned properties will be extended until June next year, and incentives such as local love gift certificates (special local tax) will be considered based on the performance of local governments' Good Landlord and win-win agreement ordinances.

Another pillar of support for small business owners is 'tax, tax administration, and recovery support' and 'support for enhancing non-face-to-face competitiveness.' First, the payment deadline for electricity bills for small business owners will be extended by three months (until March next year), and a plan to review and reorganize credit card fees for micro and small business owners will be prepared by December next year. For self-employed individuals struggling with debt repayment due to COVID-19 damage, credit recovery support will be provided by expanding the purchase target of the personal delinquent debt purchase fund (2 trillion won) to delinquent debts incurred until the end of next year (previously December 2020). Furthermore, the government expects that raising the simplified VAT taxation threshold from an annual sales of 48 million won to 80 million won, and the exemption threshold from 30 million won to 48 million won, will alleviate the management burden on small business owners. Measures such as tax and legal consultations for business closure and recovery, and the expansion of small business easy payment systems (Zero Pay) in online shopping malls and delivery apps will also be promoted by the first half of next year.

In line with the trend of expanding non-face-to-face transactions, the government will also help improve the competitiveness of face-to-face small business owners. First, non-face-to-face businesses will be included in the support targets for success-guaranteed loans linked with the 'Hope Return Package,' which supports small business closure and career change, and a support plan for the 'subscription economy,' where consumers prepay for promising small business products for regular delivery, will be prepared by April next year and piloted. Additionally, plans to expand exclusive channels for small business owners, establish smart stores and workshops, and reorganize the startup support system such as the New Business Startup Academy to be more online-friendly will be introduced starting next year.

Meanwhile, the ruling party has proposed the 'Rent Freeze Act,' which enforces rent reductions for small business owners who could not operate normally. On the 14th, Lee Dongju, a member of the Democratic Party of Korea, introduced a bill to amend the Commercial Building Lease Protection Act with such content. Subsequently, Lee stated plans to supplement and submit bills that provide landlords with income or corporate tax credits equivalent to the rent difference, and some have even suggested that related bank interest should be reduced if landlords purchased buildings through loans.

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