Small Business Sales Decline Disclosure Act to Be Introduced

Business Establishments Subject to Orders Such as Sales Restrictions to Receive 'Compensation for Revenue Loss'
Central Disaster and Safety Countermeasures Headquarters Chief to Announce to the Public After Notifying Damage Survey Results

[Asia Economy reporters Jang Sehee and Moon Chaeseok] Prime Minister Chung Sye-kyun has publicly instructed the cabinet to legislate the ‘Compensation for Losses of Self-Employed Workers,’ accelerating the pace of related bill proposals. Some lawmakers who have proposed related bills have also indicated the possibility of a financial burden, estimating that more than 24 trillion won could be invested in loss compensation. However, since compensation for damages to self-employed workers is a common interest across both ruling and opposition parties, full-scale discussions based on the proposed bills are expected to take place within the first half of the year.

On the 22nd, Min Hyung-bae, a member of the National Assembly’s Political Affairs Committee from the Democratic Party of Korea, plans to propose the ‘Partial Amendment to the Framework Act on Disaster and Safety Management’ as early as this month. The main points are to expand the scope of disasters and to further specify the methods of damage compensation.

It is interpreted as an intention to establish a legal basis for compensation related to COVID-19 damages and disaster relief funds, as there are limitations and fairness controversies in supporting through disaster relief funds.

The proposed amendment broadens the scope of disasters, which was originally limited to natural and social disasters, to include disasters that persist for a period determined by a presidential decree when a crisis alert is issued. This means that support will be legally specified even in cases where unexpected disasters such as the COVID-19 pandemic continue for a certain period.

The methods of damage compensation, which were limited to building restoration support and financial loans, will also diversify. Representative Min introduced a provision to allow compensation for lost sales revenue of businesses ordered to close or restrict operations due to disasters. To expand support for sales losses, the wording ‘compensation for losses’ was explicitly stated without setting a restrictive ratio.

Additionally, the head of the Central Disaster and Safety Countermeasures Headquarters will be required to publicly announce the results of damage investigations received. Making damage investigations public can also be used as a research database (DB) during disaster situations. Currently, the government is monitoring the sales decline of self-employed workers and small business owners through tax filing data from the National Tax Service.

Regarding this, Representative Min said, "It is only natural for the state to compensate self-employed workers whose business rights were forcibly infringed upon by the state due to cooperation with quarantine measures," adding, "If the legal basis is specified, disputes over right and wrong will decrease, and it will greatly help proactive administration."

Moreover, the ‘Small Business Operators’ Business Loss Compensation Bill’ has been submitted to the National Assembly regardless of party lines. Min Byung-duk of the Democratic Party recently proposed a plan to support 50-70% of the difference compared to last year’s sales for industries affected by quarantine measures. Representative Min estimated the cost of loss compensation at 2.47 trillion won per month. Choi Seung-jae of the People Power Party also mandated that the government and local governments compensate for business losses and enforce reductions in taxes, public charges, and social insurance premiums.

Meanwhile, Kim Yong-beom, the first vice minister of the Ministry of Economy and Finance, recently appeared to be conscious of the ‘government-ruling party discord theory’ surrounding the legislation of COVID-19 loss compensation, stating on the day, "The government will do its best in its role so that the people do not suffer hardships in their livelihoods." Vice Minister Kim faced difficulties after indirectly opposing the ruling party’s legislative push for loss compensation for self-employed workers and small business owners on the 20th by saying, "It is hard to find a country that has legislated this," and was scolded by Prime Minister Chung Sye-kyun with the remark, "Is this country the Ministry of Economy and Finance’s country?" However, with upcoming by-elections at the level of general elections, the support bill for small business owners is highly likely to be legislated in the February National Assembly session.

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