Kwon Chil-seung: "Retroactive Application of Loss Compensation Does Not Provide Substantial Help... Limited Scope and Timing of Payment"

[Asia Economy Reporter Oh Ju-yeon] Kwon Chil-seung, Minister of SMEs and Startups, reaffirmed the government's existing stance regarding the retroactive application of loss compensation for small business owners and self-employed individuals affected by COVID-19, stating that "it is better to provide support in the form of disaster relief rather than loss compensation."

On the 17th, Minister Kwon appeared on KBS Radio's 'Choi Kyung-young's Strong Current Affairs' and said, "The difference lies in the methodology of whether to compensate losses for past damages or to provide disaster relief funds." He emphasized that if the loss compensation method is used, the scope of application would be limited and the payment timing would inevitably be delayed, which would not provide practical help to small business owners and the self-employed.

[Image source=Yonhap News]

Minister Kwon explained, "If the loss compensation method is applied, it only applies to industries that received administrative orders or gathering bans." He added, "In the case of the travel industry, although they did not receive administrative orders or restrictions from the government, their sales reportedly decreased by about 80%. Such industries have no way to receive support for this damage or disaster under the loss compensation method."

He also pointed out that the payment timing could be postponed to early next year. Minister Kwon said, "The comprehensive income tax filing deadline was extended to August for the convenience of small business owners, so in principle, losses from last year can only be calculated by the end of this year or early next year." He continued, "That means the losses from last year would be paid at the end of this year or early next year."

He added, "This is not a realistic method at all," and said, "Personally, I am skeptical about choosing such a method (retroactive application of loss compensation), and the government’s position is the same."

He emphasized that if retroactive application is done through disaster relief funds, it can respond "broadly and quickly."

Minister Kwon said, "Disaster relief can be provided quite broadly based on actual sales data," adding, "We can provide support without limiting the scope even to industries in management crises, and it can be done quickly." He explained, "The system is designed so that after applying, payments can be made to individuals in about three hours." However, he added, "If we go with the loss compensation claim method, individual agreements must be made, and there may be lawsuits later. That would delay the payment timing even further." He also said, "I don’t think retroactively applying the loss compensation method to a disaster situation that has lasted over a year is a realistic approach at all," and conveyed, "The government’s judgment is that it does not practically help small business owners."

Meanwhile, the National Assembly’s Industry, Trade, Energy, SMEs and Startups Committee held a bill review subcommittee yesterday and passed the Loss Compensation Act solely by the ruling party. The Loss Compensation Act processed at the subcommittee does not include retroactive application and is an amendment to the Small Business Support Act. However, a supplementary provision was added to allow a de facto retroactive effect in the form of 'damage support' for past losses.

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