[Yoon Administration Tax Law] One-Year Extension of Good Landlord Tax Credit... Reduced Tax Burden for Small Businesses

Special Tax Reduction for SMEs Extended for 3 Years
Exemption from Late Payment Penalties for Small Business Owners

The government will extend the tax credit period for benevolent landlords by one year to help small business owners suffering from high rents. Additionally, the special tax reduction system for small and medium-sized enterprises (SMEs) will be extended by three years, and late payment penalties on taxes will be waived for small business owners who have tax arrears due to business closure, among other reasons.

The Ministry of Economy and Finance announced the '2022 Tax Reform Plan' containing these measures on the 21st.

First, the tax credit period for benevolent landlords will be extended by one year, from this year to next year. Under the Commercial Building Lease Protection Act, real estate lessors who reduce rent for small business owners can receive a tax credit of 70% of the reduced amount (50% if comprehensive income exceeds 100 million KRW).

This is expected to encourage landlords to reduce rents, thereby helping small business owners.

To support the business recovery of SMEs affected by the spread of COVID-19, the application period for the special tax reduction system for SMEs will be extended by three years. Income tax and corporate tax will be reduced by 5 to 30% depending on location, industry, and size for 48 industries.

However, to ensure tax fairness, the special 10% tax reduction for medium-sized enterprises in the metropolitan area engaged in telecommunications, printed publications, and other sectors will be abolished.

The system that exempts late payment penalties on tax arrears and allows installment payments for up to five years for small individual business owners who restart their business after closure will also be extended by one year.

Accordingly, small business owners who closed their business before December 31 of this year and restarted or found employment by December 31, 2025, will be eligible for special tax collection relief benefits.

To continue supporting win-win cooperation between large and small-medium enterprises, the 10% tax credit on contributions for win-win cooperation will be extended by three years.

Furthermore, to promote a culture of corporate donations of used assets, companies that donate used assets free of charge to universities or other institutions will receive a tax credit of 10% of the market value.

The tax support application period for payment amounts under the win-win settlement system will be extended by three years to help SMEs and mid-sized companies smoothly receive payment for supplies. The tax special treatment applying lower corporate tax rates to cooperative corporations such as agricultural and fisheries cooperatives will also be extended by three years. Cooperative corporations with a tax base of 2 billion KRW or less will be taxed at 9%, and those exceeding 2 billion KRW at 12%.

In addition, the Ministry of Economy and Finance will establish a legal basis allowing the Korea Customs Service, with company consent, to directly provide tax information to financial institutions to facilitate trade finance support for export companies.

The ministry explained, "Export SMEs will no longer need to submit export declaration certificates to banks to receive trade finance support, as the Customs Service will directly provide related information to banks."

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