SME Industry "Welcomes Tax Reform Plan... Eases Burden of Business Succession"

Kim Ki-moon, President of the Korea Federation of Small and Medium Business.

[Asia Economy Reporter Donghyun Choi] The small and medium-sized enterprises (SME) sector has expressed a welcoming stance toward the '2022 Tax Reform Plan' announced by the government on the 21st.

The Ministry of Economy and Finance announced the tax reform plan on the same day, which includes the relaxation of requirements for the family business inheritance deduction, expansion of the special gift tax exemption limit for business succession, and deferral of inheritance and gift tax payments when SMEs succeed family businesses.

The Korea Federation of SMEs immediately commented, "The expansion of the special gift tax exemption and inheritance deduction limits for SME business succession will relieve the heavy tax burden that has made succession difficult for many SMEs," adding, "We believe this will provide institutional support for SMEs to grow into competitive long-standing enterprises."

The Federation further stated, "We thank the Ministry of Economy and Finance and the Ministry of SMEs and Startups for actively communicating with SMEs on the ground and striving to make the system more practical during this tax reform process for business succession." However, it emphasized, "Given the rapidly changing business environment, including accelerated technology-service convergence and a declining working population, it is desirable to completely abolish the restrictions on industry changes and relax the employment retention requirement to 80% cumulatively over five years to enable SMEs to increase investment and maintain innovation momentum."

The Federation also noted, "The extension of the special tax reduction system for SMEs until 2025 is expected to help SMEs secure new investment capacity amid the emergency economic situation," and added, "Considering the purpose of the system to stabilize SME management and its high utilization rate, we hope that the currently limited 48 applicable industries will be converted to a negative list system."

Finally, the Federation urged, "We ask the National Assembly to ensure the smooth passage of this tax reform plan so that prompt support can be provided to SMEs in crisis," and stated, "The SME sector will also strive to overcome the Korean economic crisis by expanding investment and creating jobs in line with the government's progressive tax reform plan."

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