6 out of 10 SMEs View Expansion of Corporate Tax Special Rate Positively

[Asia Economy Reporter Kwak Min-jae] Six out of ten small and medium-sized enterprises (SMEs) evaluated the government's tax reform plan positively.

The Korea Federation of SMEs announced the results of the "2022 Tax and Tax Administration Survey for SMEs," conducted on 500 corporate SMEs, on the 26th.

This survey consisted of ▲ the 2022 government tax reform plan ▲ satisfaction with tax support systems ▲ opinions on the National Tax Service's tax administration.

In July, the government announced the 2022 tax reform plan, including applying a special tax rate of 10% on corporate SME tax bases up to 500 million KRW (currently 200 million KRW), and expanding the limits for business succession deduction and gift tax special cases up to 100 billion KRW.

Among the responding SMEs, 64.2% positively evaluated the expansion of the special corporate tax rate (from 5% to 10%). Regarding business succession matters such as the increase in the special tax case limit (up to 100 billion KRW), 49.8% of SMEs also evaluated it positively. On the other hand, negative opinions on the expansion of the special corporate tax rate accounted for only 4.8%, and negative evaluations of the business succession tax reform plan were 6.0%.

The reasons for positively evaluating the expansion of the special corporate tax rate included ▲ securing new investment capacity due to reduced corporate tax burden (36.8%) ▲ contribution to new hiring and wage increases for workers (27.7%).

The reasons for positively evaluating the business succession-related tax reform included ▲ tax burden relief due to the increase in the special tax case limit (57.0%) ▲ easing of stringent post-management requirements (16.5%).

Opinions that the government's tax support system helps management accounted for 38% (7% very helpful + 31% helpful). The main reason for it being helpful was the reduction of tax burden (74.2%).

The tax support areas that should be expanded in 2023 were identified as employment support (42%) and investment promotion (22.2%).

Regarding the National Tax Service's tax administration services, 54% of responding SMEs answered that they were satisfied (10.6% very satisfied + 43.4% generally satisfied).

The desired directions for national tax administration services in 2023 were ▲ reduction of tax audits (32.4%) ▲ expansion of incentives for sincere reporting (28%).

Choo Moon-gap, head of the Economic Policy Division at the Korea Federation of SMEs, stated, "SMEs have shown positive evaluations of the 2022 tax reform plan, which includes the expansion of the special corporate tax rate and business succession provisions," and emphasized, "The 2022 tax reform plan must be passed by the National Assembly to establish an institutional foundation that can expand SMEs' capacity for investment and new hiring amid the complex economic crisis."

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