KCCI Proposes 25 Legislative Tasks Across 8 Sectors to the National Assembly

Submission of 'Legislative Issues Report on Economic Sector' to the National Assembly on the 27th
Urgent Need to Establish Legal Systems Supporting Competitiveness Instead of Corporate Regulation

[Asia Economy Reporter Choi Seoyoon] The Korea Chamber of Commerce and Industry (KCCI) submitted the 'Economic Legislative Issues Consultation Report,' which gathers public opinions on economic legislative issues, to the National Assembly on the 27th.

To prepare the proposal, KCCI collected opinions on economic legislative issues from over 300 general citizens through its online participation platform, the ‘KCCI Communication Platform,’ and reviewed tasks that significantly impact the national economy and corporate management.

According to opinions received from companies and the general public via the communication platform, the most urgent issue identified was the ‘modernization of outdated labor laws’ (22.0%), followed by ‘support for future core technology development’ (18.4%) and ‘promotion of future strategic industries’ (14.3%).

Based on the opinions of companies and citizens, KCCI selected 25 tasks across eight major sectors from bills proposed in the National Assembly, considering economic importance, impact on corporate activities, and legislative feasibility, and prepared statements for each task. These sectors include ▲promotion of future strategic industries ▲establishment of tax systems aligned with global standards ▲modernization of outdated labor laws ▲support for future core technology development ▲support for service and distribution industries ▲rationalization of environmental and safety regulations ▲creation of a stable business environment ▲and improvement of uniform regulations.

Regarding the promotion of future strategic industries, KCCI called for the passage of the amendment to the ‘Special Act on National Advanced Strategic Industries.’ Since securing future technologies through overseas M&A is crucial in strategic industry sectors, KCCI urged the improvement of the financial-industrial separation regulations under the Fair Trade Act for general holding companies to enable the operation of ‘corporate-led strategic industry funds.’ Additionally, KCCI urged the government’s tax reform plan, which lowers corporate tax rates and adjusts complex tax base brackets to align with global standards, to be passed as originally proposed. Since 2011, among 38 OECD countries, 20 have lowered corporate tax rates, while only six countries, including Korea, have raised them.

Double taxation on dividends from subsidiaries and inheritance tax deductions for family businesses also require improvement. For dividends from overseas subsidiaries, KCCI urged the introduction of the ‘exclusion from taxable income’ system, adopted by 31 of 38 OECD countries, instead of the foreign tax credit system, which fails to resolve double taxation issues. For dividends from domestic subsidiaries, KCCI requested an increase in the exclusion rate, which is currently less favorable compared to foreign countries. To foster long-established family businesses, KCCI proposed expanding the scope and amount of inheritance tax deductions and relaxing strict post-management periods and requirements.

The proposal identified the amendment to the Labor Union Act, which limits claims for damages and provisional seizures related to illegal labor disputes, as an issue requiring careful review. KCCI stated, “Fundamental rights such as the three labor rights are guaranteed as long as they do not infringe on others’ fundamental rights, which is a basic constitutional principle.” It warned that if illegal strikes cannot be held accountable, the ‘de-Korea’ trend among domestic and foreign companies will accelerate, urging caution in legislation.

‘Flexible working hours’ for labor law modernization was listed as a bill for prompt adoption. Unlike major countries such as the U.S. and Germany, Korea maintains rigid and uniform working hour systems, causing discrepancies with changing work patterns in the Fourth Industrial Revolution era. KCCI said, “The calculation unit for extended working hours should be expanded from 12 hours per week to 52 hours per month upon labor-management agreement, and flexibility should be increased by introducing exemptions from working hour regulations for high-salary and managerial positions.”

The proposal also suggested improvements to the ‘Serious Accident Punishment Act,’ which has been in effect since this year. KCCI argued, “The current Serious Accident Punishment Act has ambiguous provisions and excessive penalties, leading to cautious management decisions and concerns about contraction of business activities.” It called for supplementary legislation to clarify the obligations of management responsible under the law and improve penalty provisions considering the causes of accidents.

KCCI also mentioned the legislation of the ‘Delivery Price Linkage System.’ Several bills are pending in the National Assembly to legalize a system that reflects raw material price increases above a certain threshold in delivery prices. KCCI expressed concerns that artificial price adjustments through legislation undermine the principle of private autonomy and market mechanisms, and that since 83% of subcontract transactions are between small and medium enterprises, this would impose a significant burden on SMEs.

Kim Hyunsoo, Director of Economic Policy at KCCI, said, “Amid the ongoing triple challenges of high inflation, high exchange rates, and high interest rates, concerns about a global economic downturn are higher than ever.” He added, “This regular session of the National Assembly, the first under the new government, plays a significant role in overcoming the crisis and firmly establishing a foundation for future growth through cooperation, understanding, and smooth operation between ruling and opposition parties for the country’s economy.”

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