Next SME Step After Delivery Unit Price is 'Corporate Succession'

Co-Chairmen Kim Gi-moon and Kwak Soo-geun
Launch of Corporate Succession Legislation Promotion Committee
Request for Prompt Introduction of Tax Reform Plan

The small and medium-sized enterprise sector launched the 'Corporate Succession Legislation Promotion Committee' on the 21st at the Korea Federation of SMEs in Yeouido, Seoul.

[Asia Economy Reporter Donghyun Choi] The small and medium-sized enterprises (SME) sector has united to push for the passage of the corporate succession system reform bill in the National Assembly. As the long-awaited 'linked delivery price system,' a wish of the industry for 14 years, recently passed the final hurdle, the focus has shifted to corporate succession.

On the 21st, the SME sector launched the 'Corporate Succession Legislation Promotion Committee' at the Korea Federation of SMEs in Yeouido, Seoul. The committee was organized to urge the swift passage of related bills to improve corporate succession support systems. Kim Ki-moon, president of the Korea Federation of SMEs, and Kwak Soo-geun, professor emeritus at Seoul National University, were appointed as co-chairs. Five members participated as committee members: Lee Jeong-han, president of the Korea Women Entrepreneurs Association; Kang Sam-kwon, president of the Korea Venture Business Association; Seok Yong-chan, president of the Korea Management Innovation SME Association; Choi Bong-gyu, president of the Korea SME Convergence Central Association; and Kim So-hee, president of the Korea Family Business Succession Association. Thirteen organizations are participating.

They requested the prompt adoption of the inheritance tax reform plan for business succession announced by the Ministry of Economy and Finance on July 21. According to the reform plan, the application of the business succession inheritance deduction will be expanded from companies with annual sales under 400 billion KRW to those under 1 trillion KRW, and the deduction limit will be raised from a maximum of 50 billion KRW to 100 billion KRW. The shareholder requirements for the decedent will also be relaxed from the current majority shareholder or ownership of 50% or more (30% for listed companies) to 40% (20% for listed companies). Additionally, a new inheritance tax payment deferral system will be introduced, allowing heirs who meet certain conditions to defer inheritance tax payment until the time they transfer, inherit, or gift the business. The opposition party maintains its stance against the reform plan, arguing that it could lead to wealth inheritance and economic and social polarization.

At the committee launch ceremony, Kim Ki-moon, president of the Korea Federation of SMEs, said, "If the long experience and know-how of the first generation harmonize with the young sensibility of the second generation through corporate succession to innovate, companies can grow further and create jobs," urging "the swift passage of the tax reform bill." Kwak Soo-geun, professor emeritus at Seoul National University, emphasized, "Today's competition among global companies goes beyond competition between companies to competition among ecosystems with thousands of partner companies," adding, "Since the survival of partner companies is also the source of competitiveness for large corporations, smooth SME succession is necessary to establish an institutional foundation for nurturing 100-year companies."

At the event, representatives from the first and second generations currently undergoing business succession participated and read an appeal urging the passage of the tax reform bill. Song Gong-seok, CEO of Watos Korea, attending as a first-generation representative, said, "If you try to succeed blindly while focusing only on management, you cannot utilize the system, and if you try to use the system, you are blocked by requirements and cannot invest freely," requesting, "The system should be improved so that companies can grow into 100- or 200-year enterprises and repay society with good jobs and product development." Han Jong-woo, CEO of Hanul Herbal Medicine and a second-generation operator, urged, "As the age of succession increases, the ability to challenge and recover diminishes, but our system is designed around inheritance and does not allow for quick succession," adding, "The bill must be passed in this regular National Assembly session so that the second generation can have the will to challenge and succeed while young."

On the same day, the committee also adopted a statement urging the expansion of the special gift tax exemption limit, relaxation of post-management requirements, and abolition of the business maintenance requirement. The committee plans to continue activities urging the legislation of the corporate succession tax reform bill, including submitting the statement to Park Dae-chul, chairman of the National Assembly's Planning and Finance Committee.

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