Junggyeonryeon "Additional Corporate Tax Reduction for Mid-sized Companies Should Be Considered"

Junggyeonryeon Announces 'Top 100 Regulatory and Difficulty Improvement Tasks for Mid-sized Companies in 2023'

[Asia Economy Reporter Kim Cheol-hyun] Although the 2023 budget bill, which lowers the corporate tax rate by 1% across all taxable income brackets, passed the plenary session, there is an opinion that a proactive review of an additional reduction in the effective corporate tax rate for mid-sized companies is necessary to decisively boost overall economic vitality.

The Korea Federation of Mid-sized Enterprises (KFME) announced this on the 28th while releasing the 'Top 100 Regulatory and Difficulty Improvement Tasks for Mid-sized Enterprises in 2023.' The KFME emphasized, "Considering the high economic contribution of 5,480 mid-sized companies responsible for 13.1% of total employment and 15.4% of sales as of last year, the fastest solution to overcoming the crisis is to drive active investment and employment by mid-sized companies through regulatory improvements."

A KFME official stated, "According to the National Assembly Budget Office's Tax Notebook, as of 2020, the effective corporate tax rate for mid-sized companies was 18.3%, for small and medium enterprises (SMEs) 13.1%, and for business groups subject to mutual investment restrictions 18.0%," adding, "To fundamentally strengthen all corporate activities of mid-sized companies, including investment, employment, and R&D, continuous discussions on the necessity of additional corporate tax reductions should be held."

Among the 'Top 100 Improvement Tasks' announced by the KFME that day, there are also eight items related to new business sectors including the restructuring of the national research and development (R&D) support system, ten items in the tax sector, six in business succession, eight in employment and labor, four in finance, and twenty-five in the environment sector. These cover on-site difficulties that urgently need improvement to remove regulations hindering the growth and innovation of mid-sized companies and to overcome the economic crisis. The KFME included management difficulties collected through significantly expanded on-site and written surveys of mid-sized companies, as well as industry- and sector-specific meetings since the inauguration of Chairman Choi Jin-sik in February this year, along with essential regulatory reliefs from 15 government ministries in this improvement agenda.

In particular, the KFME emphasized that before any regulatory improvements, converting the 'Mid-sized Enterprises Special Act,' which is set to expire in 2024, into a permanent law is a prerequisite to establish a stable foundation for nurturing and supporting mid-sized companies. In the tax sector, the KFME stated that institutional improvements to enhance corporate vitality are urgent, including expanding the scope of tax support under the Restriction of Special Taxation Act to all mid-sized companies, including corporate tax reductions, and increasing R&D investment tax credits regardless of company size.

The KFME also stressed the necessity of improving the Serious Accident Punishment Act, which aggravates on-site difficulties for companies due to excessive punishment provisions and ambiguous standards, such as imposing medium penalties for industrial accidents caused by negligence. In the environmental sector, overlapping regulations on air pollutants were pointed out as the most severe issue.

The KFME plans to submit the 'Top 100 Improvement Tasks' to government ministries such as the Office for Government Policy Coordination and the Ministry of Economy and Finance, and to continuously communicate on-site difficulties and the need for regulatory improvements through relay policy meetings by ministry next year as well as this year. Lee Ho-jun, the full-time vice chairman of the KFME, said, "The unanimous voice on-site is that the perception of our companies as the source of national wealth and the growth engine of the national economy must be corrected," adding, "To establish 2023, when the private-led growth paradigm will be fully activated, as the first year of Korea's economic leap forward, it is necessary to thoroughly review and drastically improve the rigid regulations surrounding mid-sized companies, thereby maximizing the innovation and challenge energy of mid-sized companies positioned in all industrial sectors."

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