SME Sector "Urgent Need for Passage of Business Succession Support Bill in National Assembly Within This Year"

Korea Federation of SMEs Holds Press Conference on the 28th
Urges National Assembly to Pass 'Three Major Tasks for Revitalizing Business Succession'

"This is the golden time for our country's economy. If business succession does not occur, the damage to our society and economy will be significant." This is the plea from the small and medium-sized enterprise (SME) sector. More than half of SMEs are considering closure or sale if business succession does not take place, and in such cases, employment may not be guaranteed. If business succession fails and leads to closure, approximately 570,000 workers will lose their jobs, and the estimated lost sales amount will reach 138 trillion won.

The Korea Federation of SMEs (Chairman Kim Ki-moon) held a press conference on the 28th at the Federation's Yeouido office to urge the National Assembly to pass the business succession support bill. This press conference was held to call for the prompt passage of the original bill on the 'Three Major Tasks for Revitalizing SME Succession,' which is included in the 2023 government tax reform proposal and is currently under discussion in the National Assembly's Planning and Finance Committee (Tax Subcommittee).

Song Chi-young, Chairman of the SME Central Association's Corporate Succession Activation Committee (center), is speaking at a press conference urging the National Assembly to pass the corporate succession tax reform bill. (From left: Chu Moon-gap, Head of Economic Policy at the SME Central Association; Yeo Sang-hoon, Director of Big Dream (second-generation entrepreneur); Chairman Song (CEO of Protool); Song Gong-seok, Chairman of the Korea Bathroom Materials Industry Cooperative (CEO of Watos Korea); Shim Jae-woo, Head of Samjung Gas Industry (second-generation entrepreneur))

At the press conference, Song Chi-young, Chairman of the SME Federation's Business Succession Activation Committee, stated in a declaration, "Among SMEs over 30 years old, 81% of CEOs are aged 60 or older, indicating a serious aging of SME managers," and added, "Now is the golden time for our economy when the sustainable growth of SMEs can be determined, so I hope the business succession support bill will definitely pass in the last regular session of the 21st National Assembly."

The SME sector particularly explained that tax revenue increases when the number of long-established companies grows through business succession. Chairman Song said, "Most SMEs continue their family businesses through succession, and the longer a company’s history, the higher the corporate tax payments," adding, "Inheritance and gift taxes are temporary revenues, but corporate taxes from long-established companies supported by business succession are long-term revenues. Business succession should be viewed from a long-term perspective for the country's future."

The SME sector also pointed out the limitations of the current business succession system again. Choo Moon-gap, Head of Economic Policy at the SME Federation, said, "The current special tax treatment for business succession gift tax has a low preferential tax rate limit and a short installment payment period, so the tax burden on SMEs remains high," and added, "Furthermore, restrictions on changing the business type of succession companies act as a condition that limits proactive responses to changes in industry trends."

Choo also said, "The corporate tax payment capacity of long-established companies over 30 years old is 32 times higher than that of companies less than 10 years old, so fostering long-established companies through smooth SME succession support greatly contributes to society and the economy, including long-term tax revenue increases," and added, "Considering these points, active interest and support from the National Assembly are necessary."

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