[2023 Tax Reform] Mid-sized Enterprises: "Significant Progress in Reducing Tax Burden on Business Succession"

Opinions of Mid-sized Enterprises on the 2023 Tax Law Amendment Proposal

The mid-sized business sector evaluated that the reflection of several issues they have continuously requested, such as the easing of tax burdens on business succession, in the '2023 Tax Law Amendment' is a significant institutional advancement achieved under difficult circumstances.

The Korea Federation of Mid-sized Enterprises (KFME) released a statement on the 27th, saying, "Amid growing concerns about the economy, such as worsening trade balance and declining tax revenues, we agree with the direction and content of the 2023 Tax Law Amendment, which encompasses comprehensive tasks to overcome the current economic crisis and establish a sustainable growth foundation by boosting economic vitality and restoring people’s livelihoods."

KFME stated, "It is very desirable to reaffirm the value of private-led growth through strengthening corporate competitiveness to promote investment and employment, while reducing the burden on low-income and middle-class citizens. At the same time, expanding support for marriage, childbirth, and child-rearing by newly establishing gift property deductions related to marriage strengthens solidarity and responsibility toward future generations." They also evaluated that strengthening tax fairness and tax avoidance management, as well as expanding the scope of tax appeals to enhance taxpayer rights, is an appropriate measure to improve public trust and acceptance of tax policies.

Choi Jin-sik, Chairman of the Korea Federation of SMEs

The current tax law amendment includes provisions such as extending the installment payment period for special gift tax cases from 5 years to 20 years, raising the low-rate 10% gift tax special taxation bracket from 6 billion KRW to 30 billion KRW, and expanding the allowable scope of business type changes during the post-management period to major categories. In response, KFME said, "We warmly welcome these measures reflecting the necessity of business continuity based on 'transferring management know-how as a public good' rather than wealth inheritance."

Regarding the expansion of tax credit areas, such as newly including bio and pharmaceuticals in national strategic technologies and designating essential technologies related to energy efficiency improvement and supply chains as new growth source technologies, KFME called it an essential decision to strengthen the competitiveness of advanced core industries. They also expect that extending the application period of various tax special cases related to research and development (R&D) and employment, such as tax reductions on technology transfer income, tax credits for regular employees, and tariff reductions on renewable energy equipment, will help alleviate corporate burdens.

Choi Jin-sik, Chairman of KFME, emphasized, "To enhance economic vitality and establish a stable mid- to long-term growth foundation, it is essential to improve policy effectiveness through the establishment and adjustment of detailed items and to consider a progressive tax system reform befitting the status of an advanced country." He added, "We must re-examine the effectiveness of scattered special cases and deduction systems, boldly reduce corporate tax?the biggest burden on companies?to below 20%, the G7 average level, and clearly differentiate between large corporations and mid-sized enterprises by tax brackets to expand fairness in effective tax rates."

Chairman Choi also stated, "Based on rational tax policies, we must induce voluntary cooperation from all community members," adding, "With the primary goal of producing tangible results for the public, we will faithfully fulfill the mission assigned to companies as key players in national wealth creation by creating quality jobs and making active investments to ensure the successful implementation of all economic policies."

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