Small Business Sector Proposes 'Increase in Credit Card Income Tax Deduction Rate' to National Tax Service Chief

The small business sector met with Kwanghyun Lim, Commissioner of the National Tax Service, to propose measures for tax administration support, including increasing the income tax deduction rate for credit card spending at small business establishments.

Kwanghyun Lim, Commissioner of the National Tax Service (left), and Chiyoung Song, President of the Korea Federation of Small and Medium Business, are taking a commemorative photo at the conference room of the Korea Federation of Small and Medium Business in Yeongdeungpo-gu, Seoul. Korea Federation of Small and Medium Business

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On April 15, the Korea Federation of Small and Medium Business announced that it had held a "Tax Administration Support Meeting for Small Businesses" with Commissioner Lim at the conference room of the Korea Federation of Small and Medium Business in Yeongdeungpo-gu, Seoul.

This meeting was organized to share the tax-related challenges faced by small businesses suffering from severe difficulties due to high inflation, high interest rates, and the war in the Middle East, and to convey suggestions from the field in order to seek practical tax administration support measures.

The meeting was attended by Commissioner Lim and officials from the National Tax Service, as well as Chiyoung Song, President of the Korea Federation of Small and Medium Business, and leaders of various business associations.

Commissioner Lim stated, "We have arranged this meeting to hear directly from small businesses that are struggling behind the macroeconomic recovery indicators," and added, "The National Tax Service will serve as a reliable pillar for small businesses, including by fully revising the criteria for simplified taxation for the first time in 26 years."

On this day, the Korea Federation of Small and Medium Business proposed key tax policy tasks, including: ▲ raising the income tax deduction rate for spending at small business establishments; ▲ increasing the threshold for applying simplified taxation; ▲ introducing simplified tax filing features to the Hometax and Sontax platforms; ▲ implementing tax policies linked to cash flow for accounts receivable and outstanding payments; ▲ lowering the value-added rate for major industries; ▲ further reducing credit card fees for national tax payments; and ▲ expanding tax consultation services between the National Tax Service and the Korea Federation of Small and Medium Business.

The Federation emphasized that, amid recent sluggish consumption and weak domestic demand, the business sentiment among small businesses continues to deteriorate, and that tax relief is urgently needed as they face both declining sales and rising costs.

President Song said, "Small business owners are at the crossroads of survival, to the point where even enduring is difficult," and expressed concern that "if tax burdens are further increased on top of high inflation, high exchange rates, and high oil prices caused by worsening external conditions such as the Middle East war, the crisis on the ground will become even more unmanageable."

Kwon Hyukhwan, Director of the Korea Skin Beauty Cooperative, who attended the meeting, proposed raising the credit card income tax deduction rate for ordinary small business establishments with annual sales below 300 million won to the traditional market level (40%) to help revitalize neighborhood businesses. In response, the National Tax Service said it would actively recommend this to the fiscal authorities.

Additional suggestions included requests for a simplified tax filing system for small businesses, and raising the threshold for simplified taxation from the current 104 million won to 150 million won, among others.

The National Tax Service stated that it would actively review the issues and policy suggestions raised at the meeting, and that matters requiring institutional reform would be reflected through discussions with relevant ministries and the National Assembly.

President Song said, "Small businesses are the foundation of our economy and the main actors sustaining livelihoods on the front lines. The tax administration support policies of the National Tax Service must go beyond simple administrative assistance and serve as a real foundation for small businesses to recover. We will continue to cooperate toward this goal."

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