SMEs "Welcome Tax Law Amendment... Impact on Job Expansion"

Korea Federation of Small and Medium Business

Headquarters of the Korea Federation of Small and Medium Business

[Asia Economy Reporter Kim Daeseop] The small and medium-sized enterprises (SME) sector welcomed the government's announcement of the '2020 Tax Reform Plan' on the 22nd. They expected that the government's strong commitment to supporting the recovery from the damage caused by the novel coronavirus infection (COVID-19) and stabilizing livelihoods would have a positive impact on strengthening future growth engines and expanding jobs.

The Korea Federation of SMEs emphasized in a statement that "the newly established integrated investment tax credit, unlike the existing tax credits which applied only to specific facility investments, has been restructured so that companies can invest according to their industry and situation and receive tax credits accordingly. It is expected that many SMEs will find this very useful, greatly helping to strengthen their competitiveness."

The SME sector particularly anticipated that the tax burden on small-scale merchants, who had faced difficulties due to rising business costs and lack of tax capacity, would be somewhat alleviated by the 'increase in the simplified VAT taxation threshold,' which had not been revised for 20 years. However, they expressed regret that measures to ease the pre- and post-conditions for business succession inheritance tax credits and to activate the pre-gift system for smooth business succession were not included in the tax reform plan.

The Korea Federation of SMEs stated, "There is also a need for improvement measures to reduce the tax burden incurred when small business and small merchant mutual aid subscribers receive their mutual aid funds early due to reasons such as business closure." They added, "Building on this tax reform plan, the SME sector will also contribute to the early overcoming of COVID-19 and the stable expansion of jobs."