[Asia Economy Reporter Kim Bo-kyung] The legal term "entertainment expenses," which refers to costs used in corporate business activities, is expected to be replaced by another term soon.
The Korea Federation of Small and Medium Business (Kbiz), in collaboration with Assemblyman Kim Byung-wook of the Democratic Party, announced on the 28th that they conducted a survey on opinions regarding the term "entertainment expenses" among 527 small and medium-sized enterprises (SMEs).
As a result, the image of the term "entertainment expenses" was perceived as "negative (33.2%)" at a rate 4.6 times higher than "positive (7.2%)."
The reasons for the negative responses were ranked as follows: "The term 'entertainment' is inappropriate in the current era (44.6%)," "It induces a negative perception of corporate activities (42.3%)," and "The actual expenditure content differs from the meaning of the term (13.1%)."
Among SMEs, 56.5% preferred the term "external activity expenses" as a replacement for "entertainment expenses."
Other preferred alternative terms included "external cooperation expenses (23.1%)," "transaction activity expenses (16.5%)," and "transaction promotion expenses (3.6%)."
Analysis showed that 8 out of 10 SMEs (79.6%) favored the term "external," which encompasses all actual business activities of a company, over "transaction," which means "to give and receive goods."
When asked about improvement measures for the entertainment expenses system, 62.4% of SMEs responded that expanding the scope and limits of recognized entertainment expenses is necessary.
In particular, more SMEs hoped for "expansion of the recognized scope of entertainment expenses (47.2%)" than "increase in the limit of entertainment expenses (15.2%)." This suggests difficulties in processing actual company expenses as entertainment expenses when they are not recognized as such.
Seo Seung-won, Executive Vice President of Kbiz, stated, "Although entertainment expenses are costs used in normal business activities, it is true that they have been subject to unnecessary misunderstandings due to negative social perceptions."
He added, "Changing the term 'entertainment expenses' can have a positive impact on corporate business activities. It is necessary to actively consider selecting a replacement term to revitalize the domestic economy, which has been depressed due to COVID-19."
Assemblyman Kim Byung-wook of the Democratic Party said, "It is regrettable that costs inevitably incurred in business management are still referred to by the negatively connoted term 'entertainment expenses.'"
He stated, "Based on the results of this survey, we will review appropriate terms to replace 'entertainment expenses' and soon push for legislative proposals to create an environment where companies can focus solely on management."
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