Reasons for Receiving Acquisition Tax of 100 Million Won and Property Tax Reduction for 5 Years?

Ulsan Citizens' Grievance Committee Resolves Corporate Complaints

Tax Reduction Benefits Granted to Recognized Startup SMEs

A small and medium-sized enterprise that relocated to Ulsan last year received a special benefit of exemption from acquisition tax amounting to 110 million KRW and property tax for five years. How did this happen?

On the 19th, Ulsan City announced that, through the resolution of grievances by the Citizens' Grievance Committee (Chairman Lee Chae-hong), the company was granted an exemption from acquisition tax exceeding 100 million KRW and property tax for five years.

The business owner of this company started a new business in February 2022, operating manufacturing in Oedong-eup, Gyeongju City, and then purchased a factory in the Jungsan General Industrial Complex in Buk-gu in October 2023, relocating to Ulsan.

Afterwards, the company applied for a local tax exemption for start-up small and medium enterprises at the Buk-gu Office, but the office did not accept the application.

The office considered that since the business owner had maintained another business location until April 2022 before closing it, this was not a new start-up but rather an 'expansion of business or addition of business type.'

In response, the business owner filed a grievance with the Citizens' Grievance Committee, stating, "Usually, closure reports are not made immediately, and the closure date was delayed due to settlement of outstanding payments with clients, but the business was effectively closed."

The Citizens' Grievance Committee, after about a month of investigation and legal review, determined that the company qualified as a start-up enterprise under the Local Tax Special Cases Restriction Act.

They judged that the existing business, which was operated by one person before the opening of the new business site, should be considered effectively closed, and that whether it is a start-up should be comprehensively reviewed based on the relevant laws, including whether the business type applies and whether the actual effects of a start-up have occurred, regardless of the business registration closure date.

In fact, the applicant had been engaged in a business type not covered by the Local Tax Special Cases Restriction Act for start-up small and medium enterprises but registered as a 'manufacturing' business, which qualifies as a start-up small and medium enterprise.

In March 2023, the applicant also received a loan agreement of 150 million KRW for the Small and Medium Business Innovation Start-up Commercialization Fund from the Small and Medium Business Corporation.

Accordingly, the Ulsan City Citizens' Grievance Committee resolved that "the company qualifies as a start-up small and medium enterprise and is eligible for local tax exemption," and the Buk-gu Office accepted this decision.

As a result of this resolution by the Citizens' Grievance Committee, the applicant will receive an exemption from acquisition tax of 110 million KRW and property tax for five years in accordance with relevant laws.

Chairman Lee Chae-hong of the Citizens' Grievance Committee said, "This will serve as a good example to widely promote Ulsan as a business-friendly city," and added, "We will continue to actively listen to the grievances of all businesspeople coming to Ulsan to do business and strive to find practical solutions."

The local tax exemption for start-up small and medium enterprises is a system that exempts acquisition tax, property tax, and other local taxes on real estate acquired within four years from the start-up date, according to the Local Tax Special Cases Restriction Act.

Officials from the Ulsan Citizen Grievance Committee are inspecting a corporate site.