61% of Mid-sized Companies "Willing to Invest Locally if Business Succession Tax Deduction Expands"

Survey Results on Regional Investment Intentions of Mid-sized Companies

It was suggested that the current tax support is insufficient to actively promote regional investment by mid-sized companies.

The Korea Federation of Mid-sized Enterprises stated on the 24th in the ‘Survey Results on Mid-sized Companies’ Intentions for Regional Investment’ that “although support such as national and local taxes is being provided for balanced regional development and revitalization of regional investment, 83.6% of mid-sized companies responded that the current system is ‘not sufficient.’”

The survey was conducted from March 27 to April 2 targeting 116 mid-sized companies. According to the results, 61.2% of mid-sized companies answered that expanding the business succession deduction benefits for regional investment companies would enable new investments. Among them, 62.0% responded that they would even consider relocating their headquarters to a region if additional inheritance tax reduction benefits were provided.

The mid-sized enterprise sector stated that if the business succession deduction is expanded, they intend to invest in regions at scales of ‘over 10 billion KRW to under 50 billion KRW (43.1%),’ ‘under 10 billion KRW (28.4%),’ ‘over 100 billion KRW (14.7%),’ and ‘over 50 billion KRW to under 100 billion KRW (13.8%).’ Additionally, mid-sized businesspeople said that to actively drive the expansion of regional investment, ‘gift tax incentives should be implemented alongside inheritance tax reductions (81.9%).’

Lee Ho-jun, the full-time vice chairman of the Korea Federation of Mid-sized Enterprises, said, “While the population in the metropolitan area increased by 2.4% over the past five years, the non-metropolitan population decreased by 1.3%, increasing the need to support regional economies,” adding, “To revitalize regional economies as a foundation for both short-term economic activation and long-term industrial competitiveness enhancement, we will closely communicate with the government and the newly inaugurated National Assembly to ensure that multifaceted support measures such as easing inheritance and gift taxes, improving the business succession deduction system, promoting investment subsidies, and expanding investment tax credits can be implemented.”