Scheduled for release in October
Corporate contributions exempt from income and corporate taxes
On the 19th, the Ministry of SMEs and Startups announced that it signed a business agreement at the Bankers' Hall in Jung-gu, Seoul, with the Small and Medium Business Corporation, IBK Industrial Bank, and Hana Bank to introduce the ‘Preferential Savings Deduction for Employees of Small and Medium Enterprises (SMEs).’
The preferential savings deduction is a policy financial product introduced to encourage long-term employment of SME employees and support asset formation, aiming to alleviate the manpower shortage in SMEs. It is scheduled to be launched in October.
The Tomorrow Filling Deduction, operated by the Ministry of SMEs and Startups since 2014, has had 260,000 subscribers so far, but due to the high burden on companies, support was focused on key personnel, limiting broader assistance. The Tomorrow Filling Deduction requires employees (at least 100,000 KRW) and companies (at least 200,000 KRW) to save 340,000 KRW monthly, and after five years, employees receive more than 20 million KRW.
The preferential savings deduction is designed so that any employee working at an SME can receive higher returns compared to general savings products by combining their own contributions (up to 500,000 KRW per month), company support funds (20% of the employee’s contribution), and preferential interest rates (1-2%) from the partner banks.
Additionally, the government plans to provide income tax and corporate tax reductions on company contributions, and the partner banks will support participating SMEs by lowering loan interest rates.
Employees and employers can agree in advance on the monthly contribution amount and notify the Small and Medium Business Corporation of this fact, then visit the partner bank to subscribe to the preferential savings deduction product.
At the business agreement ceremony, 34 pre-subscriptions for the preferential savings deduction were conducted, mainly among young employees of SMEs such as ‘Wiley,’ ‘AR,’ and ‘AutoSigma.’ Park Su-in, CEO of Wiley, said, “Employees’ satisfaction with the company increases and it helps with asset management, while companies can retain excellent talent long-term, making this a valuable system that provides positive experiences for both sides. Since it is a policy that satisfies both employees and companies, we plan to actively utilize it.”
Kim Sung-tae, President of IBK Industrial Bank, stated, “We will expand the ‘SME Employee Preferential Program,’ IBK’s own specialized financial service that favors SMEs and their workers, to strengthen practical co-growth.”
Oh Young-joo, Minister of SMEs and Startups, emphasized, “For SMEs to grow, it is possible only when passionate and excellent talent work together. We will prepare various policy support measures so that SMEs and their employees can grow and develop together.”
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