Expansion of Tax Support for Noryan Usan Gongje... Government and National Assembly Join Forces

National Assembly Proposes Bill for Income Deduction up to 9 Million Won
Government Pushes to Expand Income Deduction for Corporate Representatives

Tax benefits for the Small Business and Small Merchant Mutual Aid (Noranwoosan Gongje), which helps small businesses and small merchants secure their livelihoods from threats such as business closure and old age and provides opportunities for business recovery, are expected to be expanded. On the 31st, National Assembly members Park Soo-young and Jung Tae-ho each introduced bills to support tax benefits for Noranwoosan Gongje. The fact that the bipartisan secretaries of the National Assembly's Planning and Finance Committee have taken legislative action signals a green light for expanding tax support for small businesses and small merchants.

According to the small and medium business sector on the 6th, the 'Partial Amendment to the Restriction of Special Taxation Act' introduced by Representative Park raises the income deduction limit from the current maximum of 5 million won to 9 million won and expands the business income criteria from 40 million won to 60 million won to provide income deduction benefits to more small merchants. If the amendment passes, subscribers with business income of 60 million won or less will be able to deduct up to 9 million won annually. It is estimated that about 82% of all Noranwoosan subscribers fall into this category, and the tax deduction amount per person will double, providing an average annual tax benefit of about 760,000 won.

The 'Partial Amendment to the Restriction of Special Taxation Act' introduced by Representative Jung stipulates that even if long-term subscribers of more than 10 years voluntarily terminate their subscription, they will be considered to have achieved the purpose of accumulating a lump sum, and retirement income tax will be imposed along with the mutual aid fund. If the amendment passes, taxation will be applied with a retirement income tax rate of about 5%, significantly increasing the tax benefits for long-term Noranwoosan subscribers. As of the end of September, the number of long-term Noranwoosan subscribers of more than 10 years is about 190,000.

The government also included in the tax reform plan announced in July an increase in the maximum income deduction limit for Noranwoosan from 5 million won to 6 million won and an expansion of the target to allow corporate representatives to deduct income up to a total salary of 80 million won.

Kim Ki-moon, chairman of the Korea Federation of Small and Medium Business, said, “Due to the prolonged domestic demand slump after COVID-19 and high inflation and high interest rates, small merchants are facing very difficult management conditions, and the government and the National Assembly have united to provide support.” He added, “With the expansion of tax support for Noranwoosan Gongje, the social safety net for small businesses and small merchants is expected to be further strengthened.”