KCCI: "SME Succession, Growth Opportunity Not Wealth Inheritance"

"Heavy Inheritance Tax Burden Poses Problems for Business Operations"
Over 30 SME Leaders Call for Support Measures

Concerns have been raised that institutional improvements for business succession are necessary to ensure the sustainable growth of small and medium-sized enterprises (SMEs). The current inheritance tax system imposes a heavy burden regardless of whether business succession occurs, hindering economic dynamism, thus necessitating tax reform that promotes corporate growth.

On the 27th, the Korea Chamber of Commerce and Industry (KCCI) held the 97th meeting of the SME Committee at the Chamber Hall under the theme "SME Business Succession Strategy." About 30 people attended, including Yoon Seok-geun, Chairman of the SME Committee, Lee Eui-hyun, CEO of Da-il Special Steel Co., Ltd., Oh Sang-ho, CEO of Maeil Food Co., Ltd., Choi Seok-woo, CEO of Gyeongnam Steel Co., Ltd., and Hyun Jae-woong, CEO of Halla-san Co., Ltd.

Seoul Jung-gu Korea Chamber of Commerce and Industry. Photo by Kang Jin-hyung

Jo Yong-gwan, partner at PKF Seohyun Accounting Corporation, pointed out the excessive burden of inheritance tax in his lecture. He stated, "Strict requirements for business succession deductions act as a factor hindering the sustainable growth of SMEs," and suggested, "Effective institutional support at the government level is needed, such as expanding the business succession deduction amount, allowing collateral provision of unlisted stocks during installment payment, relaxing employment retention requirements, and improving the evaluation method for pre-gifted stocks."

Jung Si-young, partner at PKF Seohyun Accounting Corporation, called for a strategic approach to tax benefits. Partner Jung emphasized, "To receive tax benefits for business succession, a prior review of the fulfillment of requirements during the five-year post-management period is essential," adding, "In particular, continuous monitoring is necessary to check whether the main business can be maintained during restructuring such as mergers and splits, and the governance structure after third-party paid-in capital increases through new investments."

Yoon Seok-geun, Chairman of the SME Committee at KCCI (and Chairman of Ilseong IS), stated, "There needs to be a social perception shift that business succession is not merely the inheritance of wealth," emphasizing, "It is an important task not only for the continuous growth opportunities of individual companies but also for maintaining employment and the ecosystem of inter-company transactions, which are crucial for the sustainable development of the national economy."

The committee members attending the meeting urged institutional improvements and strengthened government support measures.

Sung Ki-moon, CEO of Moltex Co., Ltd., pointed out the excessive burden of the current system, stating, "Lowering inheritance tax rates and expanding government support systems are urgently needed for smooth business succession of SMEs."

Lee Eui-hyun, CEO of Da-il Special Steel Co., Ltd., said, "Inheritance tax is a heavy burden for SMEs to bear," lamenting, "It blocks the resources necessary to secure the competitiveness of the next generation of management and to operate the business stably."

In response, a KCCI official proposed a concrete plan to partially introduce capital gains tax on shares related to management rights to achieve both fair redistribution of wealth and sustainable corporate growth.