Korea Federation of SMEs: "Manage Your Income Tax Savings with the Yellow Umbrella"

Up to 6 Million Won Annual Income Tax Deduction
Tax Savings Up to 1.54 Million Won

The Korea Federation of SMEs announced on May 12 that it is actively encouraging enrollment in the Yellow Umbrella Mutual Aid Fund, which is recognized as a top tax-saving strategy for business owners, in line with May being the month for comprehensive income tax filing.

The Small Enterprise and Small Business Mutual Aid (Yellow Umbrella) is a savings program designed for small businesses and self-employed individuals. It serves as a mutual aid system to help business owners prepare for livelihood risks such as business closure, old age, or disasters.

By joining the Yellow Umbrella, members can receive income tax deductions on their total annual contributions, up to a maximum of 6 million won per year. Depending on the amount of business income, the tax-saving effect is expected to range from a minimum of 390,000 won to a maximum of 1.54 million won. As a result, the organization explained that during the comprehensive income tax filing period in May, the number of new Yellow Umbrella enrollments increases by more than 50% compared to usual. In both 2023 and last year, the average monthly number of new Yellow Umbrella members was about 20,000, but in May alone, about 30,000 people enrolled each year.

The Yellow Umbrella also offers advantages for saving a lump sum, as compound annual interest is applied to the entire contribution amount without any administrative fees being deducted. In February, the Bank of Korea lowered the base interest rate to 2.75%, which led to a decrease in deposit rates at commercial banks. However, the Yellow Umbrella’s payout rate for business closure mutual aid payments has remained at 3.3% since 2023.

Kim Ki-moon, Chairman of the Korea Federation of SMEs, stated, "The Yellow Umbrella serves as the ultimate social safety net for small businesses and self-employed individuals." He added, "I hope that more business owners will reduce their costs and alleviate their concerns about business closure or retirement by joining the Yellow Umbrella, so that they can overcome the current economic crisis."