SME Sector: "Current Corporate Tax Rate Should Be Maintained for Certain Brackets"

Concerns Over Corporate Tax Increase
SMEs Call for Expanded Tax Support and Maintaining Current Rates for Lower Brackets

The small and medium-sized business sector expressed both agreement with the basic direction of the "2025 Tax Reform Plan" announced by the government on July 31, while also voicing concerns regarding the proposed increase in corporate tax rates.

The Korea Federation of SMEs stated in a position paper on the same day, "The extension of the sunset provision for special tax reductions for SMEs and the relaxation of requirements for applying retirement income tax when withdrawing from the Yellow Umbrella Mutual Aid Fund are expected to provide substantial support to SMEs and small business owners who are facing increasing economic difficulties. The establishment of national strategic technologies in the AI sector and the introduction of special accelerated depreciation for smart factory facility investments are also expected to effectively enhance the innovation capacity of SMEs."

However, the SME sector pointed out, "We are concerned about the plan to increase the corporate tax rate by 1%, returning it to the 2022 level. Due to worsening business conditions, the number of business closures last year exceeded one million, and the number of SMEs with net losses reached 400,000. In this environment, an increase in tax burden is likely to undermine business owners' confidence, which could lead to reduced investment and hiring."

Therefore, the SME sector stated, "In future discussions on corporate tax rates, it is necessary to consider maintaining the current tax rate for tax base brackets below a certain threshold," and added, "Tax support measures, such as raising the tax deduction rate for safety facility investments, should be expanded so that SMEs with poor financial conditions can also actively participate in industrial accident prevention."