Large Corporations Received Over 80% of Tax Cuts in South Korea Last Year; SMEs Lagged

South Korea's tax reduction benefits disproportionately favored large corporations last year, with these companies receiving over 80% of the total tax cuts, according to data submitted by the Ministry of Economy and Finance.

Companies designated as "inter-subsidiary investment companies", large enterprises whose assets exceed 0.5% of the nation's GDP, saw their tax reductions surge by 81.8% year-on-year, reaching 4.26 trillion won. Their share of the overall corporate tax reductions also climbed from 9.8% to 16.0%.

Out of the total 2.7 trillion won increase in corporate tax reductions nationwide, 71.1% was attributed to these large corporations. Significant increases in tax credits for research and development (R&D) expenses and integrated investment tax credits, amounting to 1.19 trillion won and 719.4 billion won respectively, were major contributing factors.

In stark contrast, tax reductions for small and medium-sized enterprises (SMEs) grew by a modest 4.3% to 18.83 trillion won. Their proportion of the total corporate tax reductions also decreased from 75.1% to 70.4%.

Additionally, the inheritance tax deduction for family businesses, a system designed to help SMEs pass down ownership, saw a dramatic increase of 136.0%, with the deducted asset value reaching 541 billion won. This represents a nearly 15.7-fold increase from 34.4 billion won in 2015.