South Korea Eases Tax Burden for 40,000 Small Businesses by Revising Exclusion Zones

The National Tax Service is undertaking a significant reform to support small business owners by revising the criteria for simplified tax rates. This move acknowledges the evolving economic landscape and the struggles faced by small enterprises, particularly in traditional markets and commercial districts.

For years, certain areas were designated as excluded zones for simplified taxation, meaning even small businesses within them had to adhere to the more stringent general tax system. This often created inequities, especially when neighboring areas or larger businesses enjoyed the benefits of the simplified rate. This revision rectifies that imbalance, bringing relief to thousands of entrepreneurs.

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There were unreasonable aspects where small businesses could not apply for simplified taxation due to the failure to promptly reflect changes in commercial areas and sales trends in the regional criteria.

This comprehensive review, the first since 2000, will shrink the number of excluded zones by nearly half. This means approximately 40,000 small business owners can now benefit from the simplified tax system, which offers lower tax rates and less burdensome reporting requirements compared to the general system. This is a crucial step in alleviating financial pressure and fostering a more supportive business environment for our nation's vital small business sector.

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This is the first time in 26 years since the regional criteria were implemented in 2000 that the excluded areas have been reviewed from scratch and reduced by the largest margin.