Seoul, South Korea – The South Korean government is set to introduce a series of measures aimed at bolstering the nation's small business sector in 2025. The new policies, outlined by the Ministry of Economy and Finance, focus on tax benefits, financial support, and business advisory services.
Enhanced Tax Benefits for Self-Employed Individuals
Starting from January 1, 2025, the income tax deduction limit for self-employed individuals contributing to the Yellow Umbrella Social Safety Net will increase. Those earning less than 40 million won annually will see their deduction cap rise from 5 million won to 6 million won. For those earning between 40 million and 100 million won, the deduction will increase from 3 million won to 4 million won. Additionally, corporate representatives with annual salaries of 80 million won or less will now be eligible for deductions.
Expanded Support for Landlords and Employees
Landlords who reduce rent for small businesses will continue to receive tax benefits. The government will provide a 70% tax credit on rent reductions, with a 50% credit for those with annual incomes exceeding 100 million won. Furthermore, small and medium-sized enterprises (SMEs) that share profits with their employees will continue to receive tax breaks. The government has extended the program for an additional three years, allowing companies to exempt performance-based bonuses from income tax.
Increased Support for Youth and Key Employees
The government has also extended tax breaks for the "Tomorrow's Career Fund" for key employees and young workers at SMEs. The minimum participation period for tax deductions has been reduced from five to three years.
Digital Transformation and Business Closure Support
To aid small businesses in the digital age, the government will provide subsidies for renting service robots and kiosks, covering up to 70% of the costs. Additionally, a tailored support program will be implemented for traditional markets based on their digital capabilities and logistics infrastructure. For businesses facing closure, the government will offer comprehensive support, including business liquidation assistance, consulting services, and legal advice. The maximum support for store closure has been increased from 2.5 million won to 4 million won.
Job Support for Former Small Business Owners
The government will also revamp its job support programs for former small business owners. The "Hope Return Package" will be shortened to a one-month mindset-focused program, with increased training allowances.
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