Young Tech. Start-up in Korea; Maximizing Corp. Tax Benifit
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Young entrepreneurs are a vital workforce that stimulates the growth of small and medium-sized enterprises (SMEs) and contributes to the economic vitality. However, these young founders face various challenges, such as lack of funds, barriers to market entry, and securing manpower. To alleviate these difficulties and boost the entrepreneurial spirit among the youth, the government implements various support policies, one of which is the SME tax relief policy.
The SME tax relief policy aims to reduce the financial burden on young entrepreneurs by providing tax deductions on corporate tax, income tax, value-added tax (VAT), and more for SMEs established by them. This policy helps young founders focus more on business operations by easing their financial constraints.
The conditions and duration of the SME tax relief policy are as follows:
- Conditions: A young entrepreneur is defined as a self-employed individual under the age of 29 or a corporate representative under the age of 39. The SMEs established by these young entrepreneurs must be within 5 years from the business start date, which is considered the earlier date between the corporation's establishment or the business registration. Additionally, the definition of an SME varies by industry, so it's necessary to check the specific criteria.
- Duration: The SME tax relief policy applies for 3 years from the business start date. However, if the amount of tax reduction exceeds 100 million won per year, the excess amount will not be eligible for the deduction.
For young entrepreneurs to apply for the SME tax relief policy, they must follow these steps:
- Application: The young entrepreneur must submit an application for the SME tax relief to the tax office they belong to. The application form can be downloaded from the tax office's website.
- Review: The tax office reviews the conditions of the young entrepreneur and the SME. If necessary, additional documents may be requested.
- Approval: If the conditions are met, the tax office issues an approval and provides the tax deduction accordingly.
Young entrepreneurs can successfully grow their businesses through the SME tax relief policy. However, they must be well aware of the conditions and duration of the relief and accurately follow the application process. The tax savings should be invested back into business development and fulfilling social responsibilities.
Proper utilization of the SME tax relief policy by young entrepreneurs can significantly contribute to our country's creative economy and future industries.
