Voices from the field said tax support for corporations should be expanded to help small and midsize enterprises maintain employment, and regional funding to foster management-innovation SMEs should also increase.
The SME ombudsman held a roundtable on regulatory improvement with the Korea Association of Management Innovation SMEs (Main-Biz Association) at the Gwanghwamun Building in Jongno-gu, Seoul, on the 11th.
Attending the roundtable were SME Ombudsman Choi Seung-jae, Main-Biz Association President Kim Myeong-jin, 16 association executives and representatives of corporations. The Main-Biz Association counts as members management-innovation SMEs recognized for innovation across management, including organization, marketing and production methods. As of the end of last year, there were 25,449 management-innovation SMEs.
The biggest demand from corporations that day was expanded tax support for SMEs that maintained employment.
The government operates a system that, instead of cutting headcount in difficult business conditions, allows SMEs that kept jobs by adjusting wages to deduct part of the decrease in wage aggregates and the increase in hourly wages from corporate and income taxes. However, the system is scheduled to end at the end of this year.
The Main-Biz Association noted that with labor and fixed costs rising sharply, including a 71.1% increase in the minimum wage compared with 11 years ago, the current deduction level makes it hard to encourage corporations to keep employees. It proposed raising the deduction rates to 20% and 30%, respectively, and extending the application deadline to the end of 2028.
Main-Biz Association Director Kwon Jong-soon said, "If the benefit is small, when management gets tough, corporations ultimately choose to reduce headcount," stressing the need for substantive support for corporations that maintain employment.
In response, Ombudsman Choi Seung-jae said that because the government, in the 2026 tax reform plan released on the 3rd, judged the system had achieved its original purpose and decided to end it, it is unlikely the deduction rates will be raised or the system extended in the short term. He added that objective verification of the system's effectiveness is necessary.
Choi said, "We need to confirm with statistics what effect it actually had on maintaining employment and analyze the system's performance through corporate cases," proposing that the Main-Biz Association conduct a fact-finding survey of its member companies to build evidence for policy improvements.
There were also calls to expand the targets eligible for regional SME development funds.
Metropolitan local governments operate SME development funds to support startups, business stabilization and regionally specialized industries, but support for, and preferential treatment of, management-innovation SMEs differs by local government, resulting in low perceived benefits for corporations, the association said.
The Main-Biz Association said that although management-innovation SMEs are innovation-type SMEs like venture corporations and technology-innovation SMEs, in some local governments' development funds the eligibility or preferential conditions are unclear, and it proposed that each local government's local government ordinance and fund operation plans explicitly reflect innovation-type SMEs.
In response, the ombudsman said it had conveyed proposals to improve regulatory difficulties to 15 metropolitan local governments, including the Seoul Metropolitan Government, and 10 of them had replied.
Incheon plans to push measures to expand loan support for management-innovation SMEs in its 2027 business plan, and Gyeonggi Province currently gives 10 bonus points to management-innovation SMEs and will additionally review support measures for these innovation-type SMEs when drafting next year's fund operation plan. Ulsan is providing 10 billion won each for technology innovation and management innovation, and Gangwon Special Self-Governing Province applies a loan limit for innovation-type SMEs that is 100 million won higher than for general corporations.
The ombudsman plans to reexamine, once each local government prepares its 2027 SME development fund operation plan, whether management-innovation SMEs are included as eligible targets and whether bonus-point and preferential conditions are sufficient.
Ombudsman Choi Seung-jae said, "Even if it is hard to give an immediate answer, if on-the-ground evidence accumulates, the door to discussion can open again," adding, "We will keep consulting with the relevant ministries on today's proposals and carry them through to improvements that SMEs can feel in their daily operations."