![Rep. Hwang Jeong-a of the Democratic Party of Korea [provided by the lawmaker's office]](https://wimg.heraldcorp.com/news/cms/2026/07/27/news-p.v1.20260727.c32f872dc74f4f168ba349b63bdce70f_P1.jpg)
A bill that would allow small and medium-sized enterprises outside the greater Seoul area to retain their SME-level tax benefits even after growing into mid-sized or large companies is being pursued in the National Assembly.
Rep. Hwang Jeong-a of the Democratic Party of Korea, who represents Daejeon's Yuseong-eul district, said Monday she introduced the bill — an amendment to the Restriction of Special Taxation Act — on Sunday.
Under current law, Hwang said, a company loses its SME tax benefits the moment it graduates to mid-sized or large-company status, making the cost of growth outweigh its rewards and discouraging firms from expanding.
Industry groups including the Korea Chamber of Commerce and Industry have long flagged the problem, arguing that the sharp, stepwise drop in tax benefits when a company moves beyond SME status "undermines growth incentives and active investment."
The gap is stark: the general R&D tax credit stands at 25 percent for SMEs but only 2 percent for large companies — a 23-percentage-point difference. Even for national strategic technology R&D, the credit is 40 percent for SMEs versus 30 percent for large firms. The integrated investment tax credit for facilities commercializing new-growth and source technologies is 12 percent for SMEs and 3 percent for large companies, while the rate for facilities commercializing national strategic technologies is 25 percent for SMEs and 15 percent for large companies.
The amendment aims to ease regional imbalances and remove bottlenecks in the corporate growth ladder. It would allow companies headquartered outside the greater Seoul area to continue receiving SME-level tax treatment even after growing into mid-sized or large firms.
Specifically, the bill would grant a special taxation provision under the Restriction of Special Taxation Act, treating qualifying companies as SMEs for the tax year in which they outgrow SME status and for the following 10 tax years. To qualify, a company must have its headquarters or principal office outside the greater Seoul area.
To prevent abuse through shell offices, however, the benefit would apply only when total investment and total headcount at the regional headquarters or principal office exceed those at any of the company's facilities in the greater Seoul area.
"Strong support is needed to accelerate the growth of regional small, venture and innovative companies in order to back the three major mega-projects and shift the paradigm toward region-led growth," Hwang said. "By providing growth incentives for regional companies, we can build the institutional foundation for industry, regions and the nation to leap forward together."
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