S. Korea to exempt SMEs expanding hiring, investment from regular tax audits

Oct 28, 2026, 04:13 pm

Small and medium-sized enterprises (SMEs) that increase hiring or expand investment will be excluded from selection for regular tax audits. The measure is intended to ease the management burden on companies that are helping stimulate Korea's economy through job creation and investment despite difficult economic conditions.

The National Tax Service (NTS) announced on Oct. 28 that SMEs submitting job creation plans or investment expansion plans will be excluded from selection for regular tax audits covering corporate income tax for the 2025 business year and comprehensive income tax for the 2025 tax year.

Eligible businesses include corporations and sole proprietors whose revenue for the 2025 business year, or the 2025 tax year for individuals, falls below industry-specific thresholds and that meet the SME criteria under the Restriction of Special Taxation Act. The revenue thresholds include 180 billion won for manufacturing, 120 billion won for food manufacturing, and 40 billion won for restaurants and accommodation businesses.

However, corporations with total assets of 200 billion won or more and self-employed professionals are excluded. Businesses with a record of unpaid wages, delinquent taxpayers, tax offenders and other noncompliant businesses are also ineligible.

To qualify for tax administration support for job creation, businesses must submit plans to increase their number of regular employees in 2027 by at least 2% to 3% compared with 2026. Preferential treatment will be provided by applying double weighting when calculating the number of regular employees for the hiring of young people aged 15 to 34, older workers aged 60 and above, and people with disabilities, as well as the hiring of vulnerable groups by youth-founded startups and companies experiencing job losses.

For tax administration support related to investment expansion, businesses must submit plans to increase investment in 2027 by at least 5% to 20% compared with 2026. In particular, to stimulate regional economies and promote balanced national development, businesses located outside the Seoul metropolitan area will be subject to investment growth thresholds of 5% to 15%, five percentage points lower than those applied to businesses in the metropolitan area.

Businesses seeking the support need to submit either a job creation plan or an investment expansion plan through the NTS Hometax website between Nov. 2 and Nov. 30. Applications can also be submitted by mail or in person to the relevant district tax office.

"Even if businesses are excluded from regular tax audits after submitting their plans, they may be additionally selected in 2028 for regular tax audits covering the 2025 business year if they fail to increase employment or investment as originally planned," an NTS official said, urging businesses to faithfully implement their plans.

Nam Seong-hwan

#SME #Employment #Tax audit #Investment #Youth