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  • KITA Proposes Policy Initiatives to Create Innovative Entrepreneurial Ecosystem and Tax Support Syst
    2017-08-01

    KITA Proposes Policy Initiatives to Create Innovative Entrepreneurial Ecosystem and Tax Support System

    - Requested to reflect in the ‘100 days of Action Plan to Create Jobs’ of the Jobs Committee -

     

     

    The Korea International Trade Association (Chairman, Kim In-ho) proposed policy initiatives to create innovative entrepreneurial ecosystem and tax support system for the quality job creation.

     

    The organization proposed 25 policy initiatives to the Jobs Committee, including the creation of an innovative entrepreneurial ecosystem and expansion of tax incentives for job creation, and requested the government to reflect them in the ‘100 days of Action Plan to Create Jobs’ announced on June 1.

     

    In detail, in order to activate innovative entrepreneurship, which will be the driving force of job creation, KITA suggested integrated management of policy support for innovative entrepreneurship at the government level, expansion of voucher system customized for innovation entrepreneurship, introduction of special regulations for innovation entrepreneurship that will lead the convergence of industries.

     

    The voucher system to support innovative start-up businesses has already been common in developed countries such as EU and Singapore, whereas in Korea it is still being implemented on a small scale only in support of technical commercialization. Therefore, KITA said that it is necessary to expand the voucher system to the overall support of innovative start-ups in the future, including new product development, prototype production, and space lease, etc.  

     

    In addition, in order to revitalize the investment and recovery of funds for business start-ups, KITA suggested the creation of investment ecosystem focused on private investment and globalization, expansion of investment allowance of fund of venture investment company (hereinafter referred to as "venture fund"),  elimination of the first loss compensation system when constructing an investment combination expansion of incentives for technological innovation-type M & A (at the level of "special law to boost corporate vitality"), allowance of other media advertising and relaxation of restrictions on individual investment limits to promote crowdfunding.

     

    The domestic investment market is still rigid and highly dependent on government funds, in spite of the efforts to stimulate private investors. In particular, despite the steady expansion of the venture investment market, the number of venture fund registrants and new registrants in Korea has been declining since last year. Therefore, it is urgent to have effective incentives and deregulation to boost investment in start-ups.

     

    Moreover, in order to promote individual start-ups of electronic commerce, which can generate high profit with a small capital and a minor burden of failure in the digital economy era, KITA suggested to expand entrepreneurial education to nationwide for 370,000 domestic e-commerce vendors. KITA also proposed a variety of policy ideas such as 'Start-up Village' that provides accommodation and work space for entrepreneurs by recycling idle space such as abandoned houses in the local province.

     

    The Korea International Trade Association has also called for an overall improvement in the tax support system to expand the employment of small and medium-sized companies. Specifically, the organization proposed 13 tax support improvement tasks, including allowance of duplicate application of tax deduction for employment and other tax exemption to prevent the companies from being missed for the tax credits for the actual employment, extension of sunset period for 11 pertinent reduction and exemption systems for more than 10 years to ensure sustainability of tax support for employment creation, expansion of tax incentives for job creation for small and medium-sized enterprises, and grant corporate income tax reduction and exemption benefits for the technical commercialization profit of small and medium-sized companies, etc.

    Ahn Geun-bae, head of KITA's Trade Policy Support Division stressed "In order to create high quality jobs, the new government needs to expand the tax reduction and exemption for employment creation and strengthen the institutional basis for revitalizing innovative start-ups." Mr. Ahn also said "I expect that the policy initiatives that KITA has proposed this time will be reflected in the government's 100 days of Action Plan to Create Jobs and be implemented."

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