SMEs to enjoy 50% tax exemption for gains from tech transfer

Small and medium-sized enterprises will get a 50 percent tax exemption from income earned by technology transfer from January next year at the earliest. A company that takes over or merges with a venture firm will also be exempted from corporate tax by a certain ratio.

The Science, ICT and Future Planning Ministry announced “Measures to galvanize private sector R&D investment” at the 3rd National Science and Technology Council meeting on Friday. The measures are meant to improve the current situation of lackluster R&D by SMEs, with the number of companies running affiliated R&D centers only accounting for 0.8 percent (26,381 firms) of the SMEs in Korea. For starters, tax benefits will increase. SMEs will enjoy a 50 percent exemption in corporate tax or income tax for gains from technology transfer. If this policy, which was revoked in 2005, is reinstated, 540 SMEs stand to benefit.

If a company takes over or merges with a venture firm, or “technology innovation firm,” which invests more than 5 percent of its sales in R&D, the former will enjoy corporate tax exemption amounting to 10 percent of the value of technology concerned. If the two firms are not in special relationship, the company that is taken over will be exempt from transfer tax.

For full article, see Dong-a Ilbo.