15 Trillion Won in Emergency Support for SMEs Hit by High Exchange Rates... Corporate Tax Filing Deadline Extended

Government Announces "Support Measures for SMEs Facing Business Difficulties" on July 3

As the won-dollar exchange rate has remained above the 1,500 won mark for the longest period since the 1997 financial crisis, the government will inject 15 trillion won in emergency business funds for small and medium-sized enterprises (SMEs) facing management difficulties due to the prolonged high exchange rate, such as increased costs for importing raw materials. In addition, the government will strengthen financial support such as trade insurance and guarantees, and implement comprehensive measures including the extension of corporate and value-added tax payment deadlines.

On the morning of July 3, the government held a joint meeting of the Emergency Economic Headquarters and the Ministers of Economic Affairs, chaired by Deputy Prime Minister Koo Yoon-cheol, at the Sejong Government Complex, and announced the "Emergency Support Plan for SMEs Facing Management Difficulties Due to High Exchange Rates." Recently, the high exchange rate trend has persisted for several months, intensifying management challenges for SMEs. In particular, import companies are facing significant difficulties due to rising costs as raw material prices increase. According to a survey by the Korea Federation of SMEs, 62.7% of exporting and importing SMEs responded that the impact of the high exchange rate is "serious" or "very serious."

Yonhap News Agency

14.9 Trillion Won to Be Injected for SMEs Experiencing Liquidity Shortages Due to High Exchange Rates

The government will first provide 14.9 trillion won in emergency business funds to SMEs and mid-sized companies experiencing liquidity shortages due to high exchange rates. The main source of funding is the remaining 13.8 trillion won from the 23.7 trillion won in policy finance previously allocated to support companies impacted by the Middle East situation. An additional 1.1 trillion won in new funds will also be supplied. The government plans to further expand the scale of support if necessary, depending on future circumstances. Companies can access the funds through a dedicated track newly established within the Emergency Business Stabilization Fund at the Korea SMEs and Startups Agency. In particular, for SMEs where the proportion of imported raw materials and components exceeds 20% of sales, the eligibility criteria will be eased so that support is available regardless of sales or operating profit decline.

In addition, the scale of support for the Korea Eximbank's special crisis response program will be expanded from the original 7 trillion won to 8 trillion won. The preferential interest rate will be increased from up to -2.0 percentage points to -2.2 percentage points. The guarantee ratio of the Korea Technology Finance Corporation will be raised from 95% to 100%, and the guarantee fee reduction will be expanded from 0.3 percentage points to 0.4 percentage points. The government will also support loan repayment deferrals and maturity extensions for policy funds.

Import Insurance Subscription Criteria Eased, Premiums Discounted by 50%

Trade insurance and foreign exchange risk insurance support for importing SMEs and mid-sized companies will also be significantly expanded. The eligibility criteria for import insurance will be eased so that companies with no export record can also subscribe. A 50% discount on import insurance premiums will be implemented until April next year, and the Korea Trade Insurance Corporation will double the loan guarantee limit for companies whose import costs for key raw materials have increased. In addition, to help mitigate foreign exchange risk, the supply of foreign exchange risk insurance from the Korea Trade Insurance Corporation will be increased by 100 billion won from the original 1.2 trillion won to 1.3 trillion won. The premium discount for this insurance will also be increased from 15% to 30%. The eligibility for foreign exchange risk insurance, previously limited to certain raw material importers, will be expanded to all importers except for luxury goods. Companies using Eximbank loans will be given the option to convert between foreign currency and won, or between different foreign currencies, free of charge.

Corporate Tax Payment Deadlines Extended... One-Stop Guidance for High Exchange Rate Support Policies

Beyond financial support, the government will also provide tax relief by extending payment deadlines for corporate tax, value-added tax, income tax, and customs duties, giving companies more breathing room. Consulting will be provided to companies and organizations so that exchange rate fluctuations can be reflected in pricing formulas when signing supply payment-linked contracts. For companies that excel at implementing such contracts, incentives such as exemptions from direct investigations for both suppliers and contractors will be granted. To encourage the participation of the financial sector, the government will reflect the results of high exchange rate-related support for SMEs when developing detailed indicators for the Win-Win Finance Index, which evaluates the level of cooperation between financial institutions and SMEs. In addition, export support centers will centrally manage issues related to high exchange rates and provide one-stop guidance on SME support policies.

Joo Hwan-wook, Policy Coordination Officer at the Ministry of Economy and Finance, said, "We will ensure the prompt implementation of the main tasks in this plan to quickly relieve the management burden on SMEs suffering from high exchange rates, while closely monitoring their difficulties and continuously seeking additional support measures as needed."

This content was produced with the assistance of AI translation services.