Venture Industry Welcomes Tax Reform Proposal, Expects Boost in Private Venture Investment

"High Hopes for Practical Support Measures"
Positive Assessment of Venture Capital Inflow Initiatives

The Korea Venture Capital Association (VC Association) and other players in the venture industry positively evaluated the government's 2026 tax reform proposal, stating that it encourages private venture investment and expands the foundation for the growth of the venture ecosystem.

On the 7th, the VC Association, along with the Venture Business Association and the Korea Startup Forum, issued a statement welcoming the government's 2026 tax reform proposal and expressed these views.

The VC Association particularly welcomed the inclusion of practical support measures that can be directly felt by venture companies in their growth stages. They forecast that the newly established domestic production tax credits in six key areas—including secondary batteries, core materials, and artificial intelligence (AI) robot components—will make a substantial contribution to the scale-up phase of deep tech and manufacturing ventures.

The association also expects that the redesigned tax reduction for start-up small and medium enterprises and the introduction of a growth acceleration step-down system will help alleviate the tax burden both at the initial start-up stage and at the point when companies graduate from being classified as SMEs. In addition, the association projected that the regional incentives for research and development (R&D) and investment tax policies, as well as allowances for SME employees and local relocation subsidies, would ease the R&D and talent acquisition burdens faced by ventures outside the greater Seoul area.

Regarding the newly introduced tax regime that supports third-party business succession, the association assessed that it is meaningful because it widens the exit routes for recovery and succession of ventures having difficulty in passing on their businesses to heirs, including through mergers and acquisitions (M&A).

Concerning measures to support the inflow of private venture capital, the association stated, "Easing the operating year requirements for venture investment tax support targets (from 7 years to 10 years) helps open the way for continued follow-up and large-scale investment in scaling-up ventures. The institutionalization of the capital gains tax exemption on share transfers is also significant in providing sustainability for private venture capital inflow and broadening the investment base," they stressed.

However, the association also pointed out that it hopes core tax support tasks such as tax benefits for performance-based restricted stock units (RSU) of venture companies, which the venture industry has been consistently advocating, will be reviewed positively through in-depth discussions.

The VC Association added, "We hope that this tax reform proposal will lead to substantial outcomes that can be felt in the actual business field and that a tax support system will be established covering the entire cycle from start-up, investment, growth, recovery, to reinvestment."

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