Tax Reduction for Young Entrepreneurs up to 100% Depending on Region... Business Registration Procedures Also Simplified

To support young entrepreneurs struggling with unstable revenue in the early stages of starting a business, the 'Tax Reduction for Young Entrepreneurs' system, which eases the tax burden, and the 'Business Registration and Operating Notification in One Step' service, which simplifies administrative procedures, are currently in effect. According to this information provided by the National Tax Service, tax reduction benefits are determined by the representative's age, industry, and startup location.

Three Key Requirements for Tax Reduction: Age, Industry, and New Startup Status

To receive the Tax Reduction for Young Entrepreneurs, the representative's age must be checked first. At the time of startup, the representative's age must be between 15 and 34 years old. However, if military service has been completed, that period can be deducted from the age calculation by up to 6 years, which widens the actual applicable age range.

Industry requirements are also strict. Not all industries are eligible; they must fall under industries specified by the tax law, such as manufacturing, construction, restaurants, e-commerce, information and communications, and logistics. On the other hand, wholesale and retail, bars, and real estate rental businesses are excluded from the reduction. The National Tax Service emphasized that since industry classification may vary depending on actual business activities, eligibility must be confirmed through the Korean Standard Industrial Classification before starting a business.

Simply starting a business does not mean everyone is recognized as a 'new startup.' If an existing business is succeeded, a new industry is added to an existing business, or the same type of business is restarted after closing, it may not be considered a new startup under tax law, and thus the tax reduction benefits may not be granted. The video noted as a precaution that in such cases, benefits may be denied because they are not recognized as a new startup under tax law.

Differential Application from 50% to a Maximum of 100% Depending on Region

If all requirements are met, the reduction rate based on the location of the business must be considered. Based on young entrepreneur small and medium-sized enterprises (SMEs) starting after January 1, 2026, if they start a business in large metropolitan areas such as overcrowded congestion control zones, they receive a 50% reduction in income tax or corporate tax. On the other hand, if they start a business in other regions (including population decline areas), the reduction rate increases to 75%.

In particular, when specific conditions and industries are combined, tax reduction of up to 100% is possible. The purpose of this system is to help young entrepreneurs, whose early-stage profits are unstable, to start their businesses stably. The National Tax Service stated that since the tax burden may feel significant due to unstable revenue in the early stages of startup, they hope young entrepreneurs will actively utilize this system to make a stable start.

Starting Restaurants or Hair Salons: Report All at Once at City, County, or District Offices

Startup administrative procedures have also been significantly simplified. Previously, when starting a restaurant or hair salon, there was the inconvenience of first reporting the business to the competent city, county, or district office and then visiting the tax office again to apply for business registration. However, since August 31, the 'Business Registration and Operating Notification in One Step' service has been implemented nationwide through cooperation between the Ministry of the Interior and Safety and the National Tax Service.

Now, individual entrepreneurs preparing to open a restaurant or hair salon can process both the operating notification and the business registration application simultaneously by visiting the competent local government (city, county, or district office). As the National Tax Service can directly verify permit and license documents through information sharing between agencies, the burden on taxpayers to separately issue and submit permit and license documents has been reduced.

This data sharing service also applies to entrepreneurs in other industries. Previously, when applying for business registration, they had to directly obtain business permits or other permit and license documents issued by other government agencies and submit them to the tax office. However, the National Tax Service can now directly verify that information through data sharing, so taxpayers no longer need to separately prepare and submit related documents.

The National Tax Service plans to further expand data sharing with related agencies in the future. Through this, they intend to continuously simplify administrative procedures so that taxpayers are not asked for documents they have already submitted, thereby creating an environment where prospective entrepreneurs can focus more on preparing their businesses.

Source: original video (YouTube)