Article 7 (Special Tax Reduction for Small and Medium-sized Enterprises)

For enterprises operating the industries eligible for reduction set forth in item 1 below among small and medium-sized enterprises, the amount equivalent to the tax shall be reduced by multiplying the income tax or corporate tax on income generated at the business site by the reduction ratio set forth in item 2 (limited to the amount calculated pursuant to item 3). This shall apply to tax years ending by December 31, 2028. Provided, that if the head office or main office of a domestic corporation is located in the Seoul Metropolitan Area, all business sites shall be deemed to be located in the Seoul Metropolitan Area, and the reduction ratio according to item 2 shall apply. <Amended by Act No. 11915, Dec. 27, 2010; Act No. 12256, Dec. 31, 2011; Act No. 12256, Jan. 1, 2013; Act No. 12256, Jan. 1, 2014; Act No. 12802, Dec. 23, 2014; Act No. 13558, Dec. 15, 2015; Act No. 14422, Dec. 20, 2016; Act No. 15219, Dec. 19, 2017; Act No. 16123, Dec. 11, 2018; Act No. 16193, Dec. 24, 2018; Act No. 17321, Jun. 9, 2020; Act No. 17738, Dec. 29, 2020; Act No. 18213, Apr. 20, 2021; Act No. 18556, Aug. 17, 2021; Act No. 19112, Dec. 31, 2022; Act No. 19907, Dec. 31, 2023; Act No. 20542, Dec. 31, 2024; Act No. 20990, Mar. 14, 2025; Act No. 21192, Dec. 23, 2025> 1. Industries eligible for reduction a. Crop cultivation business b. Livestock business c. Fishery business d. Mining industry e. Manufacturing industry f. Sewage and waste treatment (including recycling), raw material regeneration, and environmental remediation business g. Construction industry h. Wholesale and retail trade i. Passenger transport among transportation businesses j. Publishing business k. Video and audio recording production and distribution business (excluding video viewing room operation business) l. Broadcasting business m. Telecommunications business n. Computer programming, system integration and management business o. Information service business (excluding virtual asset trading and brokerage business) p. Research and development business q. Advertising business r. Other scientific and technical services business s. Packaging and filling business t. Professional design business u. Creative and artistic service business (excluding self-employed artists) v. Contract manufacturing business based on original equipment manufacturing as determined by Presidential Decree w. Engineering business x. Logistics industry y. Business operating academies that teach vocational technical fields under the 「Act on the Establishment and Operation of Schools and the Regulation of Extracurricular Tutoring」 or business operating vocational ability development training facilities under the 「National Lifelong Vocational Ability Development Act」 (limited to cases where vocational ability development training is the primary business) z. Business operating automobile repair shops as determined by Presidential Decree aa. Ship management business under the 「Maritime Act」 bb. Business operating medical institutions under the 「Medical Service Act」 [limited to clinics, dental clinics, and Oriental medical clinics where the ratio of medical care benefits received under Article 47 of the 「National Health Insurance Act」 to their revenue (sales calculated according to corporate accounting standards) is 80% or more in the relevant tax year, and their total income in the relevant tax year is 100 million won or less. Hereinafter referred to as "medical business" in this Article] cc. Tourism business under the 「Tourism Promotion Act」 (excluding casinos, tourist entertainment establishments, and foreign-exclusive entertainment establishments) dd. Business operating elderly welfare facilities under the 「Welfare of the Aged Act」 ee. Exhibition industry under the 「Act on the Development of the Exhibition Industry」 ff. Labor supply and employment placement business (including agricultural labor supply business) gg. Call center and telemarketing service business hh. Business of energy saving specialized companies under Article 25 of the 「Energy Use Rationalization Act」 ii. Business of operating long-term care institutions providing home care benefits among long-term care institutions under Article 31 of the 「Long-Term Care Insurance for the Aged Act」 jj. Building and industrial facility cleaning business kk. Security and bodyguard service business ll. Market research and public opinion survey business mm. Social welfare service business nn. Intangible property rental business (limited to cases of renting intellectual property under Article 3, item 1 of the 「Framework Act on Intellectual Property」) oo. Industry under Article 2, item 1, subparagraph b of the 「Industrial Research and Development Promotion Act」 pp. Private care and similar services, social education facilities, employee training institutions, other technical and vocational training academies, libraries, historic sites, and similar leisure-related services (excluding reading room operation business) qq. Housing rental management business under the 「Special Act on Private Rental Housing」 rr. New and renewable energy generation business under the 「Act on the Promotion of Development, Use, and Diffusion of New and Renewable Energy」 ss. Security system service business tt. Forestry business uu. Customs clearance agency and related service business vv. Automobile rental business (limited to cases where the business operator is a car rental business operator registered under Article 28 of the 「Passenger Automobile Transport Business Act」 and at least 50% of the registered automobiles are electric vehicles or hydrogen electric vehicles under Article 2, item 3 or item 6 of the 「Act on Promotion of Development and Distribution of Eco-friendly Automobiles」) 2. Reduction ratio. Provided, that for business sites operating the industries under item 1, vv, the reduction ratio shall be the reduction ratio under item 1, b, c, and f multiplied by 50/100, notwithstanding items b, c, and f. a. Business sites operated by small enterprises (hereinafter referred to as "small enterprises" in this Article) engaged in wholesale and retail trade, and medical business (hereinafter referred to as "wholesale business, etc." in this Article): 10/100 b. Business sites operated by small enterprises in the Seoul Metropolitan Area engaged in industries eligible for reduction under item 1, excluding wholesale business, etc.: 20/100 c. Business sites operated by small enterprises outside the Seoul Metropolitan Area engaged in industries eligible for reduction under item 1, excluding wholesale business, etc.: 30/100 d. Business sites operated by small and medium-sized enterprises excluding small enterprises (hereinafter referred to as "medium enterprises" in this Article) outside the Seoul Metropolitan Area engaged in wholesale business, etc.: 5/100 e. Business sites operated by medium enterprises in the Seoul Metropolitan Area engaged in publishing businesses such as general book publishing as determined by Presidential Decree: 10/100 f. Business sites operated by medium enterprises outside the Seoul Metropolitan Area engaged in industries eligible for reduction under item 1, excluding wholesale business, etc.: 15/100 3. Reduction limit: Amount according to the following classifications. a. In cases where the number of full-time employees in the relevant tax year decreased compared to the previous tax year: 100 million won minus 5 million won per person for the decreased number of full-time employees (if the amount is negative, it shall be zero). b. Other cases: 100 million won

Notwithstanding paragraphs ① and ②, for small and medium-sized enterprises engaged in petroleum sales business as determined by Presidential Decree under the 「Petroleum and Petroleum Alternative Fuel Business Act」 and satisfying all the reduction requirements in item 1 below, the amount equivalent to the tax shall be reduced by multiplying the income tax or corporate tax on income generated from the petroleum sales business by the reduction ratio in item 2 (limited to the amount in item 3 of paragraph ①). This shall apply until December 31, 2023. <Newly added by Act No. 19112, Dec. 31, 2022> 1. Reduction requirements a. Shall have entered into the first supply contract for petroleum products (referring to petroleum products under the 「Petroleum and Petroleum Alternative Fuel Business Act」. Hereinafter the same in this item) with Korea National Oil Corporation established under the 「Korea National Oil Corporation Act」 during the period from January 1, 2022, to December 31, 2022. b. During the petroleum product supply contract period under subparagraph a, the quantity of petroleum products purchased from Korea National Oil Corporation established under the 「Korea National Oil Corporation Act」 shall be 50% or more of the quantity of petroleum products sold in each quarter. c. Shall operate under the brand name "Al-tteul Gas Station" (Thrifty Gas Station). 2. Reduction ratio a. Business sites operated by small enterprises: 20/100 b. Business sites operated by medium enterprises outside the Seoul Metropolitan Area: 15/100 c. Business sites operated by medium enterprises in the Seoul Metropolitan Area: 10/100

When applying paragraphs ① and ③, the scope of full-time employees, the method of calculating the number of full-time employees, and other necessary matters shall be determined by Presidential Decree. <Newly added by Act No. 15219, Dec. 19, 2017; Act No. 17738, Dec. 29, 2020; Act No. 19112, Dec. 31, 2022>