What Changed
Founders who closed a business and restarted in the same industry no longer have to wait as long before they count as a "startup." On August 25, Korea's Cabinet approved an amendment to the Enforcement Decree of the Support for Small and Medium Enterprise Establishment Act, proposed by the Ministry of SMEs and Startups (MSS). The amended decree has been in effect since September.
The core change is simple: the period during which a same-industry restart after closure is not recognized as a startup has been cut from three years to one. If you restart in the same industry more than a year after closing, you can now qualify as a startup.
MSS cited feedback from the field. Preparing a same-industry restart takes about 11 months on average. With AI and technology convergence changing the startup landscape quickly, a three-year wait was seen as excessive.
Transitional Rule: Businesses That Already Restarted Are Covered
Businesses that began operating before the amendment took effect can still use the new standard as long as fewer than seven years have passed since they started.
> Hypothetical case: Company A's CEO closed a metal-processing business in March 2025 and opened a new company in the same industry 14 months later, in May 2026. Under the old three-year rule, the new company was classified as "not a startup" and could not apply for early-stage programs. Under the amended rule, more than a year has passed since closure, so it qualifies as a startup and can apply to programs whose age requirements it meets.
Other Exclusions Remain Unchanged
Only the same-industry restart period has changed. The existing exclusions still apply, so check the decree text directly:
How "same industry" is determined (for example, which level of the Korean Standard Industrial Classification is compared) is set by the decree and related notices. Similar industry codes alone do not settle the question. Business age runs from the business commencement date, and the closure date is proven with a certificate of business closure from the tax office.
Programs and Benefits Affected
Tax benefits need a separate review. The tax reduction for startup SMEs falls under the Restriction of Special Taxation Act, which has its own startup requirements and exclusions. This decree amendment does not automatically make you eligible for that reduction, so confirm it with a tax professional.
Restart Checklist
How KITIM Can Help
KITIM checks in advance whether a restarted business qualifies as a startup, designs a mix of general and restart-only programs suited to your stage, and supports you through writing the business plan. If you want to know whether this amendment has opened new programs to you, contact the KITIM consulting team. Share your closure and restart dates and your industry details, and we will put together a list of programs you can apply for.