Why SME Succession Matters Now
The average age of Korean SME owners is approximately 58 years, with over 40% of companies needing to resolve succession within the next decade. Thousands shut down each year because no suitable successor can be found.
Key Provisions of the Special Act
1. Relaxed Business Inheritance Deduction
Management period: 10 years → 7 yearsDeduction ceiling: 60B KRW → 100B KRWPost-succession management: 7 years → 5 yearsEmployment retention: 80% full-time → total headcount basis2. Expanded Gift Tax Special Treatment
Donor age: 60 → 55 yearsBusiness continuity: 7 years → 5 yearsGift tax ceiling: 20B → 30B KRW3. New Third-Party M&A Tax Incentives
Sales through the platform: 10% capital gains tax rate (down from up to 30%)Buyer: KOSME loans up to 3B KRW at 2.5%20% additional corporate tax reduction if 70% employment retained for 3 yearsM&A Platform Guide
Seller Process
Business valuation (DCF tool or specialist)NDA + Information Memorandum registrationAI matching + professional broker linkageLOI → MOU → Due DiligenceShare Purchase Agreement (SPA) + tax special rate applicationBuyer Process
Filter by sector, scale, region; review listingsKOSME M&A loan pre-screeningStandard legal/financial/technical due diligence packagePreparation Checklist
[ ] Conduct preliminary business valuation (PER, EV/EBITDA)[ ] Confirm eligibility for inheritance deduction or gift tax treatment[ ] Register on SME-Connect platform (Q2 2026)[ ] Review M&A capital gains tax special rate requirementsKITIM Consulting
KITIM provides comprehensive succession consulting: strategy, valuation, tax simulation, and M&A platform registration support. Contact us today.
