SMEs ministry ties tax relief to AI support for 2,559 startups

The SMEs ministry said Monday it will link its industrial support for 2,559 artificial intelligence small and mid-sized companies and startups to tax administration relief from the National Tax Service.

The arrangement follows the December cooperation agreement between the Ministry of SMEs and Startups and the National Tax Service. The SMEs ministry selects companies with high growth potential in AI and supports their technology development, commercialization, financing, startup launch and overseas expansion, and the National Tax Service attaches tax administration support to those same companies.

The SMEs ministry is running 20 programmes this year covering AI model and service development and the application of AI technology in industrial settings, and has shared the list of participating companies with the National Tax Service. The programmes include AI technology development, the commercialization of AI application products, preferential guarantees for AI and AI transformation, AI-based smart factories, deep-tech startup support and global acceleration.

The tax measures include minimizing tax verification, giving priority handling to advance reviews of tax credits for research and personnel development expenses and to consulting on corporate tax deductions and exemptions, and providing liquidity support through extended payment deadlines and early payment of refunds. AI companies will also get tax consultation through a dedicated service on the Hometax portal and dedicated consultation desks at tax offices nationwide.

AI startups within five years of founding will be excluded from selection for regular tax audits, while other AI small and mid-sized companies can postpone a regular audit for two years, or three years if they are based outside the capital region, if they apply. Companies with no clear suspicion of tax evasion will also be excluded from written reviews of their filed returns.

The tax administration support runs from Oct. 1 this year to Feb. 28, 2028.

The two agencies said AI startups need large investments in securing skilled staff and building data and computing infrastructure from the early stages of technology development, but can take considerable time to generate stable sales and profit.

"The competitiveness of the AI industry depends on building an environment where startups with innovative technology and ideas can grow quickly," SMEs Minister Lee So-young said. "Through this cooperation, the SMEs ministry's support for technology development, commercialization, financing and overseas expansion will be connected with the National Tax Service's tax administration support."

National Tax Service Commissioner Lim Kwang-hyun said AI small and mid-sized companies and startups are key to technological innovation and future growth, and that reducing the tax difficulties they face in the course of growth matters. "We will cooperate closely with the SMEs ministry to continue practical tax administration support that AI companies can feel on the ground," he said.