Democratic Party lawmaker Kim Dong-a introduces three-bill package to revive venture investment

Rep. Kim Dong-a of the Democratic Party of Korea (Seoul's Seodaemun-gu A district) announced Monday that she had introduced three amendments to the Restriction of Special Taxation Act — collectively dubbed the "three venture investment revitalization bills" — aimed at injecting momentum into a startup and venture ecosystem that has entered a deep freeze amid domestic and global economic uncertainty, and at building a virtuous cycle of investment.

According to Kim, mounting external uncertainty — including geopolitical risk and a declining potential growth rate — has rapidly chilled domestic venture investment sentiment. The current system lacks sufficient tax incentives to draw private-sector capital into venture investment, critics have long argued, leaving the ecosystem overly dependent on government support.

A chronic concentration of venture activity in the Greater Seoul area is also accelerating the risk of regional population decline, while a blocked "mid-exit market" — through mergers and acquisitions or secondary share purchases — has created a severe bottleneck that prevents successful investments from recycling back into the ecosystem.

The three bills address what Kim describes as the ecosystem's three core challenges: revitalizing the exit market, attracting private capital, and nurturing venture companies outside the capital region.

Key provisions include restoring a 10 percent income deduction for investments in special-purpose venture funds — extending the benefit to secondary share acquisitions and M&A transactions — introducing a new capital gains tax exemption for domestic corporations that invest in venture companies, raising the investment tax credit rate from 5 percent to 10 percent, and expanding income deduction benefits for angel investors backing venture and startup companies outside Greater Seoul. Together, the measures are designed to provide a support framework covering the full investment cycle from entry to exit.

"Venture companies and startups — the engine of South Korea's future growth — are fighting for survival in an economic deep freeze, and we must use tax policy to dismantle the irrational rules that are blocking the flow of money," Kim said. "I hope these three bills will unclog the stalled mid-exit market and allow abundant private capital to flow toward innovative companies and regions, creating a venture ecosystem where everyone can thrive together."