MOU signed to tackle business succession hurdles, push for policy reform
Next-generation CEOs briefed on tax and legal risks
80% of SMEs cite tax burden in succession process
The Korea Federation of SMEs and the Korea Mechanical Construction Association have agreed to cooperate in identifying obstacles that small and medium-sized enterprises face during business succession and in expanding education for next-generation executives.
The Korea Federation of SMEs signed an MOU with the Korea Mechanical Construction Association on Wednesday at the Mechanical Construction Building to support SME business succession.
Under the agreement, the two organizations will jointly identify difficulties that arise during the succession process and work together on policy reform. They will also co-organize training sessions and briefings aimed at strengthening the management capabilities of next-generation CEOs.
Taxes are the single biggest burden SMEs cite in the succession process. According to the Korea Federation of SMEs' "2025 SME Business Succession Survey," 80 percent of respondents identified tax burden as their top concern. A lack of succession support policy came second at 23 percent, followed by concerns about business deterioration after succession at 19.3 percent.
The Korea Federation of SMEs operates a Family Business Succession Support Center, which conducts surveys on SME succession, recommends policy improvements, provides education for next-generation CEOs and shares information on succession tax regimes. Immediately after signing the MOU, the two organizations held a briefing for next-generation CEOs in the mechanical construction industry on succession tax support and legal risk management.
The briefing covered legal disputes that can arise during the succession process as well as tax support regimes such as the family business inheritance deduction. Jo Ung-gyu, a partner attorney at law firm Barun, explained legal risks that can emerge during succession — including forced heirship litigation — and outlined ways to address them. Jeong Gwang-yong, head tax accountant at Hanmaek Tax Corporation, introduced business succession tax support regimes including the family business inheritance deduction, along with changes and points of caution stemming from this year's government tax reform proposal.
"We hope this MOU will lead to policy improvements that reflect the voices from the field, creating an environment where SME succession can proceed smoothly," said Kim Hui-jung, head of the economic policy division at the Korea Federation of SMEs.
Chu Mun-gap, executive vice president of the Korea Mechanical Construction Association, said the association would help member companies better understand and make use of relevant policies as they prepare for succession. "We will actively identify the difficulties our member companies face during the succession process and work to translate that into tangible support," Chu said.
hong@heraldcorp.com
