AI startups less than five years old to be excluded from regular tax audits
Other AI small businesses to receive two-year deferrals, three years for regional firms
R&D and commercialization support linked to tax benefits and liquidity assistance
The government will provide integrated support — from technology development to tax burden relief — for 2,559 AI small and medium-sized enterprises and startups, exempting early-stage AI startups from regular tax audits and deferring audits for other AI SMEs by up to three years.
The Ministry of SMEs and Startups and the National Tax Service announced Monday that they will coordinate their support programs for 2,559 promising AI SMEs and startups to help the companies grow.
The move follows an MOU the two agencies signed last December on supporting the growth of AI SMEs and startups. Under the arrangement, the Ministry of SMEs and Startups identifies high-potential AI companies and provides support covering research and development, commercialization, financing, entrepreneurship and overseas expansion, while the National Tax Service offers corresponding tax administration assistance.
The Ministry of SMEs and Startups shared with the National Tax Service a list of companies selected through 20 projects this year supporting AI model and service development as well as AI adoption at industrial sites. The projects cover AI technology development, commercialization of AI-applied products, preferential guarantees for AI and AI transformation, AI-based smart factories, deep tech startup support and global accelerating programs.
The National Tax Service will ease the tax verification burden on these companies and provide tax credits and liquidity support. AI startups less than five years old will be excluded from regular tax audit selection. For other AI SMEs, regular tax audits will be deferred for two years upon application by the taxpayer, with the deferral period extended to three years for companies based outside major cities.
Companies with no clear evidence of tax evasion will also be excluded from filing review. The aim is to reduce the time and costs companies spend on tax compliance so they can focus on technology development and commercialization.
Pre-screening for R&D and workforce development tax credits, along with consulting on corporate tax deductions and reductions, will be prioritized. Liquidity support will be provided through extended payment deadlines, exemptions from tax payment guarantees, deferrals of asset seizure and sale, and early refunds of corporate and value-added taxes.
A dedicated consultation channel will also be set up to help companies resolve tax-related difficulties. A specialized advisory service for AI SMEs will be available on the Hometax online platform, and separate consultation desks will operate at corporate tax divisions in tax offices nationwide.
AI startups require substantial funding from the earliest stages of technology development — for securing skilled personnel and building data and computing infrastructure — yet generating sales takes time. The support package is designed to ease the financial and tax burdens companies face during growth and allow them to concentrate their resources on technology development and market entry.
Minister of SMEs and Startups Lee So-young said the competitiveness of the AI industry depends on how quickly an environment can be created in which startups with innovative technologies and ideas can grow. "Through this collaboration, we will organically link the ministry's support for technology development, commercialization, financing and global expansion with the National Tax Service's tax administration assistance, building a foundation for promising AI SMEs and startups to focus even more on technology development and growth," she said.
National Tax Service Commissioner Lim Gwang-hyeon called AI SMEs and startups "core companies that will lead technological innovation and create future growth engines." He added that the agency would continue working closely with the Ministry of SMEs and Startups to deliver tangible tax administration support that AI companies can feel on the ground.
boo@heraldcorp.com
