Korea to Ease Tax Audits for 2,559 AI Startups

The Ministry of SMEs and Startups and the National Tax Service will jointly support 2,559 artificial intelligence small businesses and startups.

The ministry said on the 11th that it is linking the two agencies' startup support programs as a follow-up to a memorandum of understanding on growth support for AI small businesses and startups signed with the tax agency last December. Under the arrangement, the ministry identifies small businesses and startups with high growth potential in AI and supports their research and development, commercialization, financing and overseas expansion, while the tax agency provides tax administration support. The approach reflects the fact that AI startups require large investments in the early stages of technology development but take a long time to generate stable revenue.

To link the programs, the ministry shared with the tax agency a list of companies selected for 20 AI-related support programs. Based on the list, the tax agency confirmed 2,559 firms as recipients of tax administration support. The firms will receive minimized tax verification, priority handling of advance reviews for research and manpower development tax credits and consulting on corporate tax reductions, extended payment deadlines and early refund payouts, and tax consultations dedicated to AI companies.

In particular, the tax agency plans to exclude AI startups founded within the past five years from selection for regular tax audits. Other AI small businesses will have regular tax audits deferred for two years upon the taxpayer's application, or three years for companies based outside the Seoul metropolitan area. Where there is no clear suspicion of tax evasion, the firms will also be excluded from reviews of filed returns, easing their tax verification burden.

"The competitiveness of the AI industry depends on how quickly we can create an environment where startups with innovative technologies and ideas can grow," SMEs and Startups Minister Lee So-young said. "Through this collaboration, we will build a foundation that allows promising AI small businesses and startups to focus more on technology development and growth."

"We will continue to work closely with the ministry to provide practical tax administration support that AI companies can feel on the ground," National Tax Service Commissioner Lim Kwang-hyun said.