‘Dismayed’ Blockchain Startups Excluded from S Korean Tax Support Plan

South Korean blockchain companies say they are “deeply disappointed” by the news that they will be excluded from a support program for small- and medium-sized enterprises (SMEs) in the worst-hit parts of the nation, helping them deal with the financial aftermath of the coronavirus pandemic.

Per media outlet Asia Kyungjae, the South Korean Ministry of SMEs and Startups has announced a package of emergency support measures that will see companies’ income and corporate tax bills cut by up to 60% in the cities of Daegu and Gyeongsan, as well as the Cheongdo and Bonghwa counties. However, blockchain-related companies are not eligible – nor are insurance companies, real estate agents, brokerages and law firms.

Blockchain consultant Mira Kim told Cryptonews.com,

“The government has talked about industry 4.0 fueling the future growth of South Korea, but blockchain companies in the area have told me they feel a deep sense of disappointment and dismay at not being given support at this difficult time. It seems unfair to exclude them.”

The ministry’s plans will see companies it classes as “medium-sized” enterprises receive tax discounts of up to 30%, with the full 60% available for companies that fall into the “small businesses” category.

The ministry said that it would also offer support for eligible companies who were struggling to pay their rent.

The aforementioned areas are in the North Gyeongsang province. Last month, President Moon Jae-in declared that Daegu, the country’s third-biggest city, and the entire North Gyeongsang province, were now being classed as “special disaster zones.”

However, North Gyeongsang is one of the country’s biggest blockchain hotspots. The provincial government has blockchain deals in place with leading tech universities, as well as major international blockchain players like Orbs.

The North Gyeongsang city of Gumi was one of the first big cities in the country to adopt a local stablecoin, and the province is now building an ambitious new blockchain business hub at the POSCO Techno Park in Pohang.