Page 4 - 201909G20Entrepreneurship Newsletter

ROK: Govt to Pump $3.9 Billion in Growth Engines

non-memory semiconductors, an increase of 229 percent. Most of
the investment will be used to support research and development,
incorporate new technology into public services and establish
infrastructure such as charging stations for electric and hydrogen-
powered vehicles.
The announcement comes under the Moon Jae-in administration’s
policy drive for “innovative growth” from the start of this year that
focuses on fostering new sectors beyond established industries that are
facing growing uncertainties. The Bank of Korea recently downgraded
this year’s economic growth forecast to 2.2 percent from 2.5 percent.
Korea recorded 2.7 percent growth last year, which was the slowest in
six years. The emphasis on “innovative growth” is an attempt to avoid
the headwinds through new industries. It is also a shift in policy direction
The South Korean government will invest 4.7 trillion won ($3.9 billion) from “income-led growth” that attempted to spur economic growth
next year into six rising industries to develop new so-called growth through direct increases in wages.
engines as the economy faces increasing global challenges.
Plans are highlighted to improve competitiveness by fostering 200,000
Under the plan, the government will focus support on six sectors - data, new experts in the budding industries by 2023. The government
artificial intelligence (AI), 5G technology, non-memory semiconductors, announced that it will increase the number of graduate schools that
biotechnology and future mobility. The nearly five trillion won in support specialize in AI to eight from the current three and establish 30 education
to the industries is a 45 percent rise from a similar budget allocated this centers. The support to the six industries will be included in next
year. year’s budget proposal to the National Assembly in September. The
The government plans to spend 650 billion won on 5G next year, a government added that it will also announce long-term plans to develop
rise of 86 percent from this year, while committing 230 billion won to future mobility vehicles, AI and 5G

Germany to Cut Corporate Tax for SMEs

On August 29, 2019, German Economy
Minister Peter Altmaier announced the
outlines of a plan to reduce the tax and
regulatory burden on small and medium-
sized companies in Germany.
In presenting the SME Strategy, Altmaier
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proposed reducing the tax burden on SMEs
through a gradual phasing out of the solidarity
tax, and by limiting the level of corporate tax
paid by such firms to 25 percent of profits.
Altmaier also called for a tax ceiling for private
companies, which would limit their overall tax
burden to 45 percent.

The solidarity tax is a 5.5 percent surcharge
on personal and corporate income, which has
been used to fund economic development in
the former East Germany. Earlier this month, the Government announced that this tax would be narrowed in scope for individual taxpayers from 2021,
a measure that would mean that 90 percent of taxpayers would no longer have to pay it.

While the headline rate of corporate tax at the federal level is currently 15 percent, local taxes and the solidarity tax increase the combined rate to over
30 percent on average.The plan also envisages a reduction in SMEs' administrative burden by EUR1bn (USD1.1bn) through the implementation of a
new Bureaucratic Relief Act.