Korea Raises Small-Business Revenue Threshold in a Decade

Starting Sept. 1, South Korea raised the revenue threshold for classifying companies as small businesses from 150 billion won to 180 billion won, marking the first increase in a decade. The adjustment allowed roughly 300 firms that had been reclassified as mid-sized companies to return to small-business status.

Small-business groups welcomed the change, noting that many companies had experienced “nominal growth” after the COVID-19 pandemic, with rising prices and soaring raw material costs boosting revenue without real expansion. In contrast, mid-sized business associations warned that the relaxed criteria could trigger a “Peter Pan syndrome,” where companies hesitate to grow. A representative from the Korea Federation of Mid-Sized Enterprises said, “The current revenue cap is already twice that of major economies such as the United Kingdom and the United States. Most government support is concentrated on small businesses, leaving little incentive for companies to advance to mid-sized status.”

The term “Peter Pan syndrome” comes from the 1983 book "The Peter Pan Syndrome: Men Who Have Never Grown Up" by psychologist Dan Kiley. It refers to adults who resist fully integrating into adult society and wish to remain childlike. In a corporate context, it describes companies that, despite growing into mid-sized firms, seek to maintain small-business status to continue receiving benefits.

Small-business classification serves as a critical benchmark for government policies, including tax relief, financial support, and regulatory exemptions. According to the Federation of Korean Industries, companies that “graduate” from small-business status face a more than threefold increase in applicable regulations, from 57 to 183. Benefits limited to small businesses, such as preferential loans, special tax credits, and priority in public procurement, disappear once a company becomes mid-sized.

For this reason, many firms have resorted to measures such as creating subsidiaries or adjusting permanent employee numbers to avoid losing small-business status. In 2023, 301 companies advanced from small to mid-sized, while 574 reverted from mid-sized back to small-business classification—nearly double.

Experts say Korea’s current corporate ecosystem prioritizes protection over growth. They emphasize the need to move beyond small-business–focused policies to restore a smooth growth ladder from small to mid-sized to large enterprises.

According to the Korea Chamber of Commerce and Industry, the number of small-business support programs increased from 1,422 in 2018 to 1,646 in 2023, while the budget grew 60%, from 21.9 trillion won to 35 trillion won. Despite this increased support, the International Institute for Management Development’s World Competitiveness Ranking shows South Korea’s small-business competitiveness has declined from 41st place in 2005 to 61st last year, suggesting that protection-focused policies have done little to enhance competitiveness.

The Bank of Korea forecasts the economy will grow just 0.9% this year. In a period of near-zero growth, revitalizing economic momentum is critical. Against this backdrop, the Korea Economic Research Institute, the Korea Chamber of Commerce and Industry, and the Korea Federation of Mid-Sized Enterprises recently launched a “Task Force for a Growth-Oriented Corporate Ecosystem.” This marks the first time business groups have united under the banner of building a corporate growth ecosystem. Experts argue that in an environment where companies fear growth, neither innovation nor future competitiveness can flourish, urging the government and private sector to accelerate efforts to restore the broken ladder of corporate growth.