The National Assembly's transport committee has approved a bill that would effectively put the local ride-hailing service Tada out of business.
Tada is officially a van rental service that comes with a driver, which is allowed under the current law.
But the amendment, if passed, would restrict that to vans that are used for tours lasting six or more hours.
Pick-up and returns would also be restricted to airports.
Korean taxi drivers have protested against services such as Tada, claiming they threaten their livelihoods.
The revised bill will go to the judiciary committee and then to the floor for a vote at this month's plenary session.
If passed, related firms will have to end their services after one year, followed by a six-month grace period before facing penaties.