Board of Audit and Inspection: "Unable to Tax LG Family's Stock Transactions as Gift Tax Due to Regulatory Gaps"

[Asia Economy Reporter Oh Ju-yeon] It has been revealed that although tax evasion suspicions through on-market stock transactions by the LG family shareholders were confirmed, gift tax was not imposed due to insufficient related regulations.

On the 31st, the Board of Audit and Inspection disclosed this in the 'Seoul Regional Tax Office Regular Audit Report.'

According to the report, the LG family shareholders and others pre-determined the stock trading prices and quantities over more than ten years since 2007, placed orders simultaneously, and conducted trades, then disguised these as general competitive trades among unspecified multiple parties to evade taxes.

Under the 'Inheritance and Gift Tax Act,' if property is transferred between related parties at prices lower or higher than market value resulting in gains, gift tax should be imposed. However, listed stocks traded on the securities market were excluded from gift tax targets on the grounds that they were traded on the stock exchange.

The Board of Audit and Inspection pointed out that the tax authorities did not impose gift tax on the LG family shareholders in addition to capital gains tax.

The gift tax that could not be levied due to this loophole amounts to 74.3 billion KRW.

The Board of Audit and Inspection notified, "The Minister of Strategy and Finance should prepare improvement measures to enable the imposition of gift tax on transactions where related parties pre-determine stock prices and quantities in the securities market and trade, which are practically difficult to be regarded as competitive trades among unspecified multiple parties."

This content was produced with the assistance of AI translation services.