Lowering the Threshold for Business Succession Deduction

Research Service on Requirement Relaxation to Complete in November
Focus on Relaxation of Sales, Number of Regular Employees, and Post-Management Requirements

Hong Nam-ki, Deputy Prime Minister for Economy, attended the full meeting of the Planning and Finance Committee held at the National Assembly on the 16th and received a report from the committee officials. Photo by Dongju Yoon doso7@

[Asia Economy Reporter Jang Sehee] It has been confirmed that the government has begun revising the business succession tax deduction system. This follows a request made during the regular National Assembly session in November last year by the National Assembly's Planning and Finance Committee to review inheritance tax improvement measures, drawing attention to whether relaxation measures will be introduced.

According to the government on the 13th, the Ministry of Economy and Finance recently commissioned a research project on the business succession tax deduction system. A Ministry of Economy and Finance official stated, "Since there are various opinions within the industry about relaxing eligibility criteria such as sales volume by company size and easing post-management requirements like the number of regular employees, we plan to examine these matters in depth."

In South Korea, the business succession tax deduction system requires holding more than 50% of the shares in the relevant business and maintaining the number of regular employees for seven years before inheritance to qualify for the deduction benefits.

Although the government relaxed requirements in 2019 by shortening the mandatory management period after inheritance from 10 years to 7 years, voices from the industry still call for easing employment obligations and the prohibition on disposing of more than 20% of corporate assets.

Meanwhile, the Ministry of Economy and Finance plans to complete the research project by November this year, gather public opinion, and push for legal amendments within the year.

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