2029 Individuals Subject to Gift Tax for 'Ilgam Molajugi'... Must Pay by the End of This Month

[Sejong=Asia Economy Reporter Kim Hyunjung] It has been revealed that 2,029 individuals are subject to gift tax payment due to transactions such as preferentially awarding contracts to companies with relatives as shareholders or subcontracting work.

On the 9th, the National Tax Service announced that it sent notification letters to 2,029 recipients expected to meet the gift tax criteria for preferential contract transactions and to 1,711 beneficiary corporations. The government treats profits gained by corporate owners' children through preferential contract transactions as a form of gift and requires tax reporting and payment. The subjects must file and pay gift tax by the 30th of this month.

Preferential contract transactions are subject to taxation if the ratio of sales to corporations related to controlling shareholders and special relations exceeds 30% of the beneficiary corporation's business year sales (50% for small and medium enterprises, 40% for mid-sized enterprises), and if the direct or indirect shareholding ratio of the controlling shareholder and their relatives in the beneficiary corporation exceeds 3% (10% for small and mid-sized enterprises).

Additionally, if the combined shareholding ratio of the controlling shareholder and relatives is 30% or more, and business opportunities are received from corporations related to the controlling shareholder resulting in related operating profits, this is regarded as subcontracting work and subject to gift tax payment. For gift tax on subcontracting work, notification letters were sent to 115 beneficiary corporations expected to meet the tax criteria.

From this year's filings, additional documents must be submitted. In addition to the existing ▲one copy of the recipient and taxable amount calculation statement ▲documents proving sales excluded from taxation and other evidence ▲documents verifying the relationship between the controlling shareholder and related corporations, one copy of the ▲statement of income adjustment by category must also be submitted.

Even if a notification letter was not received, failure to voluntarily report and pay may result in disadvantages in the future.

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