Hong Nam-ki: "Careful Consideration Needed for Switching to Inheritance Acquisition Tax... Adjusting Inheritance Tax Rates and Tax Base Brackets"

G20 Accompanying Journalists' Washington Meeting

[Washington D.C. (USA) = Asia Economy Reporter Son Sunhee] Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki said that he is "looking into" the plan to convert the inheritance tax into an estate acquisition tax. However, he expressed a negative stance on adjusting the inheritance tax rate and the taxable base brackets. The government plans to review the entire inheritance tax system once the research project is completed by the end of this month, which is interpreted as providing a guideline.

Hong, who visited the United States to attend the G20 Finance Ministers' Meeting and other events, held a press briefing with accompanying reporters in Washington D.C. on the 14th (local time) and said, "We are looking into the issue of converting the inheritance tax to an estate acquisition tax based on the decedent," adding, "If converted, the inheritance tax burden will decrease." However, he drew a line by saying, "There were many opinions that it is not appropriate to ease the inheritance tax rate itself in a situation where asset inequality has widened," and "We have a very cautious stance on adjusting the inheritance tax rate and taxable base brackets."

The current inheritance tax is an estate tax method that taxes the entire property of the heir. If the amount exceeds 3 billion KRW, a maximum tax rate of 50% is applied. Additionally, if the decedent is the largest shareholder or a related party, 20% is added to the stock valuation. This taxable base was revised in 1999, and considering the increase in asset values and inflation since then, there have been criticisms that the burden is heavy. Especially recently, as real estate prices surged and the inheritance tax burden spread to the middle class, calls to ease it have grown louder.

If the estate tax is changed to an estate acquisition tax, the tax rate will be applied only to the property inherited from the decedent's perspective, allowing a lower tax rate compared to the estate tax. Deputy Prime Minister Hong explained, "We are comprehensively reviewing the feasibility and social acceptance," adding, "This fundamentally changes the inheritance system paradigm in Korea, and naturally, the issue of consistency with the gift tax system will also be connected." The actual revision is likely to be no earlier than next year, and in that case, it is expected to apply from the 2023 inheritance portion.

Meanwhile, Deputy Prime Minister Hong is expected to decide and announce whether to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) as early as the 25th. He said, "We need to reach a conclusion by the end of October or early November."

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