Private Kindergartens Also Eligible for Business Succession Tax Deduction

73.4% of All Private Kindergartens Eligible for Deduction
Kindergarten Management Must Exceed 10 Years for Eligibility
Inheritance Tax Imposed if Not Engaged Within 7 Years After Inheritance Start

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Private kindergartens that have been operating for more than 10 years will also be eligible for the business succession tax deduction.

On the 8th, the Ministry of Education announced that the partial amendment to the Enforcement Decree of the Inheritance Tax and Gift Tax Act was approved at the Cabinet meeting.

The Ministry of Education, in consultation with the Ministry of Economy and Finance, added kindergartens to the list of businesses eligible for the business succession tax deduction. While daycare centers were included in the eligible business sectors for the deduction in 2013, kindergartens were excluded. At the same time, kindergartens were included to prevent operations from being halted due to inheritance tax burdens upon the founder's death. Kindergartens eligible for the business succession tax deduction account for 73.4% (2,277 kindergartens) of all private kindergartens.

To qualify for the business succession tax deduction, the kindergarten must have been managed for at least 10 years according to the Inheritance Tax and Gift Tax Act. If the heir does not engage in the business without justifiable reasons within 7 years from the start of inheritance, inheritance tax will be imposed. Justifiable reasons include the death of the heir, fulfillment of military service obligations under the law, or medical treatment for illness.

At the Cabinet meeting on the same day, the Enforcement Decree of the Private School Act was also approved, which stipulates the scope of litigation cost support for financially distressed school corporations where temporary directors have been appointed. This is to prevent situations where schools with temporary directors are unable to respond properly due to the burden of litigation costs. The Private School Act, effective from the 11th, includes provisions to support litigation costs for the normalization of school corporations and requires reporting to the competent authority when litigation regarding basic assets is underway.

The Enforcement Decree of the Private School Act allows the state or local governments to support litigation costs in cases such as ▲ disputes related to board operations including personnel matters of school corporation staff ▲ lawsuits to resolve operational obstacles caused by accounting fraud or embezzlement by executives of the school corporation ▲ cases where the school corporation becomes an auxiliary participant in lawsuits against the cancellation of approval for executive appointments.

Additionally, when reporting matters related to lawsuits concerning the basic assets of school corporations to the competent authority, the report must be submitted within 30 days after receiving the verdict. When hiring new administrative staff for elementary and secondary schools, the recruitment field, number of hires, and eligibility criteria must be announced on the provincial education office and school websites at least 20 days before the application deadline.

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