"Pay Taxes Equivalent to Inherited Property"…Government Begins Full Review of 'Inheritance Acquisition Tax' Transition
Ministry of Economy and Finance Forms Expert Task Force to Introduce Inheritance Tax and Estate Acquisition Tax System
[Asia Economy Sejong=Reporter Kwon Haeyoung] The government is pushing for the introduction of an inheritance acquisition tax, which requires heirs to pay taxes based on the property they inherit, as early as next year.
On the 14th, the Ministry of Economy and Finance formed an expert task force (TF) to introduce an inheritance acquisition tax system and held its first meeting chaired by Ko Gwanghyo, Director of the Taxation Office. The government explained, "The transition to an inheritance acquisition tax is a complete overhaul of the inheritance tax system," and added, "We plan to hold regular TF meetings to discuss related issues in depth."
The inheritance acquisition tax is levied only on the portion of the estate acquired by each individual heir, not on the entire estate. The current inheritance tax system adopts an estate tax method that taxes the entire estate, and applying a progressive tax rate of up to 50% (or 60% when the maximum shareholder surcharge tax is applied) has been criticized for excessively increasing the tax burden. While the gift tax currently applies the inheritance acquisition tax method, the inheritance tax uses the estate tax method, which is also cited as one of the problems of the current inheritance tax system.
Among the 23 OECD member countries that impose inheritance tax, only four countries?including South Korea, the United States, the United Kingdom, and Denmark?adopt the estate tax method rather than the inheritance acquisition tax method.
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The government plans to conduct a research project on the legislation of the inheritance acquisition tax by May next year and prepare a tax law amendment bill to be submitted to the regular National Assembly session next year.
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