Economic Groups "Welcome Tax Support for U-Turn Companies... Some Regrets Over Inheritance Tax Reform"

"Hope for Amendments such as Inheritance Tax to Inheritance Acquisition Tax"
"Hope for Active Improvement Review on This Occasion"

Major economic organizations welcomed this year's tax law amendment bill, which includes provisions to strengthen tax support for domestic return (U-turn) companies and boost corporate investment vitality. However, they unanimously expressed regret over the exclusion of inheritance tax system reform and the expansion of research and development (R&D) tax credits.

On the 27th, the Federation of Korean Industries (FKI) issued a statement signed by Choo Kwang-ho, head of the Economic and Industrial Headquarters, saying, "The government's current tax law amendment bill is expected to serve as a catalyst for revitalizing our economy by invigorating the weakened corporate investment." He added, "The designation of biopharmaceuticals as a national strategic technology and the expansion of tax support for video content production costs will contribute not only to stimulating domestic demand and exports through investment and employment activation but also to expanding growth potential." Furthermore, he said, "Strengthening tax support for U-turn companies and introducing tax credits for overseas resource development investments will promote the return of overseas enterprises to Korea and help mitigate global supply chain risks."

They expressed regret over the exclusion of some issues such as inheritance tax reform. The FKI stated, "It is unfortunate that measures to enhance industrial and corporate competitiveness, such as the expansion of general technology R&D tax credits and the reform of the inheritance tax system, were not included in the tax law amendment bill." They added, "We hope that sufficient improvements and supplements will be made during the future legislative discussion process to provide our companies with a foundation to gain competitiveness on the global stage and lead the market."

Kang Seok-gu, head of the Research Headquarters at the Korea Chamber of Commerce and Industry (KCCI), also said, "The reinforcement of tax support for U-turn companies, the service industry, and overseas resource development companies to expand corporate investment and reduce corporate burdens is a positive aspect." The KCCI also expressed regret over the exclusion of inheritance tax reform. Kang said, "As the history of our economic development deepens, it is regrettable that the system has not been improved in a way that meets global standards regarding inheritance issues, which are currently the biggest concern for companies." He added, "We hope that active improvements will be considered at this opportunity."

Regarding inheritance tax reform, the government considered changing the taxation system from estate tax to inheritance acquisition tax during this year's tax law amendment discussions but postponed it as a mid- to long-term task after receiving criticism of 'tax cuts for the wealthy.' Estate tax is a method of levying inheritance tax on the total amount of property left by the person transferring the assets. Inheritance acquisition tax is a method of collecting inheritance tax only on the property acquired by the individual inheritor, rather than progressive taxation on the entire estate.

Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho (second from left) is delivering opening remarks at the Tax System Development Deliberation Committee held at the Bankers' Hall in Jung-gu, Seoul on the 27th.
[Photo by Jinhyung Kang aymsdream@]

The Korea Employers Federation (KEF) and the Korea International Trade Association (KITA) did not provide specific comments on inheritance tax reform. They only left general messages that the bill would help expand corporate investment, revitalize the economy, and increase exports. KEF said, "This year's tax law amendment bill is evaluated to contain well measures to enhance the vitality of our economy through expanded support for corporate investment and employment and reduced public burden." They added, "In particular, the expansion of tax support for fostering key industries and the return of overseas enterprises to Korea, as well as the easing of tax burdens on business succession, are expected to help strengthen industrial competitiveness and improve corporate sustainability through the promotion of domestic investment."

Kim Byung-yu, head of the Member Services Headquarters at KITA, said, "The trade industry welcomes the tax law amendment bill aimed at improving the export environment, such as raising the tax credit rate to secure competitiveness in the 'K-content' industry and support measures for the inflow of excellent foreign manpower." He added, "Especially, in a situation where the future environment is uncertain due to a decrease in the working population caused by low birth rates and aging, expanding support for marriage, childbirth, and child-rearing through the tax law amendment was very timely."

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