Minimum Gift Tax Rate for Business Succession Expanded to 12 Billion Won

Unmarried Birth Children Also Eligible for 150 Million KRW Gift Tax Deduction
Finance Committee Holds Tax Subcommittee, Approves Bipartisan Agreement
Expected to Pass Final Plenary Session After Full Committee Approval

The minimum gift tax rate (10%) applied when business owners transfer their family business to their children is expected to be expanded from the current threshold of KRW 6 billion to KRW 12 billion. Additionally, newlywed couples will be able to receive a gift tax deduction of up to KRW 300 million from both sides of the family.

On the 30th, the National Assembly's Planning and Finance Committee held a tax subcommittee meeting and approved 15 tax law amendment bills, including amendments to the Gift Tax Act and the Restriction of Special Taxation Act containing these provisions.

First, regarding gift tax on business succession, the original government proposal was to increase the upper limit of the taxable bracket to KRW 30 billion, but the opposition party opposed it citing 'tax cuts for the wealthy,' so it was decided to raise it from the current KRW 6 billion to KRW 12 billion. The special installment payment period for gift tax was also extended from 5 years to 15 years. The previous government proposal was 20 years.

Kim Byunghwan, 1st Vice Minister of Strategy and Finance, and Jung Junghoon, Director of the Tax Policy Bureau, are conversing at the Subcommittee on Taxation of the National Assembly's Planning and Finance Committee on the 27th of last month. Photo by Kim Hyunmin kimhyun81@

Regarding the gift tax deduction limit for newlywed couples, the amendment includes an additional exemption of gift tax on KRW 100 million of assets inherited from parents within 2 years before or after the marriage registration date. Under the current law, parents can gift up to KRW 50 million to their children tax-free over 10 years. The government proposal includes an additional KRW 100 million deduction at the time of marriage, allowing a total of KRW 150 million to be gifted tax-free. When combined for the couple, the deduction limit increases up to KRW 300 million. Furthermore, the non-taxable gift limit is expanded until childbirth, allowing unmarried households with children to receive up to KRW 150 million in assets from parents without gift tax.

The Speaker of the National Assembly designated 22 supplementary bills related to revenue budgets on the same day. According to the National Assembly Act, if the relevant committee has not completed the review of tax laws affecting the budget, the Speaker is required to designate supplementary bills for the budget bill to proceed. However, since tax-related bills were approved at the tax subcommittee meeting that day, it is expected that bills passed by the Planning and Finance Committee plenary session will be processed together with the budget bill. Amendments not designated as supplementary bills are expected to go through the Legislation and Judiciary Committee before being submitted to the plenary session.

Meanwhile, the amendment to the Local Finance Grant Act, which was jointly proposed by Speaker Kim Jin-pyo, was also designated as a supplementary revenue bill. This amendment allocates 1% of the local education finance grant resources as a special grant to strengthen AI-based teaching and learning capabilities of elementary and secondary school teachers and to support AI-customized after-school programs.

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