Special Committee on Tax Reform Calls for "Revision of Inheritance Tax Rates and Tax Base Brackets"

Reconsideration of Majority Shareholder Surtax
Experts: "It Should Be Reformed into an Inheritance Acquisition Tax System"

The People Power Party's Special Committee on Fiscal and Tax Reform decided on the 20th to actively consider reforming inheritance and gift taxes, including adjusting the inheritance tax brackets, expanding the scope of business succession, reexamining the surcharge on major shareholders, and transitioning to an estate acquisition tax.

Song Eon-seok, chairman of the People Power Party's Special Committee on Fiscal and Tax Reform, stated at the committee meeting held at the National Assembly, "One of the representative cases of Korea's tax system not aligning with global standards is the inheritance tax," he said. The meeting was attended by government officials including Kim Byung-hwan, First Vice Minister of Strategy and Finance, tax experts such as Yoon Tae-hwa, professor of Business Administration at Gachon University, and Lee Joong-kyo, professor at Yonsei University Law School.

Chairman Song also criticized, "Among the OECD countries, where the average inheritance tax rate is 50%, Korea has one of the highest inheritance tax rates, tax brackets that have remained unchanged for 24 years, and deduction limits capped at 1 billion KRW for 28 years since 1997, which are some of the problems."

Regarding the reasons why inheritance tax reform has not been implemented, he said, "It is because of the framing and opposition by the major opposition party," and added, "Whenever the government and ruling party mention inheritance tax reform, the Democratic Party, which holds an absolute majority in the National Assembly, habitually divides the public with a rich tax cut frame and has continued opposition for the sake of opposition."

Song Eon-seok, Chairman of the People Power Party's Special Committee on Fiscal and Tax Reform, and Kim Byung-hwan, First Vice Minister of Strategy and Finance, are cheering at the forum on the rational reform direction of inheritance and gift taxes held at the National Assembly on the 20th. Photo by Kim Hyun-min kimhyun81@

Vice Minister Kim also stated, "Korea's inheritance tax rate is significantly higher compared to other countries, and despite inflation, the tax base and deduction amounts have remained unchanged for 20 years, making inheritance tax reform necessary." He continued, "Various opinions have been raised, including adjusting tax rates, tax base, and deduction amounts, introducing an estate acquisition tax, and easing tax measures for business succession," and explained, "We will review the impact of each alternative and prepare a rational reform plan."

Professor Yoon suggested, "The current flat deduction of 500 million KRW needs to be increased considering inflation and asset price increases over time," and added, "The current tax brackets and rates should also be adjusted in line with increases in national income and the size of the national economy."

Professor Lee Joong-kyo of Yonsei University Law School emphasized, "Korea has relatively high inheritance tax rates even among countries that impose inheritance tax, so it is necessary to lower them to an appropriate level and rationally adjust the inheritance tax brackets that have been maintained since 2000," and stressed, "Inheritance tax should be converted to an estate acquisition tax system."

An estate acquisition tax refers to taxing the heirs who acquire the estate based on the perspective that the inherited property is income generated by the death of the decedent. The idea is to change to an estate acquisition tax that taxes based on how much each heir receives rather than the decedent, thereby eliminating distortions caused by the number of children.

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