Business Community "Welcomes Reduction of Top Inheritance Tax Rate and Extension of Sunset for Advanced Industry Tax Credit"

Hankyungyeop, KCCI, KBC, and KITA
Comments on the 2024 Tax Law Revision
"Disappointing Corporate Tax and Value-Up Promotion Tax System Reform"

Economic organizations welcomed the '2024 Tax Law Amendment' announced by the government on the 25th, which includes reductions in the highest inheritance tax rate and extensions of tax credit sunsets for advanced industries such as semiconductors. However, some expressed regret that the inheritance tax rate remains higher than the average level of OECD member countries and that the corporate tax system reform was minimal.

Choi Sang-mok, Deputy Prime Minister and Minister of Economy and Finance, speaking on the 2024 tax law amendment at the Government Complex Sejong on the 22nd.
[Photo by Yonhap News]

Economic organizations welcomed the inheritance tax reform and the extension of the tax credit sunset for advanced industries. Lee Sang-ho, Head of the Economic and Industrial Division at the Korea Economic Association, stated, "The comprehensive reform of the inheritance tax system, including the abolition of the premium valuation on major shareholder stocks, is the first tax system overhaul in 25 years since 1999 and will contribute to enhancing the dynamism of our economy." He added, "The extension of the tax credit sunset for national strategic technologies such as semiconductors and the increase in the integrated investment tax credit rate will also help improve the competitiveness of advanced industries and activate corporate investment."

Kang Seok-gu, Head of the Research Division at the Korea Chamber of Commerce and Industry, said, "We highly appreciate that a significant portion of the unreasonable inheritance tax system has been improved in this tax law amendment." He continued, "The abolition of the premium taxation on major shareholders and the reduction of the highest inheritance tax rate from 50% to 40% will have a great effect in resolving double taxation issues and improving the irrationality of the tax system."

The Korea Employers Federation (KEF) stated, "The extension of the application period for tax credits on national strategic technology investments and the 10 percentage point reduction in the highest inheritance tax rate will enhance the competitiveness of advanced industries including semiconductors and increase corporate sustainability, greatly contributing to improving our tax competitiveness."

Park Sung-hwan, Head of the Trade Promotion Division at the Korea International Trade Association, said, "It is encouraging that the amendment reflects this year's trade industry's requests for the extension of the research and development (R&D) tax credit period and the extension of the special corporate tax base for shipping companies."

However, the business community also noted some disappointments regarding corporate tax system and value-up promotion tax system reforms. Lee Sang-ho of the Korea Economic Association said, "It is regrettable that the amendment does not include measures to reduce corporate tax rates or rationalize investment and win-win cooperation promotion tax systems." He urged, "I hope improvements and supplements will be made in the legislative process to enhance corporate competitiveness."

Kang Seok-gu of the Korea Chamber of Commerce and Industry added, "The inheritance tax rate is still higher than the OECD average of 30%, and it is also regrettable that the extension of the tax credit sunset for national strategic technologies is limited to three years." He also noted, "Efforts to improve the value-up promotion tax system are needed, as it currently limits shareholder returns to corporate shareholders only and excludes separate taxation for all individual shareholders."

Park Sung-hwan of the Korea International Trade Association said, "We hope that issues not reflected this time, such as expanding the tax credit rate for overseas resource development investments and relaxing the business restriction requirements for the family business inheritance tax credit, will be reviewed promptly."

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