Government opposes lower inheritance tax: DONG-A ILBO
A study released by the Korea Institute of Public Finance was submitted by the Ministry of Economy and Finance to the National Assembly on Sunday on how to improve the inheritance and gift tax system with a review of the main issues included in the report. The administration opposes the idea of reducing inheritance tax rates from the current level of 10 to 50 percent, adding that the issue requires further deliberation. As many policies are already in place to ensure tax deductions for family businesses and agriculture, for example, it is better to make better use of these deduction-based initiatives rather than introducing inheritance tax rates, he said. “Inheritance tax and income tax have a complementary relationship. Reform of the current tax system should be considered as it is important for the redistribution of wealth.
Not only with this, the administration effectively expresses its objection to the transition from inheritance tax to inheritance acquisition tax in the inheritance tax system, adding that this issue should be reconsidered in the medium and long term. . While inheritance tax is levied on the basis of a total estate sum, inheritance acquisition tax is estimated on the basis of each individual who inherits, thereby reducing the overall tax burden. After reviewing the shift to inheritance tax, the ministry argues that taxation may have a smaller role to play in addressing the issue of inherited wealth, as the risks of tax evasion only increase.
The administration appears to be taking a negative stance towards a greater tax deduction for family business owners who bequeath their property to their descendants. The limit on the tax deduction for family business estates is currently set at 50 billion won, for which the business community is calling for an increase in the limit. However, the government believes there is no need to increase the upper limit, as last year’s average deductibles were 3.97 billion won, lower than the existing legal limit. At the same time, he favors increasing the annual payment period from five years to ten years when an amount of tax payable is more than 20 million won.
With the ministry effectively opposed to reforming the inheritance tax system, conflicts of opinion are expected to arise between government and political circles in a series of sessions chaired by the Tax Subcommittee of the National Assembly from Monday.