As published on pulsenews.co.kr, Wednesday 17 August, 2022.
The Federation of Korean Industries (FKI) has called for a revision in the nation’s inheritance tax system, whose rate is up to 60 percent, the highest among the Organization for Economic Cooperation and Development (OECD) nations. In contrast, 20 OECD members do not levy inheritance taxes on a person’s direct descendants, such as children and grandchildren.
The FKI, representing big Korean companies including Samsung, Hyundai, and LG, announced Wednesday that it delivered its opinion for the revision to the Ministry of Economy and Finance. In the opinion, the organization claimed that the nation’s notoriously high inheritance taxes would hamper entrepreneurship and contract investment and employment.
Some measures suggested by the economic organization to improve the tax system include lowering the inheritance tax rate to 30 percent, abolishing the management control premium of 20 percent in the case of inheriting stocks from the largest shareholder of a business, and applying capital gains taxes instead of inheritance taxes.
The inheritance acquisition taxes are more equitable than inheritance taxes as they are imposed based on the inherited assets, the organization explained.
The FKI also suggested a shift in the taxation method from the current bequest basis to legatee to consider the ability-to-pay-principle of inheritor.