04/07/22

SOUTH KOREA: KEF Submits a Tax Reform Proposal to Finance Ministry.

As published on businesskorea.co.kr, Monday 4 July, 2022.

The Korea Enterprises Federation said on July 3 that it submitted a proposal to the Ministry of Economy and Finance as to inheritance, corporate and earned income tax-related potential improvements.

According to the federation, the proposal includes a downward adjustment of the maximum inheritance tax rate. “The current rate is the highest in the OECD and it needs to be lowered to 25 percent, the OECD average,” it explained, adding, “Then, accumulated business know-how will be handed down better and permanence will be better ensured for enterprises.”

In addition, the federation said that the extra inheritance tax burden caused by the 20 percent valuation premium applied to the largest shareholders should be eliminated in that South Korea is the only OECD member state where the disadvantage is in effect.

The federation called for deduction-related relaxations as well. “The enterprise inheritance deduction ceiling and limitation on business type change should be abolished and the post-succession mandatory management period should be shortened from at least 10 years to at least five years,” it pointed out, adding, “Also, the blanket deduction limit should be adjusted upward from 500 million won, which has not changed at all for as long as 25 years.”