Tax Subcommittee Begins Final Negotiations on Marriage Deduction and Business Succession

Gift Tax Exemption Up to 300 Million Won Combined for Both Families at Marriage
Discussion on Expanding Lowest Tax Bracket for Business Succession
If Passed by Subcommittee on 29th, Full Committee Meeting on 30th

The ruling and opposition parties have entered the final agreement process on detailed bills such as expanding the gift tax exemption limit for marriage funds and easing gift tax on business succession to pass the tax law amendment bill.

On the morning of the 29th, the ruling and opposition party secretaries of the National Assembly's Planning and Finance Committee held a Tax Subcommittee meeting to re-examine the 2023 tax law amendment bill. The committee also held a subcommittee meeting the previous day and reached agreements on bills with little disagreement between the parties, such as the Customs Act.

On the 22nd, deliberation materials were placed at the Tax Subcommittee of the Planning and Finance Committee held at the National Assembly. Photo by Hyunmin Kim kimhyun81@

The agenda discussed that day included the so-called 'marriage deduction' and the easing of gift tax on business succession. According to the 2023 tax law amendment bill submitted by the government to the National Assembly on September 1, the bill to exempt up to 300 million KRW in gift tax upon marriage includes an additional exemption of gift tax on 100 million KRW of assets inherited from parents within two years before and after the marriage registration date. Under the current law, when parents gift assets to their children, there is no tax on up to 50 million KRW over ten years, but if the bill is amended, up to 150 million KRW per person, or a maximum of 300 million KRW combined from both sides, can be exempt from gift tax upon marriage.

The bill to ease gift tax on business succession applies when a business owner passes the business to their children. The core content is to expand the lowest gift tax rate (10%) taxable bracket from 6 billion KRW or less to 30 billion KRW or less and to extend the special installment payment period for gift tax from 5 years to 20 years.

The ruling and opposition parties have shown consensus on the purpose of the amendment bill itself. If detailed contents are coordinated in the subcommittee that day, there is a high possibility that the tax subcommittee will be held in the afternoon to pass the tax law amendment bill. A Planning and Finance Ministry official explained, "This year's tax law amendment bill focuses on pressing issues," adding, "Since it is a current issue, it is not a bill that can cause major disagreements." Previously, the tax subcommittee had narrowed differences through six meetings. However, the opposition party still opposes the amendment bill, calling it a 'tax cut for the wealthy' that benefits only a small number of people.

If the tax law amendment bill is agreed upon in the subcommittee and passes the tax subcommittee, the Planning and Finance Committee will hold a plenary session on the 30th for final approval. Although this is a step toward submitting it to the plenary session, there is a possibility of renewed conflict over whether to submit the amendment to the National Finance Act, which includes exempting the preliminary feasibility study (PFS) for the project to extend Seoul Subway Line 5 to Gimpo City, Gyeonggi Province. This amendment passed the Economic and Fiscal Subcommittee on the 23rd. If there is an agreement between the ruling and opposition party secretaries, it can be submitted to the plenary session. A Planning and Finance Committee official said, "Since the agenda for the plenary session also requires consultation between the ruling and opposition party secretaries, we need to watch the subcommittee situation first."