Expert Panel Discussion... "Top Tax Rate Reduction, Elimination of Surcharge Assessment, and Rationalization of Deduction Amounts Must Be Implemented"
It has been argued that in the taxation of inheritance acquisition tax, not only the decedent but also the residency status of the heirs should be considered, and that the calculation of the taxable inherited property should comprehensively take into account not only the Inheritance and Gift Tax Act but also the Civil Act and property division practices.
On the afternoon of the 1st, the Ministry of Economy and Finance announced that it held an "Expert Discussion on Inheritance Acquisition Taxation" at the Academia Seminar Room in Hanjin Building, Jung-gu, Seoul, hosted by the Korean Tax Law Association. This discussion was organized to discuss the necessity of switching inheritance tax to inheritance acquisition tax and the legal considerations when making such a transition.
Jung Jeong-hoon, Director of the Tax Policy Bureau at the Ministry of Economy and Finance, mentioned that "there is a growing criticism that the old and outdated inheritance tax law is hindering the dynamism of our economy and placing a burden on growth," emphasizing that "it is urgent to rationalize the inheritance tax burden through measures such as lowering the top inheritance tax rate, abolishing the surcharge valuation for major shareholders, and expanding child deductions, as announced in this year's tax law amendment proposal."
He added, "We are preparing to shift from the current inheritance tax system, which taxes the entire inherited property of the decedent, to an acquisition tax system that taxes based on the property each heir individually inherits," and explained that "this method, adopted by many OECD countries, is considered to provide a fairer tax burden than estate tax and is more effective in alleviating wealth concentration."
Kim Seong-hwan, a lawyer who presented at the discussion, pointed out that "the current inheritance tax system based on estate tax not only falls short of the ability-to-pay principle but also aggregates and taxes property gifted to third parties who are not heirs, causing heirs to bear inheritance tax on property they did not receive, which can hinder the development of a healthy donation culture."
By switching to inheritance acquisition tax, it is possible to realize fair taxation, promote donation activation, and secure consistency in taxation between gifts and inheritance.
Professor Shim Chung-jin, who participated as a discussant, stated, "While actively agreeing on the necessity of switching to inheritance acquisition tax, the government's tax law amendment proposals this year, including lowering the top inheritance tax rate, abolishing surcharge valuation, and rationalizing deduction amounts, should be promptly implemented to stimulate consumption and revitalize the economy before the transition."
Regarding legal considerations when switching to inheritance acquisition taxation, discussants pointed out that the scope of inheritance tax should consider not only the decedent but also the residency status of the heirs.
They expressed the opinion that the calculation of the taxable inherited property should seek an appropriate method by comprehensively considering not only the Inheritance and Gift Tax Act but also Korean Civil Law and inheritance property division practices. Other considerations such as inheritance deductions, joint tax liability, presumed inherited property, and prior gifted property were also discussed.
The Ministry of Economy and Finance stated, "We plan to collect opinions from tax experts and various sectors, and based on this, prepare a reform plan for switching to inheritance acquisition tax and submit the related bill to the National Assembly as early as the first half of next year."
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