Six Economic Organizations Urge Reform of Inheritance and Gift Tax System

Current Inheritance and Gift Tax System Weakening Corporate Competitiveness
Economic Organizations Issue Joint Statement

In a situation where red flags are spreading in the domestic and international economic environment, the business community has expressed the opinion that bold reforms of the inheritance and gift tax system are necessary to strengthen management stability and sustainability for rapid crisis recovery.

On the 20th, six economic organizations including the Korea Federation of Medium-sized Enterprises, the Korea Chamber of Commerce and Industry, the Korea Federation of Small and Medium Business, the Korea Employers Federation, the Korea Economic Association, and the Korea International Trade Association announced this through a joint economic statement urging reform of the inheritance and gift tax system.

Through this joint statement, the economic organizations emphasized, "As the fastest and most effective means to preserve and transfer the core of national competitiveness?companies' technological capabilities, management know-how, and entrepreneurial spirit?it is necessary to support the smooth operation of inheritance and gifting."

The economic organizations stated, "The current inheritance and gift tax system, which stipulates a top rate of 50%, the second highest among 38 OECD countries, and an effective top rate of up to 60% when applying the controlling shareholder surcharge valuation, is the biggest constraint weakening the global competitiveness of our companies," adding, "We must pool wisdom to prevent repeated value loss of companies that have moved abroad due to excessive inheritance tax burdens, companies sold to foreign private equity, and companies that have closed, as well as the chronic Korea discount."

Furthermore, the economic organizations said, "The answer to the spreading economic crisis lies with companies," and emphasized, "Urgent decisions must be made to enable companies to survive, invest, create jobs, and build a foundation for sustainable growth."

In the joint statement released ahead of the ruling and opposition parties and government policy consultation meeting held that day, the economic organizations urged, "The National Assembly should pass a progressive reform bill for the inheritance and gift tax system that lowers the top inheritance tax rate to the OECD average of 30% through open discussion and deliberation between ruling and opposition parties, abolishes the controlling shareholder surcharge valuation, and expands support for business inheritance deductions and special tax provisions for business succession gift tax to revive companies."