Gov’t to lower inheritance tax

Jul 26, 2024, 10:13 am

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Finance Minister and Deputy Prime Minister Choi Sang-mok speaks during a press briefing about the tax code revision held at the government complex in Sejong City on July 22, 2024./ Source: The Ministry of Economy and Finance

AsiaToday reporter Lee Ji-hoon

The government will lower the top rate of inheritance tax from 50 percent to 40 percent as part of a measured effort to reform the taxation system. It will cancel the proposed capital gains tax on financial investments over concerns that the tax disadvantage 14 million individual investors, and will not revise the comprehensive real estate holding tax.

The Ministry of Economy and Finance announced these measures after holding a tax development review committee in Seoul on Thursday.

“The government will overhaul old and outdated policies to reflect the changes visible in the economic conditions in order to improve the efficiency of the economy,” Deputy Prime Minister and Minister of Economy and Finance Choi Sang-mok said during a press briefing. “We will adjust the taxation standard for inheritance tax rates that have been maintained for about 25 years, and abolish the capital gains tax on financial investments to revitalize the capital market and protect 14 million individual investors.”

Under the measures, the government will revise the inheritance tax law to reduce the top rate of inheritance tax by 10 percentage points to 40 percent from the current 50 percent. It plans to raise the top of the lowest tax bracket to 200 million won from 100 million won. The inheritance tax credit per child will be raised to 500 million won from the current 50 million won, easing the tax burden on middle class households.

The fact that the adjustment of the maximum inheritance tax rate and the taxation section has not changed since 2000 has helped push for the revision.

This is because nominal grass domestic product (GDP) has more than doubled, and consumer prices has risen 80 percent since 2000.

The government has also decided to abolish the financial investment income tax as announced by the government earlier this year. The abolition of the financial investment income tax was pushed by the previous National Assembly, but it was canceled due to opposition parties. However, attention is focused on whether a compromise can be rea recently advocated for an additional delay in implementing these tax changes.

Meanwhile, the comprehensive real estate holding tax remained untouched by the government in this year’s tax reform, considering the reality that it can further raise housing prices.

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