Government to Improve Corporate Inheritance Tax Incentive
It has been required that the current corporate inheritance tax be improved in a way to expand incentives, for the current conditions for the tax incentive are too stringent to observe. Currently up to 50 billion won of tax credits are granted to companies with annual sales worth 300 billion won or less if they remain in the same business for at least 10 years after the inheritance, retaining the same level of assets and employment.
- Help those wanting to inherit companies
- Stress that the companies be managed responsibly and honestly
- Take into consideration fast changing business environment
1. Relax obligations incurred following the tax credit
- Shorten the 10 year mandatory period to 7 years of retaining businesses, assets and employment at the same level as the time of inheritance
- Allow business transformation within a larger category
- Relax requirements for the sales of more than 20 percent of assets, taking into account changes necessarily following business transformations
- Ease the employment retention rate mandated by the tax credit for medium-sized companies from 120 percent of 7 year averages to 100 percent, taking into account factory automation and other changes in business conditions
2. Add responsibility provisions and relax other requirements
- Introduce an exemption on the corporate inheritance tax credit against those with criminal records of tax fraud or accounting fraud
- Expand the 10-20 years of installment payment from companies whose sales do not exceed 30 billion won annually to all SMEs and leading medium-sized companies
- Relax ancestors’ corporate ownership requirement from 10 years to 5 years at the time of inheritance, and remove inheritors’ work experience requirement of working in the company for at least 2 years
These revisions to the Corporate Inheritance Tax will be included in the 2019 Tax Revision Bill and submitted to the National Assembly in early September.