S. Korea's top inheritance tax rate the second highest in OECD
- 5 years ago
Inheritance tax rates vary by each country,... but South Korean heirs pay some of the most in the OECD.
In light of recent controversies... regarding family succession in many Korean businesses,... debate has emerged... on whether the rate should be lowered or maintained.
Cha Sang-mi has more.
The so-called 'silver spoon' effect,... a life-long advantage given to children of affluent families... is something that's often looked down upon,... particularly by people in Korea.
Inheritance taxes,... levied on inherited property, money or possessions,... has therefore been a thorny issue.
"South Korea’s top rate of inheritance tax is 50 percent-- the second highest in the OECD. This figure is well above the OECD average, and over ten OECD members have no taxes at all on inheriting property."
Experts say the gap is due to the recent scrapping or lowering of inheritance taxes,... in many OECD countries like the U.S. and Germany.
Small business owners have called for widened tax exemptions on SMEs... while many civic groups say the status quo should be maintained.
One expert points out... that the exemption criteria is too narrow.
"Exemptions for business heirs only apply to an estate worth between 17-point-5 million to 44 million U.S. dollars, and there are other strict requirements."
Mr. Lim says a rate between 25 to 30 percent would be most appropriate... in consideration of the OECD average of 26 percent.
And for companies to avoid any backlash regarding these exemptions,... he said the savings should be recirculated for the benefit of society,... through donations or job creation.
Regarding concerns... that a high tax burden on estates is detrimental to businesses,... Professor Park says it's a misconception.
"It is misleading to say that there aren't many good companies here because of the high inheritance tax rate. Strong businesses are created first, before issues on inheritance are ever dealt with."
Professor Park points out that the government,... should rather shift its focus on policies such as deregulation... to allow firms to grow.
Cha Sang-mi, Arirang News.
In light of recent controversies... regarding family succession in many Korean businesses,... debate has emerged... on whether the rate should be lowered or maintained.
Cha Sang-mi has more.
The so-called 'silver spoon' effect,... a life-long advantage given to children of affluent families... is something that's often looked down upon,... particularly by people in Korea.
Inheritance taxes,... levied on inherited property, money or possessions,... has therefore been a thorny issue.
"South Korea’s top rate of inheritance tax is 50 percent-- the second highest in the OECD. This figure is well above the OECD average, and over ten OECD members have no taxes at all on inheriting property."
Experts say the gap is due to the recent scrapping or lowering of inheritance taxes,... in many OECD countries like the U.S. and Germany.
Small business owners have called for widened tax exemptions on SMEs... while many civic groups say the status quo should be maintained.
One expert points out... that the exemption criteria is too narrow.
"Exemptions for business heirs only apply to an estate worth between 17-point-5 million to 44 million U.S. dollars, and there are other strict requirements."
Mr. Lim says a rate between 25 to 30 percent would be most appropriate... in consideration of the OECD average of 26 percent.
And for companies to avoid any backlash regarding these exemptions,... he said the savings should be recirculated for the benefit of society,... through donations or job creation.
Regarding concerns... that a high tax burden on estates is detrimental to businesses,... Professor Park says it's a misconception.
"It is misleading to say that there aren't many good companies here because of the high inheritance tax rate. Strong businesses are created first, before issues on inheritance are ever dealt with."
Professor Park points out that the government,... should rather shift its focus on policies such as deregulation... to allow firms to grow.
Cha Sang-mi, Arirang News.