INHERITANCE TAX AND GIFT TAX ACT
Wholly Amended by Act No. 5193, Dec. 30, 1996
Amended by Act No. 5493, Dec. 31, 1997
Act No. 5498, Jan. 8, 1998
Act No. 5582, Dec. 28, 1998
Act No. 6048, Dec. 28, 1999
Act No. 6124, Jan. 12, 2000
Act No. 6301, Dec. 29, 2000
Act No. 6780, Dec. 18, 2002
Act No. 7010, Dec. 30, 2003
Act No. 7335, Jan. 14, 2005
Act No. 7580, Jul. 13, 2005
Act No. 8139, Dec. 30, 2006
Act No. 8347, Apr. 11, 2007
Act No. 8346, Apr. 11, 2007
Act No. 8435, May 17, 2007
Act No. 8828, Dec. 31, 2007
Act No. 8863, Feb. 29, 2008
Act No. 8852, Feb. 29, 2008
Act No. 9269, Dec. 26, 2008
Act No. 9916, Jan. 1, 2010
Act No. 9924, Jan. 1, 2010
Act No. 10000, Feb. 4, 2010
Act No. 10305, May 20, 2010
Act No. 10361, jun. 8, 2010
Act No. 10366, jun. 10, 2010
Act No. 10411, Dec. 27, 2010
Act No. 10854, Jul. 14, 2011
Act No. 10907, Jul. 25, 2011
Act No. 10924, Jul. 25, 2011
Act No. 11130, Dec. 31, 2011
Act No. 11609, Jan. 1, 2013
Act No. 11690, Mar. 23, 2013
Act No. 11845, May 28, 2013
Act No. 12168, Jan. 1, 2014
Act No. 13796, Jan. 19, 2016
Act No. 14388, Dec. 20, 2016
Act No. 14839, Jul. 26, 2017
Act No. 15224, Dec. 19, 2017
Act No. 15522, Mar. 20, 2018
Act No. 16057, Dec. 24, 2018
Act No. 16102, Dec. 31, 2018
CHAPTER I GENERAL PROVISIONS
The purpose of this Act is to contribute to fairly imposing inheritance tax and gift tax, to ensuring that tax obligations are properly carried out, and to smoothly raising public revenue by prescribing matters concerning requirements and procedures for taxation of inheritance tax and gift tax.
[This Article Newly Inserted by Act No. 13557, Dec. 15. 2015]
[Previous Article 1 Moved to Article 3]
The terms used in this Act shall are defined as follows:
| 1. | The term "inheritance" means inheritance under Part 5 of the Civil Act, which includes the following: |
| (b) | A gift that becomes effective upon the death of a donor under Article 562 of the Civil Act (including a gift where a donor dies while a donated debt is being repaid, which is owed by an ancestor to his or her heir within 10 years prior to the day on which inheritance commences, or is owed by an ancestor to a person other than his or her heir within five years prior to the day on which inheritance commences; hereinafter referred to as "donation effective upon death"); |
| (c) | Distribution of inherited property to a person who has been living in the same household with an ancestor under Article 1057-2 of the Civil Act, to a person who has been nursing an ancestor and to a person who has had a special relationship with an ancestor (hereinafter referred to as "specially related person"); |
| 2. | The term "day on which inheritance commences" means the day on which an ancestor dies: Provided, That where inheritance commences as the ancestor is declared missing, it shall mean the day on which his or her disappearance is declared; |
| 3. | The term "inherited property" means all the property that is in the hands of an ancestor, which includes the following articles and rights: Provided, That those that are exclusively personal to the ancestor and cease to exist following the death of the ancestor shall be excluded: |
| (a) | All the articles having economic value that can be converted into money; |
| (b) | All the legal or de facto rights having property value; |
| 5. | The term "legatee" means a person to whom a bequest is made or a person who acquires property through donation effective upon the death of a donor; |
| 6. | The term "donation" means a gratuitous transfer (including transfer of property at a remarkably low price) of any tangible or intangible property or rights having economic value to another person by a direct or indirect manner, regardless of the title, form, purpose, etc. of relevant act or transaction, or an increase in the value of another person's property: Provided, That a bequest and donation effective upon death shall be excluded; |
| 7. | The term "donated property" means all the property or profits that pass into the hands of a donee, which includes the following articles, rights and profits: |
| (a) | All the articles that can be converted into money and have economic value; |
| (b) | All the legal or de facto rights that have property value; |
| (c) | All the economic profits that can be converted into money; |
| 8. | The term "resident" means a person who has an address in Korea or a domicile in Korea for not less than 183 days, and the term "non-resident" means a person other than a resident. In such case, the definitions of resident and non-resident and matters necessary for the judgment of whether a person is a resident, non-resident, etc. shall be prescribed by Presidential Decree; |
| 9. | The term "donee" means a resident (including a non-profit corporation, the head office or main office of which is located in Korea) or a non-resident (including a non-profit corporation, the head office or main office of which is located in a foreign country) who obtains donated property; |
| 10. | The term "specially related person" means a person in a relationship prescribed by Presidential Decree, such as a lineal relationship, economic relationship, controlling management relationship with a principal. In such cases, the principal shall be deemed specially related to the specially related person. |
[This Article Newly Inserted by Act No. 13557, Dec. 15. 2015]
[Previous Article 2 Moved to Article 4]
| Article 3 (Property Subject to Inheritance Tax) |
Inheritance tax shall be imposed on the following property pursuant to this Act as at the day on which inheritance commences: <Amended by Act No. 14388, Dec. 20, 2016>
| 1. | Where an ancestor is a resident: All the inherited property; |
| 2. | Where an ancestor is a non-resident: All the inherited property in Korea. |
[This Article Wholly Amended by Act No. 13557, Dec. 15. 2015]
[Moved from Article 1; Previous Article 3 Moved to Article 3-2]
| Article 3-2 (Inheritance Tax Obligation) |
| (1) | An heir (excluding a profit-making corporation from among specially related persons) or a legatee (excluding a profit-making corporation) shall have an obligation to pay an amount calculated by multiplying a rate prescribed by Presidential Decree by the value of property each has received or is to receive from among inherited property (including donated property an heir or a legatee has received from among the donated property added to inherited property pursuant to Article 13). |
| (2) | Where a specially related person or a legatee is a profit-making corporation and where an heir or his or her lineal descendant exists among shareholders or investors (hereinafter referred to as "shareholder, etc.") of the profit-making corporation, the heir or his or her lineal descendant shall have an obligation to pay an amount equivalent to his or her share calculated as prescribed by Presidential Decree. |
| (3) | An heir or a legatee shall have a joint and several obligation to pay inheritance tax under paragraph (1) within the limits of property each has received or is to receive. |
[This Article Wholly Amended by Act No. 13557, Dec. 15. 2015]
[Moved from Article 3]
| Article 4 (Property Subject to Gift Tax) |
| (1) | Gift tax shall be imposed on any of the following donated property pursuant to this Act: <Amended by Act No. 14388, Dec. 20, 2016> |
| 1. | Property or profits gratuitously transferred; |
| 2. | Profits generated by receiving property or interest by means of transfer at a remarkably low price: Provided, That in cases of a transaction between persons who are not specially related, it shall be limited to where good cause does not exist as a transactional practice; |
| 3. | Profits where the value of property increases after the property is obtained: Provided, That in cases of a transaction between persons who are not specially related, it shall be limited to where good cause does not exist as a transactional practice; |
| 5. | Where Article 44 or 45 is applicable, the property or profits thereunder; |
| 6. | Where the amount of donated property can be calculated by applying the provisions listed in subparagraph 4 with necessary modifications, such as cases in which economic substance is the same as in the provisions listed in subparagraph 4, the property or profits thereunder. |
| (2) | Where provisions of Articles 45-2 through 45-5 are applicable, gift tax shall be imposed on the property or profits, by deeming that the property or profits have been donated. |
| (3) | With regard to any property a certain heir obtains in excess of the original share of inheritance as a result of distributing inherited property in consultation with other joint heirs after the share of each heir is fixed by registration, recording, entry of change of a holder in the register, etc. (hereinafter referred to as "registration, etc.") of the inherited property as inheritance commences, gift tax shall be imposed thereon, by deeming that it has been donated by an heir whose share of inheritance decreased due to such distribution: Provided, That where property is obtained in excess of the original share due to distribution within the deadline to file a return of inheritance tax base prescribed in Article 67 and where good cause prescribed by Presidential Decree exists, such as nullification or revocation of the original distribution of inherited property, no gift tax shall be imposed. |
| (4) | Where a donee returns donated property (excluding money) to a donor according to an agreement between interested parties within the deadline to file a gift tax base prescribed in Article 68 (excluding cases in which tax base and tax amount are determined pursuant to Article 76 before returning the donated property), donation shall be deemed not to have existed from the beginning; and where a donee returns donated property to a donor or re-donates donated property to a donor within three months past the deadline to file a gift tax base prescribed in Article 68, no gift tax shall be imposed on the returned property or re-donated property. |
[This Article Wholly Amended by Act No. 13557, Dec. 15. 2015]
[Moved from Article 2; Previous Article 4 Moved to Article 4-2]
| Article 4-2 (Obligations to Pay Gift Tax) |
| (1) | A donee shall have an obligation to pay gift tax on donated property according to the following classifications: <Amended by Act No. 14388, Dec. 20, 2016; Act No. 16102, Dec. 31, 2018> |
| 1. | Where a donee is a resident (including a non-profit corporation, the head office or main office of which is located in the Republic of Korea; hereafter in this paragraph the same shall apply): All the donated property subject to gift tax pursuant to Article 4; |
| 2. | Where a donee is a non-resident (including a non-profit corporation, the head office or main office of which is located in a foreign country; hereafter in paragraph (6) and Article 6 (2) and (3) the same shall apply): All the donated property in the Republic of Korea subject to gift tax pursuant to Article 4. |
| (2) | Notwithstanding paragraph (1), where any property is deemed to be donated pursuant to Article 45-2 (including cases where the title holder of such property is a profit-making corporation), the actual owner of such property shall have an obligation to pay gift tax on it. <Newly Inserted by Act No. 16102, Dec. 31, 2018> |
| (3) | Where income tax under the Income Tax Act or corporate tax under the Corporate Tax Act is imposed on donated property under paragraph (1) for the donee, no gift tax shall not be imposed. The foregoing shall apply to cases in which income tax or corporate tax is not imposed, or is reduced or exempted pursuant to the Income Tax Act, the Corporate Tax Act or any other Act. <Amended by Act No. 16102, Dec. 31, 2018> |
| (4) | Where corporate tax under the Corporate Tax Act is imposed on property or profits donated to a profit-making corporation (including cases where corporate tax is not imposed, or is reduced or exempted pursuant to the Corporate Tax Act or any other Act), no gift tax shall be imposed for the shareholders, etc. of the relevant corporation, excluding cases prescribed in Articles 45-3 through 45-5. <Amended by Act No. 16102, Dec. 31, 2018> |
| (5) | Notwithstanding paragraph (1), where Articles 35 through 37 or Article 41-4 apply and a donee is deemed to be unable to pay gift tax, the gift tax shall be fully or partially exempted. |
| (6) | In cases falling under any of the following subparagraphs, a donor shall have a joint and several obligation to pay gift tax to be paid by a donee: Provided, That the foregoing shall not apply to cases falling under any of Articles 4 (1) 2 and 3, 35 through 39, 40, 41-2 through 41-5, 42, 42-2, 42-3, 45-3 through 45-5, and 48 (only applicable in cases prescribed by Presidential Decree, where a contributor of a public-service corporation is not responsible for the operation of the relevant public-service corporation): <Amended by Act No. 16102, Dec. 31, 2018> |
| 1. | Where the domicile or residence of the donee is unknown and it is difficult to secure a gift tax claim; |
| 2. | Where the donee is deemed to be unable to pay gift tax and it is difficult to secure a gift tax claim, even though administrative measures are taken to collect arrears of taxes; |
| 3. | Where the donee is a non-resident; |
| 4. | Deleted. <by Act No. 16102, Dec. 31, 2018> |
| (7) | Where a donor is required to pay gift tax pursuant to paragraph (6), the head of the relevant tax office shall notify the donor of the ground therefor. <Amended by Act No. 16102, Dec. 31, 2018> |
| (8) | This Act shall apply to an association, foundation, or other organization without any legal personality, by deeming it an entity falling under any of the following subparagraphs: <Amended by Act No. 16102, Dec. 31, 2018> |
| 2. | In other cases not falling under subparagraph 1: A resident or non-resident. |
| (9) | Where an actual owner fails to pay gift tax, additional dues, or expenses for administrative measures to collect arrears of taxes under Article 45-2, and there is a shortage in the amount to be collected even though administrative measures are taken against the other property of the actual owner, such gift tax, additional dues, or expenses for administrative measures to collect arrears of taxes may be collected from the actual owner as a person liable to pay tax, whose property is deemed donated to a title holder pursuant to Article 45-2, as prescribed in the National Tax Collection Act. <Newly Inserted by Act No. 16102, Dec. 31, 2018> |
[This Article Wholly Amended by Act No. 13557, Dec. 15. 2015]
[Moved from Article 4; Previous Article 4-2 Deleted]
| Article 5 (Location of Inherited Property) |
| (1) | The location of any inherited property or donated property shall be a place determined according to the following classifications: <Amended by Act No. 11609, Jan. 1, 2013; Act No. 13557, Dec. 15. 2015; Act No. 14388, Dec. 20, 2016> |
| 1. | Real estate or a right thereto: The location of such real estate; |
| 2. | A mining claim or mining concession right: The location of the mining area; |
| 3. | A fishing right or a right to enter fishing grounds: The coast closest to fishing grounds; |
| 4. | A vessel: The location of the registry of the vessel; |
| 5. | Aircraft: The location of the hangar of the aircraft; |
| 6. | Stocks or investment shares (hereafter in this Article and Articles 22, 39, 39-2, 39-3, 41-2, 41-3, 41-5 and 63 referred to as "stocks, etc."), or debentures: The location of the head or main office of the corporation that has issued such stocks, etc., or debentures, or in which such stocks, etc., or debentures have been invested: Provided, That with regard to stocks, investment shares, or debentures issued by a foreign corporation in the Republic of Korea pursuant to domestic Acts, the location of the place of business of the financial company, etc. handling the relevant transactions as defined in subparagraph 1 of Article 2 of the Act on Real Name Financial Transactions and Confidentiality (hereinafter referred to as “financial company, etc.”); |
| 7. | A monetary trust handled by a person managing a trust business subject to the application of the Financial Investment Services and Capital Markets Act: The location of the place of business that has accepted the relevant trust property: Provided, That with regard to trust property, other than a monetary trust, the location of the trusted property; |
| 8. | Financial property prescribed by Presidential Decree, other than subparagraphs 6 and 7: The location of the business place of the financial company, etc. handling such property; |
| 9. | A monetary claim: The location of the domicile of the debtor: Provided, That this shall not apply in cases falling under subparagraphs 6 through 8; |
| 10. | Tangible property or movables, other than those prescribed in subparagraphs 2 through 9: The location of such tangible property, or the place where the movables are located; |
| 11. | Any right requiring registration, including trademark rights, patent rights, etc.: The location of the administrative body with which such rights are registered; |
| 12. | A copyright (including publishing rights and neighboring rights): Where the subject work of the copyright has been published, the place of such publication; |
| 13. | A right to the business of a person who owns any other place of business, excluding property prescribed in subparagraphs 1 through 12: The location of his or her place of business. |
| (2) | The location of property not stipulated in any subparagraph of paragraph (1) shall be the domicile of the person who holds a right to such property. |
| (3) | Any determination on the location of property prescribed in paragraphs (1) and (2) shall be made, based on circumstances existing as at the time of commencement of inheritance or donation. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 6 (Jurisdiction over Taxation) |
| (1) | Inheritance tax shall be levied by the head of a tax office (referring to the Director of the Regional Tax Office with respect to matters deemed specifically important by the Commissioner of the National Tax Service; hereinafter referred to as "head of a tax office, etc.") having jurisdiction over the place of the domicile of an ancestor (referring to the ancestor's residence if his or her domicile does not exist or is unknown; hereinafter referred to as "opening place of inheritance"): Provided, That when the opening place of inheritance is in an overseas location, inheritance tax shall be levied by the head of a tax office, etc. having jurisdiction over the place where the inherited property is located, and where the inherited property extends over jurisdictions of the heads of two or more tax offices, etc., inheritance tax shall be levied by the head of a tax office, etc. having jurisdiction over the place where the main property is located. |
| (2) | Gift tax shall be levied by the head of a tax office, etc. having jurisdiction over the place of the domicile of a donee (referring to the donee's residence if his or her domicile does not exist or is unknown; hereafter in this paragraph the same shall apply): Provided, That in cases falling under any of the following subparagraphs, gift tax shall be levied by the head of a tax office, etc. having jurisdiction over the domicile of the donor: <Amended by Act No. 16102, Dec. 31, 2018> |
| 1. | Where the donee is a non-resident; |
| 2. | Where the domicile and residence of the donee are unclear; |
| 3. | Where the property is deemed donated pursuant to Article 45-2. |
| (3) | Where any of the following is applicable, gift tax shall be levied by the head of a tax office, etc. having jurisdiction over the place where the donated property is located: <Amended by Act No. 12168, Jan. 1, 2014; Act No. 13557, Dec. 15. 2015> |
| 1. | Where a donee and a donor are both non-residents; |
| 2. | Where address or domicile of both a donee and a donor is unclear; |
| 3. | Where a donee is a non-resident or his or her address or domicile is unclear, and a certain person is regarded as a donor pursuant to Articles 38 (2), 39 (2), 39-3 (2), 45-3, and 45-4. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
CHAPTER II ASSESSMENT STANDARD AND CALCULATION OF INHERITANCE TAX
SECTION 1 Inherited Property
| Article 7 Deleted. <by Act No. 13557, Dec. 15. 2015> |
| Article 8 (Insurance Proceeds Deemed Inherited Property) |
| (1) | Insurance proceeds on a life insurance or non-life insurance policy receivable due to the death of the ancestor in accordance with an insurance contract of which the ancestor is the policyholder shall be deemed inherited property. |
| (2) | Where an ancestor has paid the insurance premium substantially although the ancestor is not a policyholder, the ancestor shall be deemed the policyholder and thereby paragraph (1) shall apply thereto. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 9 (Trust Property Deemed Inherited Property) |
| (1) | Property trusted by an ancestor shall be deemed inherited property: Provided, That where a third party holds a right to receive gains accruing from the trust, the value equivalent to such gains is not deemed inherited property. |
| (2) | Where an ancestor holds a right to receive gains accruing from the trust from a third party due to trust, the value equivalent to such grains shall be included in inherited property. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 10 (Retirement Allowance Deemed Inherited Property) |
Retirement grants, allowances, amounts for merit, pensions, or others similar thereto payable to an ancestor, which are actually paid due to the death of the ancestor, shall be deemed inherited property: Provided, That none of the following shall be deemed inherited property: <Amended by Act No. 10305, May 20, 2010; Act No. 15522, Mar. 20, 2018>
| 1. | A bereaved family pension or a lump sum return to be paid due to the death of the ancestor pursuant to the National Pension Act; |
| 2. | A survivors' pension, a survivors’ disability pension, a survivors’ pension for a public official who died in the line of duty, a survivors’ pension for official duties, a survivors’ pension for a public official who died in the line of duty while under danger, an additional payment to a survivors' pension, a lump-sum survivors' pension, a lump-sum payment to survivors, a survivors’ compensation for a public official who died in the line of duty, a survivors' compensation for official duties, or a survivors’ compensation for a public official who died in the line of duty while under danger, which is paid pursuant to the Public Officials Pension Act, the Public Officials' Accident Compensation Act, or the Pension for Private School Teachers and Staff Act; |
| 3. | A bereaved family pension, benefit additional to a bereaved family pension, lump-sum bereaved family pension, lump sum benefits for a bereaved family, or disaster compensation to be paid pursuant to the Military Pension Act; |
| 4. | A bereaved family compensation pension, lump-sum bereaved family compensation, lump-sum benefits for a bereaved family, special allowances for a bereaved family, or a pension for a pneumoconiosis bereaved family to be paid pursuant to the Industrial Accident Compensation Insurance Act; |
| 5. | Bereaved family compensation or disaster compensation or others similar thereto to be paid by the employer to the bereaved family members of an employee who has died in the course of performing his or her duty, by applying mutatis mutandis the Labor Standards Act, etc.; |
| 6. | Cases similar to subparagraphs 1 through 5, which are prescribed by Presidential Decree. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 11 (Non-Taxation of Inheritance Tax on War Dead) |
Where inheritance takes place because a person is killed in action or dies while performing his or her official duties prescribed by Presidential Decree, or dies from an injury incurred in action or while performing his or her official duties or dies of disease caused by such injury, no inheritance tax shall be levied.
[This Article Wholly Amended by Act No. 14388, Dec. 20, 2016]
| Article 12 (Non-Taxable Inherited Property) |
The following property is exempt from inheritance tax: <Amended by Act No. 10361, Jun. 8, 2010>
| 1. | Property bequeathed (including donations becoming effective due to the death of the ancestor; hereinafter referred to as "bequest, etc.") to the State, a local government, or a public organization prescribed by Presidential Decree (hereinafter referred to as "public organization"); |
| 2. | State-designated cultural heritage, City/Do-designated cultural heritage, and land prescribed by Presidential Decree that is in the protected area pursuant to the Cultural Heritage Protection Act; |
| 5. | Intra-company labor welfare fund pursuant to the Framework Act on Labor Welfare, or other property similar to such fund bequeathed, etc. to an organization prescribed by Presidential Decree; |
| 6. | Socially accepted and recognized disaster relief funds and goods, medical fees, or other property similar thereto that are property prescribed by Presidential Decree; |
| 7. | Inherited property an heir donates to the State, a local government, or public organization by the reporting deadline under Article 67. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
SECTION 3 Taxable Value of Inherited Property
| Article 13 (Taxable Value of Inherited Property) |
| (1) | The taxable value of inherited property shall be an amount obtained by adding the following property value to the value of inherited property, less the amount calculated under Article 14 therefrom. In such cases, if the amount calculated under Article 14 exceeds the value of inherited property, the excess amount shall be deemed non-existent: <Amended by Act No. 11609, Jan. 1, 2013> |
| 1. | The value of property donated by an ancestor to his or her heir within 10 years prior to the commencement date of inheritance; |
| 2. | The value of property donated by an ancestor to a person other than his or her heir within five years prior to the commencement date of inheritance. |
| (2) | Where inheritance commences due to the death of a non-resident in applying paragraph (1) 1 and 2, the value of property under each subparagraph of paragraph (1) shall be added to the taxable value of inherited property only if the property that is in the Republic of Korea is donated. |
| (3) | The value of property under Articles 46, 48 (1), 52, and 52-2 (1) and the value of donated property excluding any summing-up under Article 47 (1) shall not be included in the value of donated property to be added to the taxable value of inherited property pursuant to paragraph (1). |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 14 (Public Imposts Deducted from Value of Inherited Property) |
| (1) | Where inheritance commences due to the death of a resident, the following values or expenses related to an ancestor or inherited property as at the commencement date of inheritance shall be deducted from the value of inherited property: |
| 3. | Debts (excluding donated debts owed by the ancestor to his or her heir within 10 years prior to the commencement date of inheritance, and donated debts owed by the ancestor to a person other than his or her heir within five years prior to the commencement date of inheritance; hereafter in this Article the same shall apply). |
| (2) | Where inheritance commences due to the death of a non-resident, the following values or expenses shall be deducted from the value of inherited property: <Amended by Act No. 10366, Jun. 10, 2010> |
| 1. | Public imposts pertaining to the inherited property concerned; |
| 2. | Debts secured with liens, pledges, right to lease on a deposit basis, right of lease (including cases of conclusion of de facto rental contract), right to property transferred for security for the purposes of the inherited property concerned, debts secured as mortgages or security right prescribed by the Act on Security over Movable Property, Claims, Etc.; |
| 3. | Public imposts and debts for business that are verified by books and records kept at the place of business in the Republic of Korea, if any, as at the time of the ancestor's death. |
| (3) | The scope of the public imposts and funeral expenses deducted from the value of inherited property pursuant to paragraphs (1) and (2) shall be prescribed by Presidential Decree. |
| (4) | The amount of debts deducted from the value of inherited property pursuant to paragraphs (1) and (2) shall be an amount substantiated according to the methods prescribed by Presidential Decree. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 15 (Presumption of Inheritance to Property Disposed of Prior to Commencement Date of Inheritance) |
| (1) | Where an ancestor has either disposed of his or her property or repaid his or her debts in any of the following cases, such property or debts shall be presumed to have been inherited, and thus, shall be included in the taxable value of inherited property under Article 13: |
| 1. | Where the amount obtained by disposing of the property of the ancestor, or that obtained by withdrawing from the property of the ancestor is not less than 200 million won calculated according to the types of property within one year prior to the commencement date of inheritance or not less than 500 million won calculated according to the types of property within two years prior to the commencement date of inheritance, and the use of such amount is not objectively and clearly verified, as prescribed by Presidential Decree; |
| 2. | Where the sum of the debts repaid by the ancestor is either not less than 200 million won within one year before the commencement date of inheritance, or 500 million won within two years before the commencement date of inheritance, and the use of such sum is not objectively and clearly verified, as prescribed by Presidential Decree. |
| (2) | Where it is deemed that the heir is not obliged to repay any debt owed by the ancestor to a person other than the State, a local government and a financial company, etc. prescribed by Presidential Decree, as prescribed by Presidential Decree, such debt shall be added to the taxable value of inherited property under Article 13. <Amended by Act No. 11609, Jan. 1, 2013> |
| (3) | The calculation of the amounts, etc. either received by disposing of property under paragraph (1) 1, or withdrawn from such property, and the classification of property types shall be prescribed by Presidential Decree. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
SECTION 4 Non-Inclusion of Property Contributed for Public Interest in Taxable Value
| Article 16 (Non-Inclusion of Property Donated to Public Service Corporations in Taxable Value of Inherited Property) |
| (1) | The value of property donated by a deadline for filing an inheritance tax return prescribed in Article 67 (where there are extenuating circumstances prescribed by Presidential Decree, such as cases where the incorporation of a public service corporation, etc. is delayed for any legal or administrative ground, referring to six months from the last day of the month to which the date such ground ceases to exist belongs), which is the value of property donated by an ancestor or his or her heir among the inherited property to a person who conducts business prescribed by Presidential Decree (hereinafter referred to as "public service corporation, etc."), such as business related to religion, charity, academic studies, in consideration of public interest, shall not be included in the taxable value of inherited property. <Amended by Act No. 14388, Dec. 20, 2016> |
| (2) | Notwithstanding paragraph (1), where shares with voting rights or equity stakes (hereafter in this Article referred to as "shares, etc.") of a domestic corporation are donated to a pubic service corporation, etc., in which case the sum of shares, etc. donated and shares, etc. prescribed in subparagraph 1 exceeds the percentage prescribed in subparagraph 2 of the total number of issued shares with voting rights or the total amount of capital invested (excluding its own shares and equity stakes; hereafter in this Article referred to as "total number of issued shares, etc.") of the domestic corporation, the value of such excess shall be included in the taxable value of inheritance tax: <Amended by Act No. 15224, Dec. 19, 2017> |
| 1. | Shares, etc.: The following shares, etc.: |
| (a) | Shares, etc. of the same domestic corporation owned by the relevant public service corporation, etc. as at the time a donor makes a donation; |
| (b) | Shares, etc. of the same domestic corporation which a donor and a person who has a special relationship with him or her have donated to a public service corporation, etc. other than the relevant public service corporation, etc.; |
| (c) | Shares, etc. of the same domestic corporation owned by another public service corporation, etc. to which an heir and a person who has a special relationship with him or her have donated his property; |
| 2. | Percentage: 5/100: Provided, That where an heir makes a donation to an exemplary pubic service corporation, etc. which does not have a special relationship with a conglomerate restricted from mutual investment (hereinafter referred to as "conglomerate restricted from mutual investment") under Article 14 of the Monopoly Regulation and Fair Trade Act, which fully meets requirements prescribed by Presidential Decree, such as an external audit conducted under Article 50 (3), opening and use of an exclusive account prescribed in Article 50-2, public announcement of financial statements, etc. prescribed in Article 50-3, preparation and keeping of books and records prescribed in Article 51, percentages classified as follows: |
| (a) | Where he or she makes a donation to an exemplary pubic service corporation, etc. which fully meets the following requirements: 20/100: |
| i) | It shall not exercise voting rights of shares, etc. donated; |
| ii) | It shall aim at charity, the promotion of learning or social welfare; |
| (b) | Cases other than item (a): 10/100; |
| 3. | Shares, etc. of the same domestic corporation owned by another public service corporation, etc. to which an ancestor or a person who has a special relationship with him or her has donated property. |
| (3) | Notwithstanding paragraph (2), in any of the following cases, even if a donation exceeds the percentage prescribed in paragraph (2) 2 of the total number of issued shares, etc. of the domestic corporation, no value of such excess shall be included in the taxable value of inheritance tax: <Amended by Act No. 14388, Dec. 20, 2016; Act No. 15224, Dec. 19, 2017> |
| 1. | Where he or she donates shares, etc. of the domestic corporation which does not have a special relationship with a person who has made a donation to a public service corporation, etc. to the public service corporation, etc., which falls under the proviso of Article 49 (1), which does not have a special relationship with a conglomerate restricted from mutual investment, in which case the competent authorities deem the donation necessary in order to efficiently engage in target business of the public service corporation, etc.; |
| 2. | Where he or she donates shares, etc. in excess of percentages prescribed in the items of paragraph (2) 2 of the total number of issued shares, etc. to an exemplary public service corporation, etc. (including cases where a public service corporation receives the donation of shares, etc. within three months from the date of its incorporation, and becomes an exemplary public service corporation, etc. within two years from the date when the business year in which it is incorporated ends) which does not have a special relationship with a conglomerate restricted from mutual investment, in which case the relevant exemplary public service corporation, etc. sells shares, etc. (excluding cases where it sells shares, etc. to a person who has donated shares, etc. or a person who has a special relationship with him or her) which have been donated, in excess of the designated percentage within three years from the date it holds shares, etc. in excess of the designated percentage; |
| (4) | In any of the following cases, where the value of property donated to a public service corporation, etc. pursuant to the provisions of paragraphs (1) through (3) is not included in the taxable value of inherited property, the value prescribed by Presidential Decree shall be included in the taxable value of inherited property: <Newly Inserted by Act No. 14388, Dec. 20, 2016; Act No. 15224, Dec. 19, 2017> |
| 1. | Where property not included in the taxable value of inherited property and all or some of profits generated from the property are vested in an heir (including a person who has a special relationship with the heir); |
| 2. | In cases falling under paragraph (3) 2, where an exemplary public service corporation does not sell shares, etc. (excluding cases where it sells shares, etc. to a person who has donated shares, etc. or a person who has a special relationship with him or her) which have been donated, in excess of percentages prescribed in the items of paragraph (2) 2 of the total number of issued shares, etc. within three years from the date it holds shares, etc., in excess of the designated percentage. |
| (5) | Methods for donating inherited property prescribed in the provisions of paragraphs (1) through (4), the scope of the total number of issued shares, etc., methods for calculating the value in excess of the percentage prescribed in paragraph (2) 2 of the total number of issued shares, etc., methods for determining an exemplary public service corporation, etc., the scope of public service corporations, etc. which do not have a special relationship with a conglomerate restricted from mutual investment, the scope of domestic corporations which do not have a special relationship with a person who has made a donation to the relevant public service corporation, etc., the range of exemplary public service corporations, etc. which meet requirements prescribed in paragraph (2) 2 (a), and other necessary matters shall be prescribed by Presidential Decree. <Amended by Act No. 11130, Dec. 31, 2011; Act No. 14388, Dec. 20, 2016; Act No. 15224, Dec. 19, 2017> |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 17 (Non-Inclusion of Property Trusted for Public Interest in Taxable Value of Inheritance) |
| (1) | The value of inherited property, an ancestor or his or her heir contributes to a public service corporation, etc. as a trust for public interest pursuant to the Public Trust Act, through a trust for religious, charitable, academic or other public interest (hereafter in this Article referred to as "trust for public interest") shall not be included in the taxable value of inheritance. <Amended by Act No. 10924, Jul. 25, 2011; Act No. 12420, Mar. 18. 2014> |
| (2) | For the purposes of paragraph (1), the scope and operation of trust for public interest, the contribution timing of such trust, and other necessary matters shall be prescribed by Presidential Decree. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
SECTION 5 Inheritance Deductions
| Article 18 (Basic Deductions) |
| (1) | Where inheritance takes place due to the death of a resident or non-resident, 200 million won shall be deducted from the taxable value of inherited property (hereinafter referred to as "basic deductions"). |
| (2) | Where inheritance takes place following the death of a resident, which falls under any of the following, the amounts listed hereunder shall be deducted from the value of taxable inheritance: Provided, That no deductions prescribed in subparagraphs 1 and 2 shall be simultaneously applicable to the same inheritance: <Amended by Act No. 10411, Dec. 27, 2010; Act No. 11130, Dec. 31, 2011; Act No. 11609, Jan. 1, 2013; Act No. 12168, Jan. 1, 2014; Act No. 13557, Dec. 15. 2015; Act No. 14388, Dec. 20, 2016; Act No. 15224, Dec. 19, 2017> |
| 1. | Family business succession (hereinafter referred to as “family business succession”; referring to an enterprise which an ancestor has continuously operated for at least 10 years, which is a small or medium enterprise prescribed by Presidential Decree or a backbone enterprise prescribed by Presidential Decree; excluding any enterprise whose average sales in the taxable period of income tax in which inheritance takes place, or in the three taxable periods of income tax immediately preceding the business year in which corporate tax is imposed, or in the business year in which corporate tax is imposed is at least 300 billion won (hereafter in this Article the same shall apply); hereinafter the same shall apply): An amount equivalent to the value of the inherited property of family business limited to amounts classified as follows: |
| (a) | Where the ancestor has continuously operated the enterprise for at least 10 years and less than 20 years: 20 billion won; |
| (b) | Where the ancestor has continuously operated the enterprise for at least 20 years and less than 30 years: 30 billion won; |
| (c) | Where the ancestor has continuously operated the enterprise for at least 30 years: 50 billion won; |
| 2. | Farming business succession (including livestock raising, fishing, and forest management; hereafter in this Article the same shall apply): The value of the inherited farming business (where the value exceeds 1.5 billion won, 1.5 billion won shall be the ceiling). |
| (3) | Notwithstanding paragraph (2) 1, where the value of inherited property an heir inherits or is to inherit other than the inherited property of a family business, which falls under a backbone enterprise, the heir inherits or is to inherit, exceeds the amount obtained by multiplying the amount to be paid by the relevant heir as inheritance tax by the percentage prescribed by Presidential Decree, no deductions prescribed in subparagraph 1 of the aforesaid paragraph shall apply to the inherited property of the family business the relevant heir inherits or is to inherit. <Newly Inserted by Act No. 15224, Dec. 19, 2017> |
| (4) | An heir who succeeds to a family business or farming business shall submit documents verifying that the succession constitutes inheritance of a family business or farming business to the head of the tax office having jurisdiction over the place for tax payment, pursuant to Article 67. <Amended by Act No. 15224, Dec. 19, 2017> |
| (5) | When applying paragraphs (2) and (3), the scope of inheritance of a family business and farming business, such as requirements for an ancestor and an heir, the methods for filing an application in cases of inheriting shares, etc., the scope of the inherited property of a family business and inherited property other than the inherited property of the family business, methods for calculating the amount to be paid by an heir who inherits or is to inherit the family business as inheritance tax, and other necessary matters shall be prescribed by Presidential Decree. <Amended by Act No. 15224, Dec. 19, 2017> |
| (6) | Where an heir who has received a deduction prescribed in any of the subparagraphs of paragraph (2) falls under any of the following cases within 10 years (five years in cases falling under subparagraph 2) from the commencement date of inheritance (in cases falling under subparagraph 1 (d), the last day of the taxable period of income tax or the last day of the business year in which corporate tax is imposed, in which inheritance takes place) without good cause prescribed by Presidential Decree, inheritance tax shall be levied by including an amount obtained by multiplying the amount deducted under paragraph (2) by the disposal ratio of property for the relevant family business (only applicable in cases falling under subparagraph 1 (a)) and then by the rate prescribed by Presidential Decree in consideration of the period of up to the relevant date, in the taxable value of inherited property as at the time of commencement of inheritance. In such cases, an amount equivalent to interest calculated prescribed by Presidential Decree shall be added to the inheritance tax imposed: <Amended by Act No. 10411, Dec. 27, 2010; Act No. 11130, Dec. 31, 2011; Act No. 12168, Jan. 1, 2014; Act No. 14388, Dec. 20, 2016; Act No. 15224, Dec. 19, 2017; Act No. 16102, Dec. 31, 2018> |
| 1. | Where any of the following cases occurs after the heir has taken the deduction following inheritance to a family business pursuant to paragraph (2) 1: |
| (a) | Where the heir has disposed of at least 20/100 (10/100, within five years from the commencement date of inheritance) of property for the relevant family business; |
| (b) | Where the heir is no longer engaged in the family business; |
| (c) | Where the equity of the heir who has succeeded to stocks, etc. has decreased: Provided, That this shall not apply where equity has decreased as the heir pays inherited stocks, etc. in kind under Article 73, however, in which cases, the heir shall be the largest shareholder or the largest investor prescribed in Article 22 (2); |
| (d) | Where the average number of regular workers (referring to regular workers in the economically active population survey determined and publicly notified by the Commissioner of the Statistics Korea prescribed in Article 17 of the Statistics Act; hereinafter the same shall apply) in each taxable period of income tax or the business year in which corporate tax is imposed falls short of 80/100 of the average number of regular workers in two taxable periods of income tax or two business years in which corporate tax is imposed immediately preceding the taxable period of income tax or the business year in which corporate tax is imposed, in which inheritance commences (hereafter in this Article referred to as “base number of employees”); |
| (e) | Where the whole average number of regular workers for 10 years from the end of the taxable period of income tax or the end of the business year, in which inheritance commences, falls short of 100/100 (120/100 in cases of a backbone enterprise prescribed in paragraph (2) 1) of the base number of employees; |
| 2. | Where the heir either disposes of the inherited property subject to the deduction following succession to farming business (hereinafter referred to as "inherited property for farming business") or is no longer engaged in farming business after having taken the deduction following succession to farming business pursuant to paragraph (2) 2. |
| (7) | The heir who has taken the deduction pursuant to paragraph (2) 1 shall submit the details of property for the relevant family business, the family business and shares, as prescribed by Presidential Decree, to the head of the tax office having jurisdiction over the place for tax payment. <Amended by Act No. 15224, Dec. 19, 2017> |
| (8) | An heir falling under paragraph (6) shall file a return with the head of a tax office having jurisdiction over the place of tax payment within six months from the last day of the month to which the date when he or she falls under any of the subparagraphs of the aforesaid paragraph belongs, as prescribed by Presidential Decree, and pay the relevant inheritance tax and the amount equivalent to interest to the head of the tax office having jurisdiction over the place for tax payment, the Bank of Korea or a postal office: Provided, That the foregoing shall not apply where he or she has already paid the inheritance tax imposed and the amount equivalent to interest pursuant to paragraph (6). <Newly Inserted by Act No. 15224, Dec. 19, 2017> |
| (9) | When applying paragraph (6), matters necessary for the scope of property for a family business, methods for calculating the disposal ratio of property for a family business, methods for determining decrease in the share, scope of inherited property for farming business, methods for including the deducted amount, calculation of the average number of regular workers, etc. shall be prescribed by Presidential Decree. <Amended by Act No. 11130, Dec. 31, 2011; Act No. 12168, Jan. 1, 2014; Act No. 15224, Dec. 19, 2017> |
| (10) | In levying inheritance tax prescribed in paragraph (6), if there is any capital gains tax paid or payable under Article 97-2 (4) of the Income Tax Act, an amount equivalent to the capital gains tax calculated as prescribed by Presidential Decree shall be deducted from the calculated amount of inheritance tax: Provided, That where the amount remaining after such deduction is negative, it shall be deemed zero. <Newly Inserted by Act No. 12168, Jan. 1, 2014; Act No. 15224, Dec. 19, 2017> |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 19 (Inheritance Deductions for Surviving Spouses) |
| (1) | The actual amount inherited by a surviving spouse because inheritance takes place due to the death of a resident, shall be deducted from the taxable value of inherited property within the limit of a smaller amount of the following amounts: <Amended by Act No. 14388, Dec. 20, 2016> |
| 1. | Ceiling amount calculated in accordance with the following calculation formula: |
Ceiling amount = (A-B+C) x D-E
A: Value of inherited property prescribed by Presidential Decree;
B: Value of property bequeathed, etc. to a legatee who is not an heir among the inherited property;
C: Value of property prescribed in Article 13 (1) 1;
D: Spouse's legal portion in inheritance prescribed in Article 1009 of the Civil Act (where any of coheirs has renounced his or her inheritance, referring to the spouse's legal portion in inheritance unless such person has renounced his or her inheritance);
E: Gift tax basis prescribed in Article 55 (1) on the property donated to the spouse in advance among donated property added to the inherited property pursuant to Article 13. |
|
| (2) | The inheritance deduction for a surviving spouse prescribed in paragraph (1) shall apply where the inherited property is divided (in cases requiring the registration, entry, or change of holders, limited to those who have completed registration, entry, or change of holders; hereafter in this Article the same shall apply) by the date on which six months elapse from the following day of the deadline for reporting a tax basis of inherited property prescribed in Article 67 (hereafter in this Article referred to as "division deadline of the inherited property of a spouse"): Provided, That an heir shall report the fact that the inherited property has been divided, if any, to the head of the tax office having jurisdiction over the place for tax payment by no later than the division deadline of the inherited property of a spouse. |
| (3) | Notwithstanding paragraph (2), if it is not feasible to divide the inherited property of a spouse by the division deadline of the inherited property of a spouse due to any inevitable ground prescribed by Presidential Decree, and the inherited property is divided and a report thereon is filed by the date six months elapse from the date immediately following the division deadline of the inherited property of a spouse (if there exists any inevitable ground, such as filing of a lawsuit or an administrative appeal, the date on which the lawsuit or administrative appeal is concluded) (where the tax basis and amount of tax prescribed in Article 76 are decided after six months from the date immediately following the division deadline of the inherited property of a spouse, it refers to the date of such decision), the inherited property of the spouse is deemed to have been divided before expiry of the division deadline of the inherited property of a spouse: Provided, That the aforesaid case shall be limited to such cases where an heir reports the inevitable ground to the head of the tax office having jurisdiction over the place for tax payment by the division deadline of the inherited property of a spouse. <Amended by Act No. 12168, Jan. 1, 2014> |
| (4) | Where no actual amount is inherited by the surviving spouse or the amount inherited by the surviving spouse is less than 500 million won in cases falling under paragraph (1), 500 million won shall be deducted, notwithstanding paragraph (2). |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
[Paragraph (3) of this Article was amended by Act No. 12168 promulgated on January 1, 2014 pursuant to the decision on unconstitutionality by the Constitutional Court made on May 31, 2012]
| Article 20 (Other Personal Deductions) |
| (1) | Where inheritance commences subsequent to the death of a resident, and where any of the following is applicable, an amount corresponding to the following shall be deducted from the taxable value of inheritance. In such cases, where a person falling under subparagraph 1 falls under subparagraph 2, or where a person falling under subparagraph 4 falls under subparagraphs 1 through 3 or Article 19, the sum of such amounts shall be deducted therefrom: <Amended by Act No. 10411, Dec. 27, 2010; Act No. 13557, Dec. 15. 2015; Act No. 14388, Dec. 20, 2016> |
| 1. | With respect to one child, 50 million won; |
| 2. | With respect to a minor among heirs (excluding a spouse) and family members living together, an amount calculated by multiplying 10 million won by the number of years until he or she becomes 19 years of age; |
| 3. | With respect to a person who is at least 65 years of age among heirs (excluding a spouse) and family members living together, 50 million won; |
| 4. | With respect to a disabled person among heirs and family members living together, an amount calculated by multiplying 10 million won by the number of years of life expectancy by gender and by age according to the statistical chart approved and publicly notified by the Commissioner of the Statistics Korea pursuant to Article 18 of the Statistics Act as at the date inheritance commences. |
| (2) | The scope of cohabiting family members referred to in paragraph (1) 2 through 4, and of a disabled person referred to in paragraph (1) 4 shall be prescribed by Presidential Decree. |
| (3) | For the purposes of paragraph (1) 2 through 4, a period of less than one year shall be calculated as one year. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 21 (Blanket Deduction) |
| (1) | Where inheritance commences due to the death of a resident, the heir or legatee may deduct, from the taxable value, whichever is the larger of the total amount of deductions stipulated under Articles 18 (1) and 20 (1), and 500 million won: Provided, That where no report is filed under Article 67, 500 million shall be deducted therefrom. |
| (2) | For the purposes of paragraph (1), where the surviving spouse of the ancestor is the sole heir, only the total amount of the deductions stipulated under Articles 18 and 20 (1) shall be deducted. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 22 (Inheritance Tax Deductions for Financial Property) |
| (1) | Where the value of financial property prescribed by Presidential Decree (hereafter in this Article referred to as "value of net financial property") less a financial debt prescribed by Presidential Decree remains among the value of the inherited property as at the commencement date of inheritance when inheritance commences due to the death of a resident, the amount according to the following classifications shall be deducted from the taxable value of inherited property, but when such amount exceeds 200 million won, 200 million shall be deducted therefrom: |
| 1. | Where the value of the net financial property exceeds 20 million won: whichever is the larger of an amount equivalent to 20/100 of the value of the relevant net financial property and 20 million won; |
| 2. | Where the value of the net financial property is not more than 20 million won: the value of the relevant net financial property. |
| (2) | The financial property under paragraph (1) does not include stocks, etc. held by the largest shareholder or largest investor prescribed by Presidential Decree and financial property in another person's name that is not filed within the deadline for filing a return of inheritance tax base under Article 67. <Amended by Act No. 13557, Dec. 15. 2015> |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 23 (Casualty Loss Deductions) |
| (1) | Where inherited property is destroyed or damaged due to any disaster prescribed by Presidential Decree by the reporting deadline under Article 67 when inheritance commences due to the death of a resident, the value of such losses shall be deducted from the taxable value of inherited property: Provided, That this shall not apply where the amount equivalent to the value of such losses can be compensated for by means of the receipt of insurance proceeds, exercise of the right to indemnity, etc. |
| (2) | An heir or legatee who intends to take the loss deduction pursuant to paragraph (1) shall submit a record on the value and descriptions of such losses and evidentiary documents to the head of the tax office having jurisdiction over the place for tax payment, as prescribed by Presidential Decree. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 23-2 (Inheritance Tax Deductions for Houses in which Ancestors and Heirs Have Lived Together) |
| (1) | Where inheritance commences following the death of a resident and where all of the following requirements are met, an amount equivalent to 80/100 of the value of an inherited house (referring to the value including the value of land annexed to the house prescribed in Article 89 (1) 3 of the Income Tax Act but excluding the amount of debt secured by the relevant house and land annexed to the house as at the date inheritance takes place) shall be deducted from the taxable value of inheritance: Provided, That the deduction amount shall be limited to 500 million won: <Amended by Act No. 10411, Dec. 27, 2010; Act No. 11609, Jan. 1, 2013; Act No. 12168, Jan. 1, 2014; Act No. 13557, Dec. 15. 2015; Act No. 14388, Dec. 20, 2016> |
| 1. | That an ancestor and his or her heir (limited to where the heir is a lineal descendant of the ancestor; hereafter in this Article referred to as “heir”) shall have lived together in one and the same house continuously for at least 10 years retroactively from the date inheritance commences (excluding the period during which the heir has been underage); |
| 2. | That while an ancestor and his or her heir have formed a household continuously for at least 10 years retroactively from the date inheritance commences, they shall have met the requirements of one house for one household prescribed by Presidential Decree (hereafter in this Article referred to as “one house for one household”). In such cases, if there exists a period during which they have not owned a house, such period shall be included in the period meeting the requirements of one house for one household under the fore part; |
| 3. | That it shall be a house inherited by an heir who has been living together with an ancestor while not owning a house as at the date inheritance commences. |
| (2) | Where an ancestor and his or her heir have not been able to live together due to any ground prescribed by Presidential Decree when applying paragraph (1), they are deemed to have lived together continuously, but the period during which they have not lived together shall not be included in the period of living together under the same paragraph. |
| (3) | Where one household temporarily owns two housing units, methods of deciding a housing unit where family members live together and other necessary matters shall be prescribed by Presidential Decree. <Newly Inserted by Act No. 14388, Dec. 20, 2016> |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 24 (Limitations on Deductions to Be Applied) |
The amount to be deducted pursuant to Articles 18 through 23 and 23-2 shall be limited to an amount obtained by subtracting any of the following values from the taxable value of inheritance under Article 13: Provided, That subparagraph 3 shall be applicable only to cases in which the taxable value of inheritance exceeds 500 million won: <Amended by Act No. 10411, Dec. 27, 2010; Act No. 13557, Dec. 15. 2015> | 1. | Value of the property bequeathed, etc. to a non-heir; |
| 2. | Value of the property inherited to the heir in line, due to the renunciation of inheritance by the heir; |
| 3. | Value of the donated property added to the taxable value of inherited property prescribed in Article 13 (where any amount is deducted under Article 53 or 54, referring to the value minus the deducted amount from the value of such donated property). |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
SECTION 6 Tax Basis and Tax Rates
| Article 25 (Tax Basis and Minimum Taxables of Inheritance Taxes) |
| (1) | The tax basis of inherited property shall be the amount minus the following amount from the taxable value of inherited property pursuant to Article 13: |
| 2. | Appraisal and assessment fees of inherited property prescribed by Presidential Decree. |
| (2) | When the tax basis is less than 500,000 won, no inheritance tax shall be levied. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 26 (Inheritance Tax Rates) |
Inheritance tax shall be the amount (hereinafter referred to as "calculated amount of inheritance tax") calculated by applying the following tax rates to the tax basis of inherited property under Article 25: | Tax Basis | Tax Rates | | 100 million won and less | 10/100 of the tax basis | Over 100 million won,
but not more than 500 million won | 10 million won + (20/100 of amount exceeding 100 million won) | Over 500 million won,
but not more than 1 billion won | 90 million won + (30/100 of amount exceeding 500 million won) | Over 1 billion won,
but not more than 3 billion won | 240 million won + (40/100 of amount exceeding 1 billion won) | | Over 3 billion won | 1 billion 40 million won + (50/100 of amount exceeding 3 billion won) |
|
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 27 (Extra Taxation on Generation-Skipping Inheritance) |
Where an heir or legatee is a lineal descendant, other than an offspring of an ancestor, an amount equivalent to 30/100 (40/100 where the value of inheritance an heir or a legatee who is a lineal descendant of an ancestor other than an offspring and is a minor has received or is to receive, exceeds two billion won) of the amount calculated by multiplying the proportion of the property the heir or legatee has received or is to receive among inheritance (including donated property received by an heir or a legatee among the donated property added to inheritance pursuant to Article 13; hereafter in this Article the same shall apply) by the amount of inheritance tax calculated under Article 26: Provided, That the same shall not apply to inheritance by representation under Article 1001 of the Civil Act. <Amended by Act No. 13557, Dec. 15. 2015; Act No. 14388, Dec. 20, 2016> [This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 28 (Gift Tax Credit) |
| (1) | The amount of gift tax (referring to the calculated amount of gift tax on the donated property as at the time of donation) on the donated property added to inherited property pursuant to Article 13 shall be deducted from the calculated amount of inheritance tax: Provided, That where gift tax is not levied on the donated property added to the taxable value of inheritance due to the expiry of the period stipulated under Article 26-2 (1) 4 or (4) of the Framework Act on National Taxes, and where the taxable value of inheritance is 500 million won or less, this shall not apply. <Amended by Act No. 13557, Dec. 15. 2015> |
| (2) | The ceiling amount of gift tax to be deducted under paragraph (1) shall be calculated by multiplying the rate of tax basis of donated property that is added in the tax basis of inherited property (including the donated property to be added to the inherited property under Article 13; hereafter in this paragraph the same shall apply) by the calculated amount of inheritance tax. In such cases, where the donee of such donated property is the heir or legatee, within limits of the amount calculated by multiplying the rate of the tax basis of the donated property that is added to the tax basis calculated, as prescribed by Presidential Decree, in inherited property received or to be received by such heir or legatee, by the amount of inheritance tax to be paid by each respective heir or legatee, a deduction shall be made from the amount of inheritance tax to be paid by each. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 29 (Foreign Tax Credit) |
If inheritance tax is levied on any inherited property in a foreign country pursuant to statutes and regulations of such foreign country when inheritance tax is to be imposed due to the death of a resident, an amount equivalent to inheritance tax levied shall be deducted from the amount of inheritance tax calculated, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 30 (Tax Credit for Short-Term Re-Inheritance) |
| (1) | Where inheritance recommences due to the death of the heir or legatee within 10 years after the commencement of inheritance, an amount equivalent to inheritance tax previously levied on the re-inherited property, shall be deducted from the amount of inheritance tax calculated. |
| (2) | The amount of tax to be deducted under paragraph (1) shall be calculated by multiplying the amount calculated pursuant to subparagraph 1 by the credit rate under subparagraph 2: Provided, That with respect to the formula under subparagraph 1, if the value of the re-inherited property exceeds the amount equivalent to the taxable value of previously inherited property, the excess amount shall be deemed non-existent: |
| Value of
re-inherited property | × | Taxable value of previously inherited property | | Calculated amount of previous inheritance tax | × | Value of previously Inherited property | | Taxable value of previously inherited property |
|
| Period of re-inheritance | Credit Rates | | Within one year | 100 percent | | Within two years | 90 percent | | Within three years | 80 percent | | Within four years | 70 percent | | Within five years | 60 percent | | Within six years | 50 percent | | Within seven years | 40 percent | | Within eight years | 30 percent | | Within nine years | 20 percent | | Within 10 years | 10 percent |
|
| (3) | In the formula under paragraph (2) 1, the value of the re-inherited property means the value obtained by deducting an amount equivalent to the previous inheritance tax from the value of the previously inherited property. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
CHAPTER III ASSESSMENT STANDARD AND CALCULATION OF GIFT TAX
SECTION 1 Donated Property
| Article 31 (General Principles for Calculation of Value of Donated Property) |
| (1) | The value of donated property (hereinafter referred to as "value of donated property") shall be calculated according to following methods: |
| 1. | Where property or profits are earned by gratuitous transfer: An amount equivalent to the market value of donated property (referring to the value assessed pursuant to Chapter IV; hereafter in this Article, Articles 35 and 42 the same shall apply); |
| 2. | Where property or profits are earned by transfer at a significantly low price or are transferred at a significantly high price: An amount equivalent to the difference between the market value and the price actually paid: Provided, That this shall be limited to where the difference between the market value and the price actually paid is 300 million won or more or the difference is 30/100 or more of the market value; |
| 3. | Where the value of property increases after the property is acquired: The amount of increase in the value of property calculated according to the methods prescribed by Presidential Decree, which is the difference between the market value of property before and after reasons for increase occur: Provided, That this shall be limited to where the amount of increase in the value of property is 300 million won or more or is 30/100 or more of the amount prescribed by Presidential Decree, in consideration of the acquisition price of such property, etc. |
| (2) | Notwithstanding paragraph (1), where the provisions of Article 4 (1) 4 through 6 and paragraph (2) of the same Article are applicable, the value of donated property shall be calculated according to relevant provisions. |
[This Article Wholly Amended by Act No. 13557, Dec. 15, 2015]
| Article 32 (Time of Acquisition of Donated Property) |
The time of acquisition of donated property shall be the day prescribed by Presidential Decree, such as the day on which the property is transferred, the day on which the property is actually used, etc. excluding cases in which Articles 33 through 39, 39-2, 39-3, 40, 41-2 through 41-5, 42, 42-2, 42-3, 44, 45, and 45-2 through 45-5 apply. [This Article Wholly Amended by Act No. 13557, Dec. 15, 2015]
| Article 33 (Donation of Profits from Trust) |
| (1) | Where a trustor has designated another person as a beneficiary to receive all or part of profits from a trust in a trust contract, and where any of the following is applicable, the value of a right to receive the profits from a trust shall be the value of property donated to the beneficiary regarding the day prescribed by Presidential Decree as the date of donation, such as the day, etc. on which the principal and profits are actually paid to the beneficiary: <Amended by Act No. 12168, Jan. 1, 2014; Act No. 13557, Dec. 15, 2015> |
| 1. | Cases in which the beneficiary receives principal where the beneficiary is allowed to hold a right to receive the principal; |
| 2. | Cases in which the beneficiary receives earnings where the beneficiary is allowed to hold a right to receive the earnings. |
| (2) | Where a beneficiary is not specified or no beneficiary exists, a trustor or his or her heir shall be deemed a beneficiary, and where a beneficiary is either specified or exists, paragraph (1) shall be applicable by deeming that a new trust exists. <Amended by Act No. 13557, Dec. 15, 2015> |
| (3) | The method of calculating the value of donated property where principal and profits are received in installments in applying paragraph (1) and other necessary matters shall be prescribed by Presidential Decree. <Newly Inserted by Act No. 13557, Dec. 15, 2015> |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 34 (Donation of Insurance Proceeds) |
| (1) | Where an event (including cases of payment of insurance proceeds at maturity) insured by life insurance or non-life insurance occurs, the following amount shall be the value of donated property by regarding the day on which relevant insurance event occurs as the date of donation: <Amended by Act No. 13557, Dec. 15, 2015> |
| 1. | Where a beneficiary of insurance proceeds is different from the payer of insurance premiums (including cases in which a person other than a beneficiary of insurance proceeds has paid part of the premiums): An amount equivalent to the insurance proceeds corresponding to the premiums paid by a person other than a beneficiary of insurance proceeds; |
| 2. | Where a beneficiary has paid premiums after having been donated property during the period of insurance contract: An amount obtained by subtracting the premiums paid out of donated property from an amount equivalent to insurance proceeds corresponding to the premiums paid out of donated property. |
| (2) | Paragraph (1) shall not apply if insurance proceeds are deemed inherited property pursuant to Article 8. |
| (3) | Deleted. <by Act No. 13557, Dec. 15, 2015> |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 35 (Donation of Profits from Acquisition at Low Price or Transfer at High Price) |
| (1) | Where property (excluding property prescribed by Presidential Decree, such as convertible bonds, etc.; hereafter in this Article the same shall apply) is acquired at a price below the market value or is transferred at a price above the market value between specially related persons, and where the difference between the price actually paid or received and the market value is the same as or above the standard amount prescribed by Presidential Decree (hereafter in this paragraph referred to as "standard amount"), an amount obtained by subtracting the standard amount from the difference between the price actually paid or received and the market value, by regarding the date of acquisition or the date of transfer of the relevant property as the date of donation, shall be the price of property donated to the person who reaps profits from such acquisition or transfer. |
| (2) | Where property is acquired or transferred between persons, other than specially related persons, at a price significantly lower or higher than the market value without good cause, as a transactional practice, and where the difference between the price actually paid or received and the market value is at least the standard amount prescribed by Presidential Decree, an amount obtained by subtracting the amount prescribed by Presidential Decree from the difference between the price actually paid or received and the market value, by regarding the day of acquisition or the day of transfer of the relevant property as the date of donation, shall be the price of property donated to the person who reaps profits from such acquisition or transfer. |
| (3) | Where property is acquired or transferred between an individual and a corporation and where Article 52 (1) of the Corporate Tax Act is not applicable to the transaction of the corporation as the price actually paid or received corresponds to the market value under Article 52 (2) of the same Act, paragraphs (1) and (2) shall not be applicable: Provided, That where inheritance tax or gift tax is deemed to have been lowered using deceit or other fraudulent methods, this shall not apply. |
| (4) | In applying paragraphs (1) and (2), determination of the date of acquisition or the date of transfer and other necessary matters shall be prescribed by Presidential Decree. |
[This Article Wholly Amended by Act No. 13557, Dec. 15, 2015]
| Article 36 (Donation Resulting from Exemption from Financial Obligations) |
| (1) | Where a person is given exemption from a financial obligation by a creditor, or a financial obligation is taken over or repaid by a third party, an amount (referring to an amount obtained by subtracting an indemnity from the aforementioned amount where the indemnity has been paid) equivalent to the profits from the exemption, takeover or repayment (hereafter in this Article referred to as "exemption, etc."), by regarding the date of such exemption, etc. as the date of donation, shall be the value of property donated to the person who reaps profits from the exemption, etc. <Amended by Act No. 13557, Dec. 15, 2015> |
| (2) | In applying paragraph (1), judgement of the day on which exemption, etc. are given and other necessary matters shall be prescribed by Presidential Decree. <Newly Inserted by Act No. 13557, Dec. 15, 2015> |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 37 (Donation of Profits Resulting from Gratuitous Use of Real Estate) |
| (1) | Where a person reaps profits as he or she uses another person's real estate without cost (excluding a house in which the person lives together with the owner of the real estate and land incidental thereto), an amount equivalent to such profits shall be the value of property donated to the person who uses the real estate without cost by regarding the day on which the use of the real estate without cost begins as the date of donation: Provided, That where the amount equivalent to such profits is less than the standard amount prescribed by Presidential Decree, such case shall be excluded therefrom. <Amended by Act No. 9916, Jan. 1, 2010; Act No. 11130, Dec. 31, 2011; Act No. 13557, Dec. 15, 2015> |
| (2) | Where a person reaps profits as he or she borrows money, etc. using another person's real estate as security without cost, an amount equivalent to the profits shall be the value of property donated to the person who uses the real estate as security by regarding the day on which the real estate begins to be held as security as the date of donation: Provided, That where the amount equivalent to such profits is less than the standard amount prescribed by Presidential Decree, such cases shall be excluded therefrom. <Newly Inserted by Act No. 13557, Dec. 15, 2015> |
| (3) | In cases of a transaction between persons, other than specially related persons, paragraphs (1) and (2) shall apply, limited to where good cause does not exist as a transactional practice. <Newly Inserted by Act No. 13557, Dec. 15, 2015> |
| (4) | In applying paragraphs (1) and (2), determination of the day on which real estate begins to be used without cost and the day on which real estate begins to be held as security, methods of calculating profits from the use of real estate without cost and from the use of land as security and other necessary matters shall be prescribed by Presidential Decree. <Amended by Act No. 9916, Jan. 1, 2010; Act No. 11130, Dec. 31, 2011; Act No. 13557, Dec. 15, 2015> |
| Article 38 (Donation of Profits Resulting from Merger) |
| (1) | Where a large shareholder, etc. prescribed by Presidential Decree (hereafter in this Article and Article 39-2 referred to as "large shareholder, etc.") of a corporation that ceases to exist or is absorbed, or of a newly formed or of a surviving corporation following a merger between corporations in a special relationship prescribed by Presidential Decree (including spin-off and subsequent merger; hereafter in this Article the same shall apply) reaps profits from the merger, an amount equivalent to such profits shall be the value of property donated to the large shareholder, etc. who reaps the profits by regarding the date of merger as the date of donation: Provided, That where the amount equivalent to such profits is less than the standard amount prescribed by Presidential Decree, such cases shall be excluded therefrom. <Amended by Act No. 11130, Dec. 31, 2011; Act No. 13557, Dec. 15, 2015> |
| (2) | Where, in cases falling under paragraph (1), persons who donate profits from merger are shareholders, etc. other than a large shareholder, etc. and the number of such shareholders, etc. is at least two, profits shall be deemed to have been reaped from a shareholder or an investor. <Amended by Act No. 13557, Dec. 15, 2015> |
| (3) | In applying paragraph (1), the method of calculating profits from merger and other necessary matters shall be prescribed by Presidential Decree. <Newly Inserted by Act No. 13557, Dec. 15, 2015> |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 39 (Donation of Profits Generating from Capital Increase) |
| (1) | Where a person reaps any of the following profits as a corporation issues new stocks or equity shares (hereafter in this Article referred to as "new stocks") to increase its capital (including the amount of investment; hereinafter the same shall apply), an amount equivalent to the profits shall be the value of property donated to the person who reaps the profits by regarding the day prescribed by Presidential Decree, such as the day on which the price of stocks is paid, etc., as the date of donation: <Amended by Act No. 11130, Dec. 31, 2011; Act No. 13557, Dec. 15, 2015; Act No. 14388, Dec. 20, 2016> |
| 1. | Where new stocks are issued at a price below the market value (referring to the price assessed under Articles 60 and 63; hereafter in this Article, Articles 39-2, 39-3 and 40 the same shall apply): Any of the following profits: |
| (a) | Where a shareholder, etc. of the relevant corporation renounces, in whole or in part, their right to be allotted new stocks (hereafter in this Article referred to as "preemptive right"), and where such corporation allots such renounced new stocks (hereafter in this paragraph referred to as "forfeited stocks") (excluding where a listed corporation prescribed by the Financial Investment Services and Capital Markets Act allots such new stocks through public offering (excluding cases prescribed by Presidential Decree) prescribed in Article 9 (7) of the same Act; hereafter in this paragraph the same shall apply), profits from the allotment of forfeited stocks reaped by those who are allotted the forfeited stocks; |
| (b) | Where a shareholder, etc. of the relevant corporation has renounced, in whole or in part, their preemptive right, and where the corporation does not allot the forfeited stocks, profits from the acquisition of the new stocks reaped by persons specially related to those who renounce acquiring the new stocks; |
| (c) | Profits reaped by persons, who are not shareholders, etc. of the relevant corporation, by being directly allotted new stocks by the relevant corporation (including cases in which they directly take over or acquire the relevant new stocks from an underwriter prescribed in Article 9 (12) of the Financial Investment Services and Capital Markets Act and through methods prescribed by Presidential Decree; hereafter in this paragraph the same shall apply); |
| (d) | Profits reaped by shareholders, etc. of the relevant corporation by being directly allotted new stocks in excess of the number of stocks, etc. they are entitled to, under equal conditions, in proportion to the number of stocks, etc. owned by them; |
| 2. | Where new stocks are issued at a price above the market value: Any of the following profits: |
| (a) | Where a shareholder, etc. of the relevant corporation renounces, in whole or in part, their preemptive right, and where the relevant corporation allots forfeited stocks, profits reaped by the shareholder, etc. who renounces taking over new stocks that are allotted to them as a person who has a special relationship with them takes over such forfeited stocks that are allotted to him or her; |
| (b) | Where a shareholder, etc. of the relevant corporation renounces, in whole or in part, their preemptive right, and where the relevant corporation does not allot forfeited stocks, profits reaped by the shareholder, etc. who renounces taking over new stocks as new stocks are taken over by another shareholder, etc. who has a special relationship with the shareholder, etc. who renounces taking over new stocks; |
| (c) | Where a person who is not a shareholder, etc. of the relevant corporation takes over new stocks after being allotted new stocks directly by the relevant corporation, profits reaped by a shareholder, etc. of the relevant corporation who is specially related to the aforementioned person; |
| (d) | Profits reaped by a shareholder, etc. of the relevant corporation as another shareholder, etc. of the relevant corporation, who is specially related to the aforementioned shareholder, etc. of the relevant corporation, is directly allotted new stocks in excess of the number of stocks they are entitled to be allotted, under equal conditions, in proportion to the number of stocks possessed by them; |
| 3. | Where a corporation issues classes of shares (hereafter in this subparagraph referred to as "convertible shares") prescribed in Article 346 of the Commercial Act when subparagraphs 1 and 2 apply: Profits classified as follows generated by converting to different classes of shares after the issuance thereof: |
| (a) | Where the corporation issues convertible shares at the value lower than the market price: Profits earned by a person to whom shares were issued because the value of shares which were issued or will be issued to him or her exceeds the value of convertible shares as at the time the convertible shares are issued; |
| (b) | Where the corporation issues convertible shares at the value higher than the market price: Profits earned by a person who has a special relationship with a person to whom shares were issued because the value of shares which were issued or will be issued to him or her becomes lower than the value of convertible shares as at the time the convertible shares are issued. |
| (2) | In applying paragraph (1) 1, where the number of minority shareholders prescribed by Presidential Decree (hereafter in this paragraph and Article 39-3 referred to as "minority shareholder") who donate profits is at least two, profits shall be calculated by deeming the number of minority shareholders to be one. <Amended by Act No. 13557, Dec. 15, 2015> |
| (3) | In applying paragraphs (1) and (2), the method of calculating profits and other necessary matters shall be prescribed by Presidential Decree. <Amended by Act No. 11130, Dec. 31, 2011; Act No. 13557, Dec. 15, 2015> |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 39-2 (Donation of Profits Resulting from Capital Reduction) |
| (1) | Where a corporation retires its stocks, etc. to reduce its capital and where the following profits are reaped by retiring the stocks, etc. of some of the shareholders, the profits shall be the value of property donated to a person who reaps the profits by regarding the date of general shareholders' meeting on which a resolution to retire stocks is passed as the date of donation: Provided, That where an amount equivalent to the profits is below the standard amount prescribed by Presidential Decree, such cases shall be excluded. <Amended by Act No. 13557, Dec. 15, 2015> |
| 1. | Where stocks, etc. are retired at a price below the market value: Profits reaped by a large shareholder, etc. who have a special relationship with the shareholders, etc. whose stocks, etc. are retired; |
| 2. | Where stocks, etc. are retired at a price above the market value: Profits reaped by a shareholder, etc. who retire stocks, etc. and have a special relationship with the large shareholder, etc. |
| (2) | In applying paragraph (1), the method of calculating profits and other necessary matters shall be prescribed by Presidential Decree. <Amended by Act No. 11130, Dec. 31, 2011; Act No. 13557, Dec. 15, 2015> |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 39-3 (Donation of Profits from Investment in Kind) |
| (1) | Where a person reaps any of the following profits from investment in kind, an amount equivalent to such profits shall be the value of property donated to the person who reaps such profits by regarding the day on which an investment in kind is made as the date of donation: <Amended by Act No. 11130, Dec. 31, 2011; Act No. 13557, Dec. 15, 2015> |
| 1. | Profits reaped by taking over stocks, etc. at a price below the market value by a person who makes an investment in kind; |
| 2. | Profits reaped by taking over stocks, etc. at a price above the market value by a shareholder, etc. who are specially related to a person who makes an investment in kind. |
| (2) | In applying paragraph (1) 1, where the number of minority shareholders is two or more among shareholders, etc. who are not persons making an investment in kind, profits shall be calculated regarding the number of minority shareholders as one. <Newly Inserted by Act No. 12168, Jan. 1, 2014; Act No. 13557, Dec. 15, 2015> |
| (3) | The method of calculating profits under paragraph (1) and other necessary matters shall be prescribed by Presidential Decree. <Amended by Act No. 11130, Dec. 31, 2011; Act No. 12168, Jan. 1, 2014; Act No. 13557, Dec. 15, 2015> |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 40 (Donation of Profits from Conversion of Convertible Bonds into Stocks) |
| (1) | Where any of the following profits is reaped by taking over, acquiring or transferring convertible bonds, bonds with warrants (referring to warrants if they are detachable) or other bonds (hereafter in this Article and Article 41-3 referred to as "convertible bonds, etc.") with a right to conversion into stocks, exchange for stocks or takeover of stocks, or by converting convertible bonds, etc. into stocks, exchanging convertible bonds, etc. for stocks or taking over stocks (hereafter in this Article referred to as "conversion into stocks, etc."), an amount equivalent to such profits shall be the value of property donated to a person who reaps such profits: Provided, That where the amount equivalent to such profits is below the standard amount prescribed by Presidential Decree, such case shall be excluded herefrom: <Amended by Act No. 11130, Dec. 31, 2011; Act No. 13557, Dec. 15, 2015; Act No. 14388, Dec. 20, 2016> |
| 1. | Any of the following profits reaped by taking over or acquiring convertible bonds, etc. on the date of takeover or acquisition: |
| (a) | Profits reaped from the acquisition of convertible bonds, etc. from a specially related person at a price below the market value; |
| (b) | Profits reaped by the largest shareholder of a corporation issuing convertible bonds, etc. (excluding a stock market listed corporation prescribed by the Financial Investment Services and Capital Markets Act that issues convertible bonds, etc. through public offering of securities (excluding cases prescribed by Presidential Decree) or by other shareholder who is specially related to the largest shareholder, as he or she takes over or acquires (including cases in which he or she accepts or acquires convertible bonds, etc. from an underwriter prescribed in Article 9 (12) of the Financial Investment Services and Capital Markets Act and through other methods prescribed by Presidential Decree; hereafter in this paragraph referred to as "takeover, etc.") convertible bonds, etc. from the corporation at a price below the market value in excess of the number of convertible bonds, etc. he or she is entitled to be allotted, under equal conditions, in proportion to the number of stocks in possession; |
| (c) | Profits reaped by a person specially related to the largest shareholder of a corporation issuing convertible bonds, etc. (excluding a shareholder of the corporation) as he or she takes over, etc. the convertible bonds, etc. from the corporation at a price below the market value; |
| 2. | Any of the following profits reaped by converting, etc. convertible bonds, etc. into stocks on the day conversion into stocks, etc. is made: |
| (a) | Where the convertible bonds, etc. have been acquired from the specially related person, the profits reaped as the value of the stocks received or to be received with the convertible bonds, etc. exceeds the value of conversion, exchange or acceptance (hereafter in this paragraph referred to as "conversion value, etc."); |
| (b) | Where the largest shareholder of the corporation issuing the convertible bonds, etc. or other shareholders who are the specially related parties of the largest shareholder have accepted, etc. the convertible bonds, etc. from the relevant corporation in excess of the number entitled to be allotted, under equal conditions, in proportion to the number of stocks they possessed, the profits reaped as the value of the stocks received or to be received with the convertible bonds, etc. exceeds the value of the conversion value, etc.; |
| (c) | Where a non-shareholder of the corporation issuing the convertible bonds, etc. who is a specially related person of the largest shareholder has accepted, etc. the convertible bonds, etc. from the relevant corporation, the profits reaped as the value of the stocks received or to be received with the convertible bonds, etc. exceeds the value of the conversion value, etc.; |
| (d) | Where the convertible bonds, etc. are converted into or exchanged with the stocks, or the stocks are accepted, the profits reaped by the specially related person of those to whom the relevant stocks are delivered, as the value of stocks delivered against the convertible bonds, etc. becomes less than the conversion value, etc.; |
| (e) | Deleted; <by Act No. 13557, Dec. 15, 2015> |
| 3. | Where the methods and profits are similar to those stipulated in subparagraph 1 or 2, the profits reaped directly or indirectly from a specially related person, by conducting the transaction of the convertible bonds, etc. or by converting the convertible bonds, etc. into the stocks. |
| (2) | The largest shareholder prescribed in paragraph (1), the value of stocks received or to be received and the method of calculating profits, determination on the date of donation and other necessary matters shall be prescribed by Presidential Decree. <Amended by Act No. 11130, Dec. 31, 2011; Act No. 13557, Dec. 15, 2015> |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 41 Deleted. <by Act No. 13557, Dec. 15, 2015> |
| Article 41-2 (Donation of Profits from Excessive Dividends) |
| (1) | Where a corporation allots or distributes profits or surplus funds (hereafter in this paragraph referred to as "dividend, etc.") and where a person specially related to the largest shareholder or the largest investor in the corporation who is prescribed by Presidential Decree (hereafter in this Article referred to as "largest shareholder, etc.") receives dividends, etc. of an amount more than the proportion of stocks, etc. he or she possesses, as the largest shareholder, etc. renounce, in whole or in part, the dividends, etc. that they are eligible to receive or as they receive the dividends, etc. in an inequitable condition in proportion to the stocks, etc. they possess, the amount of dividends, etc. that the person specially related to the largest shareholder, etc. receives in an inequitable condition in proportion to the stocks, etc. in possession (hereafter in this Article referred to as "excessive dividends") shall be the value of property donated to the person specially related to the largest shareholder, etc. by regarding the day the corporation pays dividends, etc. as the date of donation, notwithstanding Article 4-2 (3). <Amended by Act No. 16102, Dec. 31, 2018> |
| (2) | Where gift tax is imposed on excessive dividends pursuant to paragraph (1), an amount equivalent to the excessive dividends shall be subtracted from the amount calculated as a gift tax pursuant to Articles 56 and 57. <Amended by Act No. 15224, Dec. 19, 2017> |
| (3) | Where the amount of gift tax on excessive dividends is less than an amount equivalent to the income tax on the excessive dividends, paragraph (1) shall not apply. |
| (4) | The methods for calculating excessive dividends and an amount equivalent to income tax on excessive dividends and other necessary matters shall be prescribed by Presidential Decree. |
[This Article Newly Inserted by Act No. 13557, Dec. 15, 2015]
| Article 41-3 (Donation of Profits from Listing of Stocks) |
| (1) | Where a person specially related to any of the following persons who are deemed to be in a position to use undisclosed information on the management, etc. of a corporation (hereafter in this Article and Article 41-5 referred to as "largest shareholder, etc.") is donated stocks, etc. of the corporation or acquires the stocks, etc. pursuant to paragraph (2), and where the person reaps profits in excess of the original taxable value of gift (excluding cases of acquiring the stocks, etc. with the donated property pursuant to paragraph (2) 2), or in excess of acquisition value when the value of such stocks, etc. increases as they are listed on the stock market (hereafter in this Article referred to as "stock market") prescribed by Presidential Decree, which is the stock market prescribed in Article 8-2 (4) 1 of the Financial Investment Services and Capital Markets Act within five years from the day on which the person is donated or acquires such stocks, etc., an amount equivalent to the profits shall be the value of property donated to the person who reaps the profits: Provided, That where an amount equivalent to the profits is below the standard amount prescribed by Presidential Decree, such case shall be excluded herefrom: <Amended by Act No. 11130, Dec. 31, 2011; Act No. 11845, May 28, 2013; Act No. 13557, Dec. 15, 2015; Act No. 14388, Dec. 20, 2016> |
| 1. | The largest shareholder or the largest investor prescribed in Article 22 (2); |
| 2. | A person prescribed by Presidential Decree, who owns at least 25/100 of the total number of stocks issued by a domestic corporation or of the total amount of investment in a domestic corporation. |
| (2) | Cases where stocks, etc. prescribed in paragraph (1) are donated or acquired, shall be any of the following: <Newly Inserted by Act No. 13557, Dec. 15, 2015> |
| 1. | Where stocks, etc. of relevant corporation are donated by the largest shareholder, etc. or are acquired from the largest shareholder, etc. at a cost; |
| 2. | Where stocks, etc. of relevant corporation are acquired with donated property (referring to the property donated by the largest shareholder, etc. within three years retroactively from the day stocks, etc. are acquired at a cost; hereafter in this Article and Article 41-5 the same shall apply). |
| (3) | The profits prescribed in paragraph (1) shall be calculated, based on the date when three months elapse from the day on which relevant stocks are listed (referring to the date of death, date of donation or date of transfer if a person who owns the stocks, etc. dies, donates or transfers the stocks, etc. within three months from the day on which the stocks, etc. are listed; hereafter in this Article and Article 68 referred to as "adjustment base date"). <Amended by Act No. 13557, Dec. 15, 2015> |
| (4) | With regard to a person who reaps profits prescribed in paragraph (1), the gift tax base and the amount of gift tax shall be adjusted by adding the profits to the original taxable value of gift (where the stocks, etc. have been acquired with the donated property, referring to the taxable value of such donated property; hereafter in this Article the same shall apply): Provided, That where the value of the stocks, etc. as at the adjustment base date is below the original taxable value of gift and the difference is equivalent to or above the standard prescribed by Presidential Decree, the amount of gift tax equivalent to the difference (referring to the original amount of gift tax paid as at the time the donation is received) may be refunded. <Amended by Act No. 13557, Dec. 15, 2015> |
| (5) | The day on which stocks, etc. are listed under paragraph (1) shall be the day trading of stocks, etc. commences on the stock market. <Amended by Act No. 11845, May 28, 2013; Act No. 13557, Dec. 15, 2015; Act No. 14388, Dec. 20, 2016> |
| (6) | In applying paragraph (2) 2, where acquisition of stocks, etc. with donated property is uncertain since the donated property and other property are mixed, the stocks, etc. shall be presumed to have been acquired with the donated property. In such cases, if the stocks, etc. have been acquired with the money borrowed by offering the donated property as security, such stocks, etc. shall be deemed to have been acquired with the donated property. <Amended by Act No. 13557, Dec. 15, 2015> |
| (7) | Paragraph (2) shall include cases in which new stocks are taken over or allotted, as new stocks are issued to increase the capital of a corporation after stocks, etc. have been received as a gift or have been acquired. <Amended by Act No. 13557, Dec. 15, 2015> |
| (8) | Where convertible bonds, etc., which were received as a gift or were acquired at a cost, have been converted into stocks, etc. (including cases of taking over or acquiring convertible bonds, etc. directly from an issuing corporation) and the convertible bonds, etc. are converted into stocks, etc. within five years, paragraphs (1) through (6) shall apply by deeming that the converted stocks, etc. were received as a gift or were acquired as at the time the convertible bonds, etc. were received as a gift or were acquired. In such cases, where the convertible bonds, etc. are not converted into stocks, etc. by the adjustment base date, paragraphs (1) through (5) shall apply, deeming that such convertible bonds, etc. were converted into stocks, etc. on the adjustment base date; and where the convertible bonds, etc. have not been converted into stocks, etc. by the expiration date of convertible bonds, etc., the amount of gift tax levied based on the adjustment base date shall be refunded. <Amended by Act No. 13557, Dec. 15, 2015> |
| (9) | Where the amount of gift tax is deemed to have been reduced by using deceit or other fraudulent methods, paragraphs (1) and (2) shall apply even to a gift between persons who are not specially related. In such cases, provisions concerning the period shall be deemed nonexistent in paragraph (1). <Amended by Act No. 13557, Dec. 15, 2015> |
| (10) | The method of calculating profits prescribed in paragraph (1) and other necessary matters shall be prescribed by Presidential Decree. <Amended by Act No. 11130, Dec. 31, 2011; Act No. 13557, Dec. 15, 2015> |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 41-4 (Donation of Profits from Gratuitous Loans of Money) |
| (1) | Where a person borrowed money from another person at no cost or at an interest rate below fair rate, the amount specified below shall be the value of property donated to the person who borrowed such money on the day on which he or she borrowed such money: Provided, That where the amount according to the following is below the standard amount prescribed by Presidential Decree, such case shall be excluded: <Amended by Act No. 11130, Dec. 31, 2011; Act No. 11609, Jan. 1, 2013; Act No. 13557, Dec. 15, 2015> |
| 1. | Where money is borrowed at no cost: An amount obtained by multiplying the amount of borrowed money by fair interest rate; |
| 2. | Where money is borrowed at an interest rate below fair rate: An amount obtained by deducting an amount equivalent to the interest actually paid from the amount obtained by multiplying the amount of borrowed money by fair interest rate. |
| (2) | In applying paragraph (1), where loan period is not specified, the amount of gift shall be calculated by regarding the period as one year; where loan period is not less than one year, the amount of gift shall be calculated by regarding that money is newly borrowed each year on the day next to the day that is one year from the beginning of the loan period. <Newly Inserted by Act No. 13557, Dec. 15, 2015> |
| (3) | In cases of a transaction between persons who are not specially related, paragraph (1) shall apply limited to where good cause does not exist as a transactional practice. <Amended by Act No. 13557, Dec. 15, 2015> |
| (4) | The fair interest rate under paragraph (1), judgment of the date of donation and other necessary matters shall be prescribed by Presidential Decree. <Amended by Act No. 11130, Dec. 31, 2011; Act No. 13557, Dec. 15, 2015> |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 41-5 (Donation of Profits from Listing of Stocks Following Merger) |
| (1) | Where a person, to whom any of the following is applicable, who is specially related to the largest shareholder, etc. of a corporation and was donated or acquired stocks, etc. of the corporation, reaps profits in excess of the original taxable value of gift (excluding cases of acquisition of stocks, etc. with donated property) or acquisition value as the corporation that issued the stocks, etc. merges with a listed corporation having a special relationship prescribed by Presidential Decree with the aforementioned corporation within five years from the date he or she was donated or acquired the stocks, etc. and thus the value of the stocks, etc. increases, an amount equivalent to the profits shall be the value of property donated to the person who reaps the profits: Provided, That where the amount equivalent to the profits is below the standard amount prescribed by Presidential Decree, such cases shall be excluded: <Amended by Act No. 11130, Dec. 31, 2011; Act No. 13557, Dec. 15, 2015> |
| 1. | Where the person was donated stocks, etc. of the relevant corporation by the largest shareholder, etc. or acquired the stocks, etc. from the largest shareholder, etc. at a cost; |
| 2. | Where the person acquired stocks, etc. of the relevant corporation with donated property from a person who was not the largest shareholder, etc.; |
| 3. | Where the person acquired stocks, etc. of another corporation with donated property, of which stocks, etc. are possessed by the largest shareholder, etc., from a person other than the largest shareholder, etc., and thus became the largest shareholder, etc. of the another corporation when stocks, etc. possessed by the largest shareholder, etc. and the aforementioned person who is specially related to the largest shareholder, etc. are totaled up. |
| (2) | Article 41-3 (3) through (9) shall apply mutatis mutandis to the donation of profits from the listing, etc. of stocks, etc., following merger under paragraph (1). In such cases, the term "listing date" shall be deemed "date of merger registration". <Amended by Act No. 13557, Dec. 15, 2015> |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 42 (Donation of Profits Following Use of Property, Provision of Services) |
| (1) | Were a person reaps any of the following profits by using property or providing services, an amount equivalent to the profits (referring to the difference between the market value and the price actually paid) shall be the value of property donated to the person who reaps the profits: Provided, That where the amount equivalent to the profits is below the standard amount prescribed by Presidential Decree, such cases shall be excluded: <Amended by Act No. 13557, Dec. 15, 2015> |
| 1. | Profits reaped by paying another person a price below the market value or by using another person's property (excluding real estate and money; hereafter in this Article the same shall apply) at no cost; |
| 2. | Profits reaped by allowing another person to use property after receiving a price higher than the market value; |
| 3. | Profits reaped by paying another person a price below the market value or by being provided with services at no cost; |
| 4. | Profits reaped by providing another person with services at a price above the market value. |
| (2) | In applying paragraph (1), where the period of using property or the period of providing services is not specified, such period shall be one year, and where such period is one year or more, the person shall be deemed to newly use or to newly allow another person to use the property, or the person shall be deemed to newly provide services to another person or to be newly provided with services by another person each year on the day next to the day that is one year from the beginning of such period. <Amended by Act No. 13557, Dec. 15, 2015> |
| (3) | In cases of a transaction between persons other than those specially related, paragraph (1) shall apply only to cases where good cause does not exist as a transactional practice. <Amended by Act No. 13557, Dec. 15, 2015> |
| (4) | In applying paragraph (1), judgment of the date of donation, method of calculating profits and other necessary matters shall be prescribed by Presidential Decree. <Amended by Act No. 11130, Dec. 31, 2011; Act No. 13557, Dec. 15, 2015> |
| (5) | through (6) Deleted. <by Act No. 13557, Dec. 15, 2015> |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 42-2 (Donation of Profits Following Corporate Reorganization) |
| (1) | Where profits are reaped as equity share or the value thereof is changed due to comprehensive exchange or transfer of stocks, takeover or transfer of business, exchange of business, corporate reorganization, etc., an amount (referring to the difference between the assessed value of property before and after change in the equity share or the value thereof) equivalent to the profits shall be the value of donated property of the person who reaps profits: Provided, That where the amount equivalent to the profits is below the standard amount prescribed by Presidential Decree, such case shall be excluded. |
| (2) | In cases of a transaction between persons other than those specially related, paragraph (1) shall apply only to cases where good cause does not exist as a transactional practice. |
| (3) | Matters necessary for the method of calculating difference between the assessed value of property before and after change in the equity share, the value thereof, etc. shall be prescribed by Presidential Decree. |
[This Article Newly Inserted by Act No. 13557, Dec. 15, 2015]
| Article 42-3 (Donation of Profits Resulting from Increase in Value of Property After Acquisition of Property) |
| (1) | Where a person, who is deemed to be unable to perform a certain act by his or her own exertions in consideration of his or her occupation, age, income and possessions, reaps profits due to a reason (hereafter in this Article, referred to as "reason for increase in the value of property") prescribed by Presidential Decree, such as implementation of a development project, change in the form and quality, partition of co-owned property, authorization of or permission for business, etc., within five years from the date he or she acquired property for following reasons, an amount equivalent to the profits shall be the value of property donated to the person who reaps such profits: Provided, That where the amount equivalent to the profits is below the standard amount prescribed by Presidential Decree, such case shall be excluded: |
| 1. | Where he or she is donated property by a specially related person; |
| 2. | Where he or she acquires property related to undisclosed internal information at a cost after he or she learns undisclosed internal information on the management, etc. of a corporation from a specially related person; |
| 3. | Where he or she acquires property with funds borrowed from a specially related person or with funds borrowed as he or she offers the property of a specially related person as security. |
| (2) | The amount calculated as prescribed by Presidential Decree, in consideration of the value of relevant property at the time of occurrence of reasons for increase in the value of property, acquisition price (referring to the taxable amount of gift in the case of donated property), usual increase in value, contribution to increasing value by a person who acquires property, etc., shall be the profits under paragraph (1). In such cases, where the property is transferred before the day reasons for increase in the value of property occur, the date of transfer shall be deemed the day on which reasons for increase in the value of property occur. |
| (3) | Where gift tax is deemed to have been reduced using deceit or other fraudulent methods, paragraph (1) shall apply even to a donation between persons other than those specially related. In such cases, provisions concerning period under paragraph (1) shall be deemed not to be in existence. |
[This Article Newly Inserted by Act No. 13557, Dec. 15, 2015]
| Article 43 (Special Cases concerning Imposition of Gift Tax) |
| (1) | Where two or more of the provisions of Articles 33 through 39, 39-2, 39-3, 40, 41-2 through 41-5, 42, 42-2, 42-3, 44, 45, and 45-3 through 45-5 apply concurrently to a single donation, only one of the provisions according to which the greatest profits are obtained shall be applicable. <Amended by Act No. 13557, Dec. 15, 2015> |
| (2) | In calculating profits under Articles 31 (1) 2, 35, 37 through 39, 39-2, 39-3, 40, 41-4, 42, and 45-5 if the same transaction, etc. are repeated within one year retroactively from the date of donation, profits shall be calculated by summing up each profit (referring to the difference between the market value and the price actually paid) acquired from respective transaction, etc. <Amended by Act No. 11609, Jan. 1, 2013; Act No. 13557, Dec. 15, 2015> |
| (3) | The method of calculating profits under paragraph (2) and other necessary matters shall be prescribed by Presidential Decree. <Amended by Act No. 13557, Dec. 15, 2015> |
[This Article Newly Inserted by Act No. 10411, Dec. 27, 2010]
SECTION 2 Presumption and Legal Fiction of Donation
| Article 44 (Presumption of Donation of Property Transferred to Spouse) |
| (1) | Any property transferred to a spouse or a lineal ascendant or descendant (hereafter in this Article, referred to as "spouse, etc.") shall be deemed the value of property donated to the spouse, etc. by presuming that the spouse, etc. has received the donation of the value of such property when the transferor has transferred the relevant property. |
| (2) | Where any property transferred to a specially related person (hereafter in this paragraph and paragraph (4), referred to as "transferee") has been re-transferred to the spouse, etc. of the original transferor within three years from the date of acquisition, the value of property as at the time the transferee has retransferred such property shall be deemed the value of property donated to the spouse, etc. of the original transferor, by presuming that the relevant spouse, etc. received the donation of the value of such property: Provided, That this shall not apply where the aggregate of determined amounts of tax prescribed by the Income Tax Act borne by the original transferor and transferee is larger than the amount of gift tax where the spouse, etc. is presumed to have been donated the property at the time the transferor transferred the property. <Amended by Act No. 11130, Dec. 31, 2011; Act No. 13557, Dec. 15, 2015> |
| (3) | Paragraphs (1) and (2) shall not apply if the relevant property falls under any of the following subparagraphs: <Amended by Act No. 11845, May 28, 2013> |
| 1. | Where the relevant property is disposed of by an auction procedure under a court decision; |
| 2. | Where the relevant property is disposed of by the declaration of bankruptcy; |
| 5. | Cases prescribed by Presidential Decree where the fact that the relevant property is transferred to the spouse, etc. in return for consideration is clearly recognized. |
| (4) | Where gift tax has been levied on the relevant spouse, etc. under the main clause of paragraph (2), income tax arising from the transfer of the relevant property shall not be imposed on the original transferor and transferee, notwithstanding the provisions of the Income Tax Act. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 45 (Presumption of Donation of Funds to Acquire Property) |
| (1) | Where, in cases prescribed by Presidential Decree, a person is deemed to be unable to acquire property by his or her own exertions in consideration of his or her occupation, age, income, possessions, etc., the funds used to acquire the property shall be the value of property donated to him or her presuming that he or she was donated the funds at the time he or she acquired the property. <Amended by Act No. 13557, Dec. 15, 2015> |
| (2) | Where, in cases prescribed by Presidential Decree, a person is deemed to be unable to pay back debts (including partial repayment; hereafter in this paragraph the same shall apply) by his or her own exertions in consideration of his or her occupation, age, income, possessions, etc., the funds used to pay back the debts shall be deemed the value of property donated to him or her presuming that he or she was donated the funds for repayment at the time he or she paid back the debts. <Amended by Act No. 13557, Dec. 15, 2015> |
| (3) | Paragraphs (1) and (2) shall not apply where the funds for acquisition or repayment is equivalent to or less than the amount prescribed by Presidential Decree by taking into account the occupation, age, income, property status, etc., and the source of the funds for acquisition or repayment is sufficiently verified. |
| (4) | Any property held in an account whose real holder has been verified pursuant to Article 3 of the Act on Real Name Financial Transactions and Confidentiality or in an account whose real holder has been verified in any other similar way pursuant to statutes and regulations of the relevant foreign country shall be presumed to have been acquired by the title holder of the property for purposes of applying paragraph (1). <Newly Inserted by Act No. 11609, Jan. 1, 2013> |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 45-2 (Deeming Property Registered in Name of Another Person to Have Been Donated) |
| (1) | Where the actual owner and the title holder of any property (excluding land and buildings: hereafter in this Article the same shall apply) requiring registration, etc. to transfer or exercise a right thereto are different persons, an amount equivalent to the value of such property (where the property requires change of a title, referring to the value assessed on the basis of the day on which ownership is obtained) shall be deemed donated by the actual owner to the title holder as at the day on which the property is registered, etc. in the name of the title holder (where such property requires transfer of a title, referring to the day next to the last day of the year following the year in which the day on which ownership is obtained falls), notwithstanding Article 14 of the Framework Act on National Taxes: Provided, That where any of the following is applicable, this shall not apply: <Amended by Act No. 11130, Dec. 31, 2011; Act No. 13557, Dec. 15, 2015; Act No. 16102, Dec. 31, 2018> |
| 1. | Where the property is registered, etc. in the name of another person or the property title is not transferred to the actual owner who obtains ownership without any intention of avoiding taxes; |
| 2. | Deleted; <by Act No. 13557, Dec. 15, 2015> |
| 4. | Where a non-resident makes a registration, etc. in the name of a legal representative or administrator of the property. |
| (2) | Deleted. <by Act No. 16102, Dec. 31, 2018> |
| (3) | Where a person registers, etc. his or her property in the name of another person, or a person does not change a name on property title to actual owner, he or she shall be presumed to have an intention of avoiding taxes: Provided, That where he or she does not change name on property title to actual owner and where any of the following is applicable, he or she shall not be presumed to have an intention of avoiding taxes: <Amended by Act No. 13557, Dec. 15, 2015> |
| 2. | Where, in cases of obtaining ownership through inheritance, an heir files a return in which the property is included in the taxable value of inheritance as he or she files a return corresponding to any of the following: Provided, That where he or she files a revised return knowing beforehand that inheritance tax base and tax amount are to be determined or corrected, or files a return after deadline, such case shall be excluded herefrom: |
| (a) | A return of the inheritance tax base prescribed in Article 67; |
| (4) | In applying paragraph (1), where a shareholder register or an employee register has not been prepared, whether property title has been changed shall be determined with documents concerning shareholders, etc. and a report on changes in the ownership of stocks, etc. submitted to the head of a tax office having jurisdiction over the place for payment of tax prescribed in Articles 109 (1) and 119 of the Corporate Tax Act. <Amended by Act No. 13557, Dec. 15, 2015> |
| (5) | Deleted. <by Act No. 13557, Dec. 15, 2015> |
| (7) | Deleted. <by Act No. 11130, Dec. 31, 2011> |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 45-3 (Deeming Profits to Have Been Donated through Transactions with Specially Related Corporations) |
| (1) | Where a corporation falls under subparagraph 1, dominant shareholders of such corporation (hereafter in this Article and Article 68 referred to as "corporation that receives benefits") and relatives of such dominant shareholders [limited to a shareholder in whose case a percentage of shares he or she directly or indirectly holds (hereafter in this Article referred to as "percentage of shareholding") out of the total number of issued shares of or the total amount of capital invested in a corporation that receives benefits exceeds the percentage of shareholding prescribed by Presidential Decree (hereafter in this Article referred to as "marginal percentage of shareholding"); hereafter in this Article the same shall apply] shall be deemed to have received donations of profits prescribed in subparagraph 2 (hereafter in this Article and Article 55 referred to as "profits deemed donated"), respectively: <Amended by Act No. 11609, Jan. 1, 2013; Act No. 12168, Jan. 1, 2014; Act No. 13557, Dec. 15, 2015; Act No. 14388, Dec. 20, 2016; Act No. 15224, Dec. 19, 2017> |
| 1. | Where a corporation falls under any of the following: |
| (a) | Where the corporation falls under a small and medium enterprise prescribed by Presidential Decree (hereafter in this Article referred to as "small and medium enterprise") or a backbone enterprise prescribed by Presidential Decree (hereafter in this Article referred to as "backbone enterprise"): Where a percentage of sales (including sales made in transactions prescribed by Presidential Decree, which are cross transactions between conglomerates subject to public announcement made under Article 14 of the Monopoly Regulation and Fair Trade Act) to a corporation that has a special relationship prescribed by Presidential Decree (hereafter in this Article referred to as "corporation that has a special relationship") with a dominant shareholder in the corporation (hereafter in this Article referred to as "percentage of transactions with a corporation that has a special corporation"), out of the sales of the corporation in the business year (referring to the sales calculated in accordance with the accounting standards for enterprises referred to in Article 43 of the Corporate Tax Act; hereafter in this Article the same shall apply) exceeds the percentage prescribed by Presidential Decree (hereafter in this Article referred to as "percentage of normal transactions"), in consideration of the size, etc. of the corporation; |
| (b) | Where the corporation does not fall under a small and medium enterprise or backbone enterprise: Where the corporation falls under any of the following: |
| i) | Where the corporation falls under a ground prescribed in item (a); |
| ii) | Where the sales to a corporation that has a special relationship exceeds the amount prescribed by Presidential Decree, in consideration of the size, etc. of the corporation, in which case a percentage of transactions with the corporation that has a special relationship exceeds 2/3 of the percentage of normal transactions; |
| 2. | Profits: Amounts calculated in accordance with formulas classified as follows: |
| (a) | Where a corporation that receives benefits falls under a small and medium enterprise: |
| Operating profits after tax of the corporation that receives benefits × Percentage of transactions with a corporation that has a special relationship exceeding the percentage of normal transactions × Percentage of shareholding exceeding the marginal percentage of shareholding |
|
| (b) | Where a corporation that receives benefits falls under a backbone enterprise: |
| Operating profit after tax of the corporation that receives benefits × Percentage of transactions with a corporation that has a special relationship exceeding 50/100 of the percentage of normal transactions × Percentage of shareholding exceeding 50/100 of the marginal percentage of shareholding |
|
| (c) | Where a corporation that receives benefits does not fall under a small and medium enterprise or backbone enterprise: |
| Operating profits after tax of the corporation that receives benefits × Percentage of transactions with a corporation that has a special relationship exceeding 5/100 × Percentage of shareholding |
|
| (2) | For the purpose of calculating the profit deemed donated, where dominant shareholders and relatives of the dominant shareholders concurrently invest in the beneficiary corporation directly and invest in the same corporation indirectly through a corporation prescribed by Presidential Decree, each amount calculated respectively in accordance with the formula prescribed in paragraph (1) shall be added up. |
| (3) | Profits deemed donated shall be calculated each business year of a beneficiary corporation, and the closing date of the relevant business year of a beneficiary corporation shall be deemed the date of donation. |
| (4) | No sales prescribed in paragraph (1) shall include those prescribed by Presidential Decree, such as sales arising from transactions between the beneficiary corporation that is a small or medium enterprise and the specially related corporation that is a small or medium enterprise. <Newly Inserted by Act No. 12168, Jan. 1, 2014> |
| (5) | Matters necessary for the scope of dominant shareholders and relatives of the dominant shareholder, calculation of proportion of transactions with a specially related corporation, calculation of business profits of a beneficiary corporation after tax, calculation of shareholding percentage of stocks in possession, and calculation of profits deemed donated under paragraph (1) shall be prescribed by Presidential Decree. <Amended by Act No. 13557, Dec. 15, 2015> |
[This Article Newly Inserted by Act No. 11130, Dec. 31, 2011]
| Article 45-4 (Deeming Profits Accruing from Business Opportunities Provided by Specially Related Corporations to Have Been Donated) |
| (1) | Where a corporation (hereafter in this Article referred to as "beneficiary corporation"), in which a dominant shareholder prescribed in Article 45-3 (1) and his or her relatives (hereafter in this Article referred to as "dominant shareholder, etc.") have at least 30/100 of shareholding percentage of stocks, is provided with business opportunities prescribed by Presidential Decree by another corporation (excluding small and medium enterprises prescribed by Presidential Decree and other corporations prescribed by Presidential Decree) having a special relationship with the dominant shareholder, etc., the dominant shareholder, etc. of the beneficiary corporation shall be deemed to have been donated an amount (hereafter in this Article referred to as "profits deemed donated") calculated according to the following formula on the last day of the business year (hereafter in this Article referred to as "year of commencing business") in which the day (hereafter in this Article referred to as "day when business opportunities are provided") on which business opportunities are provided falls. <Amended by Act No. 14388, Dec. 20, 2016> |
| [{Profits of the beneficiary corporation during the year of commencing business, accrued from the provided business opportunities X Shareholding percentage of stocks held by dominant shareholder, etc.)? Corresponding amount among paid corporate tax for the year of commencing business} ÷ Number of months in the year of commencing business X 12] X 3 |
|
| (2) | The deadline for filing the gift tax base prescribed in paragraph (1) shall be the day when three months elapse from the end of the month in which the deadline for filing the tax base prescribed in Article 60 (1) of the Corporate Tax Act falls. |
| (3) | By the business year (hereafter in this Article referred to as "adjustment business year") in which the day when two years elapse from the date when business opportunities are provided falls, the dominant shareholder, etc. of a beneficiary corporation to which profits deemed donated under paragraph (1) accrues, shall pay the difference between gift tax on an amount (hereafter in this Article referred to as "adjusted profits deemed donated") calculated according to the following formula and gift tax on profits deemed donated that was paid pursuant to paragraph (2) reflecting actual profits accrued from business opportunities provided to the beneficiary corporation, to the head of a tax office having jurisdiction over the place of tax payment: Provided, That where the adjusted profits deemed donated are less than the original profits deemed donated, the dominant shareholder, etc. may be refunded with gift tax (tax amount paid pursuant to paragraph (2) shall be the limit) equivalent to the difference. |
| [(Sum of profits reaped by a beneficiary corporation from the year of commencing business until the adjustment business year, accrued from business opportunities provided) X Shareholding percentage of stocks held by dominant shareholder, etc.]? Corresponding amount among paid corporate tax from the year of commencing business until the adjustment business year |
|
| (4) | The shareholding percentage of stocks held by the dominant shareholder, etc. prescribed in paragraphs (1) and (3) shall be applicable, based on the last day of the year of commencing business. |
| (5) | The deadline for filing the gift tax base prescribed in paragraph (3) shall be the day when three months elapse from the last day of the month in the adjustment business year in which the deadline for filing the tax base prescribed in Article 60 (1) of the Corporate Tax Act falls. |
| (6) | Matters necessary for the calculation of shareholding percentage of stocks in possession under paragraphs (1) and (3), calculation of profits reaped by a beneficiary corporation accruing from business opportunities provided, calculation of a corresponding amount among paid corporate tax, method of adjustment, procedures therefor, etc. shall be prescribed by Presidential Decree. |
[This Article Newly Inserted by Act No. 13557, Dec. 15, 2015]
| Article 45-5 (Deeming Profits to Have Been Donated through Transactions with Specific Corporations) |
| (1) | Where a person having a special relationship prescribed by Presidential Decree with the shareholder, etc. (hereafter in this Article referred to as "shareholder, etc. of a specific corporation") of any of the following corporations (hereafter in this Article and Article 68 referred to as "specific corporation") has engaged in transactions prescribed in paragraph (2) with the specific corporation, an amount calculated by multiplying profits of the specific corporation, deeming that the date when transactions are conducted is the date the donation is made, by the shareholding percentage of stocks in the specific corporation held by the shareholder, etc. shall be deemed to have been donated to the shareholder, etc. of the specific corporation: <Amended by Act No. 14388, Dec. 20, 2016> |
| 1. | A corporation having deficits prescribed by Presidential Decree; |
| 2. | A corporation temporarily closed or closed down as at the date of donation; |
| 3. | A corporation not falling under subparagraphs 1 and 2 as at the date of donation, in which a dominant shareholder prescribed in Article 45-3 (1) and his or her relatives have at least 50/100 of shareholding percentage of stocks. |
| (2) | The transactions conducted under paragraph (1) shall be any of the followings: |
| 1. | Provision of property or services at no cost; |
| 2. | Transfer or provision of property or services at a markedly low price in view of ordinary course of business; |
| 3. | Acquiring property or services by transfer or being supplied therewith at a markedly high price in view of ordinary course of business; |
| 4. | Other transactions similar to those under subparagraphs 1 through 3, which are prescribed by Presidential Decree. |
| (3) | Determination on the date of donation under paragraph (1), calculation of profits reaped by a specific corporation, scope of markedly low price and markedly high price and other necessary matters shall be prescribed by Presidential Decree. |
[This Article Newly Inserted by Act No. 13557, Dec. 15, 2015]
SECTION 3 Taxable Value of Donated Property
| Article 46 (Donated Property Not Subject to Taxation) |
No gift tax shall be imposed on any of the following: <Amended by Act No. 10361, Jun. 8, 2010; Act No. 13557, Dec. 15, 2015; Act No. 14388, Dec. 20, 2016>
| 1. | The value of property donated by the State or a local government; |
| 2. | Where an employee of a domestic corporation who has joined an employee association (hereinafter referred to as "employee stock ownership association") satisfying requirements prescribed by Presidential Decree acquires shares of the relevant corporation through the employee stock ownership association and members of such association meet the criteria for a minority shareholder prescribed by Presidential Decree, the value equivalent to the profits accrued from the difference between the acquisition value of such shares and their current market value; |
| 4. | The value of property donated to an intra-company labor welfare fund pursuant to the Framework Act on Labor Welfare, or other similar associations prescribed by Presidential Decree; |
| 5. | Socially recognized disaster relief funds and goods, medical treatment expenses, education fees or others similar thereto that are prescribed by Presidential Decree; |
| 6. | The value of property donated to the Credit Guarantee Fund pursuant to the Credit Guarantee Fund Act or other similar associations prescribed by Presidential Decree; |
| 7. | The value of property donated to the State, local governments, or public organizations; |
| 8. | Insurance proceeds of an insurance policy prescribed by Presidential Decree, whereunder the beneficiary of insurance proceeds is a disabled person; |
| 10. | Where a not-for-profit corporation inherits assets, rights and obligations of another not-for-profit corporation because another not-for-profit corporation has been dissolved or its business has changed due to alterations of statutes and regulations that constitute the basis for the incorporation thereof, the value of the relevant assets the not-for-profit corporation inherits. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 47 (Taxable Value of Gift) |
| (1) | The taxable value of gift shall be the aggregate of values of donated property under this Act as at the date of donation (excluding the value of donated property under Articles 31 (1) 3, 40 (1) 2 and 3, 41-3, 41-5, 42-3, 45-2 through 45-4 (hereinafter referred to as "donated property excluding any summing-up")), less the amount acquired by the donee as debts (including debts prescribed by Presidential Decree, such as debts related to the donated property) secured with the donated property. <Amended by Act No. 11130, Dec. 31, 2011; Act No. 11609, Jan. 1, 2013; Act No. 13557, Dec. 15, 2015; Act No. 16102, Dec. 31, 2018> |
| (2) | Where the aggregate of the value of the property donated to the same person (where a donor is a lineal ascendant, including the spouse of such lineal ascendant) within 10 years prior to the relevant date of donation is not less than 10 million won, such value shall be added to the taxable value of donated property: Provided, That this shall not apply to the donated property excluding any summing-up. |
| (3) | With respect to a conditional gift between spouses, or between lineal ascendants and descendants (including cases presumed to be a gift under Article 44) in applying paragraph (1), even if the donee takes over the debts of the donor, the amount of the debts shall be presumed not to be taken over by the donee: Provided, That this shall not apply where the amount of debts is objectively recognized, as prescribed by Presidential Decree, such as debts to the State or a local government. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
SECTION 4 Non-Inclusion in Taxable Value of Property Contributed for Public Interest
| Article 48 (Non-Inclusion in Taxable Value of Property Contributed to Public-Service Corporations) |
| (1) | No value of property contributed to a public-service corporation, etc. shall be included in the taxable value of gift: Provided, That where shares with voting rights or equity stakes (hereafter in this Article referred to as "shares, etc.") of a domestic corporation were contributed to a public-service corporation, etc., in which case the sum of the contributed shares, etc. and the following shares, etc. exceeds the percentage referred to in Article 16 (2) 2 of the total number, etc. of issued shares with voting rights, etc. or the total amount of invested capital (excluding its own shares and its own equity stakes; hereinafter referred to as "total number of issued shares, etc.") of the domestic corporation (excluding cases falling under the subparagraphs of Article 16 (3)), the value of such excess shall be included in the taxable value of gift: <Amended by Act No. 11130, Dec. 31, 2011; Act No. 13557, Dec. 15, 2015; Act No. 14388, Dec. 20, 2016; Act No. 15224, Dec. 19, 2017> |
| 1. | Shares, etc. of the same domestic corporation, which are owned by the relevant public service corporation, etc. as at the time the contributor makes contributions; |
| 2. | Shares, etc. of the same domestic corporation, which are contributed by the contributor and his or her specially related person to a public-service corporation, etc. other than the relevant public service corporation, etc.; |
| 3. | Shares, etc. of the same domestic corporation, which are owned by another public service corporation, etc. to which the contributor or a person who has a special relationship with him or her has contributed property. |
| (2) | Where a public-service corporation, etc. to which the property is contributed pursuant to paragraph (1) and Article 16 (1), falls under subparagraphs 1 through 4, 6, and 8, the head of the competent tax office, etc. shall deem that the public service corporation, etc. has received the contribution of the value prescribed by Presidential Decree and promptly levy gift tax, and where it falls under subparagraphs 5 and 7, he or she shall levy an additional tax prescribed in Article 78 (9): Provided, That among property contributed from many unspecified persons, those property prescribed by Presidential Decree, the value of which is difficult to be calculated according to its contributors, shall be excluded herefrom: <Amended by Act No. 10411, Dec. 27, 2010; Act No. 10907, Jul. 25, 2011; Act No. 14388, Dec. 20, 2016; Act No. 15224, Dec. 19, 2017; Act No. 16102, Dec. 31, 2018> |
| 1. | Where a public-service corporation, etc. uses the contributed property for purposes other than direct public-interest projects, etc. (including cases where the public service corporation, etc. operates such property for profit or for-profit projects to appropriate for direct public-interest projects; hereafter in this subparagraph the same shall apply) or fails to use such property for direct public-interest projects within three years from the date on which such property is contributed: Provided, That this shall not apply in extenuating circumstances prescribed by Presidential Decree, such as taking a long time for the public-service corporation, etc. to use it for direct public-interest projects, etc. and such fact is reported to the head of the tax office having jurisdiction over the place for tax payment as at the time a report under paragraph (5) is submitted and such property is used for direct public-interest projects, etc. within one year from the date of disappearance of such grounds; |
| 2. | Where a public-service corporation, etc. uses the contributed property (including cases where the public-service corporation, etc. operates such property for profits or for-profit projects, and where any operating income accrues therefrom; hereafter in this subparagraph and paragraph (3) the same shall apply) and the proceeds from the sale of the contributed property (including property increased due to the proceeds from the sale thereof but excluding the amount expended to pay utility bills prescribed by Presidential Decree; hereafter in this Article the same shall apply) to acquire shares, etc. of a domestic corporation, in such cases where the sum of the acquired shares, etc. and the following shares exceeds the percentage referred to in Article 16 (2) 2, out of the total number of issued shares with voting rights, etc. of the domestic corporation: Provided, That the foregoing shall not apply where the donation meets requirements prescribed by Presidential Decree, in such cases where the donation falls under Article 16 (3) 1 or 3 (in such cases, "contribution" shall be construed as "acquisition") and an industry-academia cooperation organization prescribed in the Industrial Education Enhancement and Industry-Academia-Research Cooperation Promotion Act acquires shares, etc.: |
| (a) | Shares, etc. of a domestic corporation that are the same as those owned by the relevant public service corporation, etc. as at the time the shares, etc. are acquired; |
| (b) | Shares, etc. of a domestic corporation that are the same as those contributed by a contributor in a special relationship with the relevant domestic corporation to a public-service corporation, etc., other than the relevant public-service corporation, etc.; |
| (c) | Shares, etc. of the same domestic corporation owned by another public- service corporation, etc. to which a contributor who has a special relationship with the relevant domestic corporation has contributed property; |
| 3. | Where a public-service corporation, etc. operates the contributed property for profits or for-profit projects and uses operating income accrued therefrom for purposes other than direct public-interest projects; |
| 4. | Where a public service corporation, etc. fails to use the proceeds from the sale of the contributed property, as prescribed by Presidential Decree, by the date on which three years have elapsed from the date of sale; |
| 5. | Where a public-service corporation, etc. uses the operating income prescribed in subparagraph 3 short of the standard amount prescribed by Presidential Decree, or uses the proceeds from sale under subparagraph 4 short of the standard amount prescribed by Presidential Decree for three years from the date of sale; |
| 6. | Where an exemplary public-service corporation, etc. which fully meets requirements prescribed in Article 16 (2) 2 (a), exercises voting rights of shares, etc. contributed, in violation of subitem i) of the aforesaid item; |
| 7. | Where an exemplary public-service corporation, etc. which owns shares, etc. with voting rights of a domestic corporation in excess of 5/100 of the total number of issued shares, etc. of the domestic corporation pursuant to Articles 16 (2), 48 (1), and 48 (2) 2 directly uses such shares, etc. in a public-service project because the value of such shares, etc. falls short of the amount (hereinafter referred to as "standard amount" in Article 78 (9) 3) equivalent to the amount calculated by multiplying the value of contributed property prescribed by Presidential Decree by a percentage prescribed by Presidential Decree; |
| 8. | Other cases where a public-service corporation, etc. fails to operate the contributed property or to conduct direct public-interest projects, as prescribed by Presidential Decree. |
| (3) | Where a public-service corporation, etc. permits any of the following persons to use or make a profit from the contributed property under paragraph (1), the property acquired with the contributed property as the principal money, and the proceeds from the sale of the contributed property by means of lease, loan for consumption, loan for use, etc., gift tax shall be promptly levied on the public-service corporation, etc. by deeming that the value prescribed by Presidential Decree is donated to the public-service corporation, etc.: Provided, That this shall not apply to cases prescribed by Presidential where the public-service corporation, etc. is provided with services in connection with direct pubic-interest projects and pays normal prices therefor, etc.: <Amended by Act No. 11130, Dec. 31, 2011; Act No. 16102, Dec. 31, 2018> |
| 1. | Contributor and his or her relatives; |
| 2. | Any other public-service corporation, etc. to whom the contributor makes a contribution; |
| 3. | Persons prescribed by Presidential Decree as the specially related parties of those stipulated in subparagraph 1 or 2. |
| (4) | When paragraphs (1) through (3) and (8) apply, criteria for determining whether the donated property is directly used for a public-service project, criteria for determining whether the donated property is for profits or for a project to make a profit, methods for calculation of the value in excess of the percentage referred to in Article 16 (2) 2 out of the total number of issued shares, etc., the scope of contributors who have a special relationship with the relevant domestic corporations, and other necessary matters shall be prescribed by Presidential Decree. <Amended by Act No. 11130, Dec. 31, 2011; Act No. 14388, Dec. 20, 2016; Act No. 15224, Dec. 19, 2017> |
| (5) | Where a public-service corporation, etc. has received any property contributed pursuant to paragraph (1) and Article 16 (1), the public-service corporation, etc. shall submit a report on the plan and progress on the use of such contributed property, to the head of the tax office having jurisdiction over the place for tax payment, as prescribed by Presidential Decree. |
| (6) | When the head of a tax office levies inheritance tax or gift tax on a public-service corporation, etc., he or she shall inform the competent authority of the public-service corporation, etc. of such fact. |
| (7) | When the competent authority of a public-service corporation, etc. grants an incorporation license to the public-service corporation, etc., revokes the granted incorporation license, issues a corrective order to the public- service corporation, etc., or discovers that the public-service corporation, etc. falls under the proviso of paragraph (1), (2), or (3) as a result of supervision, it shall notify the head of the tax office having jurisdiction over the place for tax payment of such fact, as prescribed by Presidential Decree. |
| (8) | Where a contributor or his or her specially related person becomes a director of a public service corporation, etc. prescribed by Presidential Decree and thus the number of directors exceeds one-fifth of the current number of directors (where the current number of directors is less than five, it shall be deemed five), or becomes an executive or employee (excluding director; hereinafter the same shall apply) thereof, an additional tax prescribed in Article 78 (6) shall be imposed: Provided, That where a contributor or a person specially related to him or her becomes a director and thus the number of directors exceeds 1/5 of the current number of directors of a public service corporation, etc. due to any extenuating circumstance prescribed by Presidential Decree, such as death, etc., and where a director is recruited to fill the vacancy or replaced within two months from the date such ground occurs, no additional tax shall be imposed. <Amended by Act No. 11130, Dec. 31, 2011; Act No. 13557, Dec. 15, 2015> |
| (9) | Where a public-service corporation, etc. (excluding a public service corporation, etc. established by the State or a local government, a public service corporation, etc. equivalent thereto that is prescribed by Presidential Decree, and an exemplary public service corporation, etc.) owns shares, etc. of a domestic corporation in a special relationship prescribed by Presidential Decree, in which case the value of shares, etc. of the domestic corporation exceeds 30/100 of the total value of its property (50/100 where it is the public-service corporation, etc. that undergoes external audit conducted under Article 50 (3), opens and uses an exclusive account prescribed in Article 50-2, and makes a public announcement of the statement of settlement of accounts, etc. prescribed in Article 50-3), the additional tax prescribed in Article 78 (7) shall be levied. In such cases, the calculation of the value of such excess stocks, etc. of the domestic corporation shall be prescribed by Presidential Decree. <Amended by Act No. 14388, Dec. 20, 2016> |
| (10) | Where a public-service corporation, etc. advertises or publicizes without reasonable consideration for the purpose of increasing the profits of a domestic corporation in a special relationship with it, the additional tax prescribed in Article 78 (8) shall be levied. In such cases, the scope of a domestic corporation in a special relationship, the methods of advertisement and public relations, and other necessary matters shall be prescribed by Presidential Decree. |
| (11) | Where any of the following cases arises in connection with the contribution, acquisition and possession of stocks, etc. to/by a public service corporation, etc., the corresponding amount shall be included in the taxable value of inherited or donated property pursuant to Article 16 (2) or 48 (1), or gift tax shall be promptly levied on it pursuant to Article 48 (2), as prescribed by Presidential Decree: <Amended by Act No. 14388, Dec. 20, 2016> |
| 1. | Where an exemplary public-service corporation, etc. fails to meet requirements for the exemplary public service corporation, etc. after it has received a contribution of shares, etc. (including cases where it acquires shares, etc. with the contributed property and the proceeds from the sale of the contributed property) in excess of 5/100 of the total number of issued shares, etc. of a domestic corporation; |
| 2. | Where a public-service corporation, etc. prescribed in the subparagraphs of Article 16 (3) or the proviso of Article 48 (2) 2 does not fall under a public-service corporation, etc. prescribed in the proviso of Article 49 (1) (excluding its subparagraphs), or possesses the stocks, etc. of a domestic corporation in a special relationship with the relevant contributor in excess of 5/100 of the total number, etc. of the voting stocks issued by the relevant domestic corporation. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 49 (Upper Limits of Holding Stocks by Public Service Corporations) |
| (1) | Where a public service corporation, etc. owns shares with voting rights or equity stakes (hereafter in this Article referred to as "shares, etc.") of the same domestic corporation in excess of 5/100 of the total number of issued shares with voting rights or the total amount of invested capital as at December 31, 1996, the public service corporation, etc. shall cause itself to possess such stocks. etc. not in excess of 5/100 of the total number, etc. of the voting stocks issued (hereinafter referred to as "upper limit of holding stocks, etc.") by any of the following deadline: Provided, That the foregoing shall not apply to exemplary public service corporations, etc., public service corporations, etc. funded and incorporated by the State or a local government, and public service corporations, etc. prescribed by Presidential Decree, which are corresponding thereto: <Amended by Act No. 14388, Dec. 20, 2016> |
| 1. | Where the equity ratio of the stocks, etc. possessed by the relevant public service corporation, etc. exceeds 5/100 of total number, etc. of issued stocks, but is not more than 20/100 thereof: By December 31, 1999; |
| 2. | Where the equity ratio of the stocks, etc. possessed by the relevant public service corporation, etc. exceeds 20/100 of total number, etc. of issued stocks: By December 31, 2001. |
| (2) | For the purposes of paragraph (1), other necessary matters, such as the methods of calculating the upper limits of holding stocks, etc. shall be prescribed by Presidential Decree. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 50 (Obligations of Public Service Corporations to Undergo Tax Verification and Audit) |
| (1) | A public service corporation, etc, shall undergo tax verification (hereinafter referred to as "tax verification by outside experts") as to whether the contributed property is used for public interest projects by taxable period or business year by selecting at least two attorneys-at-law, certified public accountants, or certified tax accountants who meet standards prescribed by Presidential Decree: Provided, That public service corporations, etc. prescribed by Presidential Decree may choose not to undergo tax verification by outside experts, based on the size of assets, the characteristics of business, etc. <Amended by Act No. 14388, Dec. 20, 2016> |
| (2) | A public service corporation, etc. that has undergone tax verification by outside experts pursuant to paragraph (1) shall report the findings thereof to the head of the tax office having jurisdiction over the place for tax payment, as prescribed by Presidential Decree. In such cases, the head of the competent tax office shall make the findings on the tax verification by outside experts as to whether the public service corporation, etc. uses the contributed property for public interest projects available for perusal by the public. |
| (3) | A public service corporation, etc. shall undergo an audit conducted by an auditor stipulated under subparagraph 7 of Article 2 of the Act on External Audit of Stock Companies by taxable period or business year: Provided, That this shall not apply to any of the following public service corporations, etc.: <Amended by Act No. 16102, Dec. 31, 2018> |
| 1. | Public service corporations, etc., the scale of property of which is smaller than that prescribed by Presidential Decree; |
| 2. | Public service corporations, etc. prescribed by Presidential Decree, based on the characteristics of projects. |
| (4) | For the purposes of paragraphs (1) through (3), the tax verification items, the tax verification procedures and methods, the preparation of the report, procedures for reporting findings on tax verification, methods of conducting audits and other necessary matters shall be prescribed by Presidential Decree. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 50-2 (Public Service Corporation's Duty to Open and Use Exclusive Accounts) |
| (1) | Where revenue and expenditure received or disbursed in connection with a direct public-interest project by a public service corporation, etc. fall under any of the following subparagraphs, the public service corporation, etc. (excluding public service corporations, etc. prescribed by Presidential Decree in consideration of the characteristics of projects; hereinafter the same shall apply) shall use an exclusive account (hereinafter referred to as "exclusive account") for the direct public-interest project prescribed by Presidential Decree: <Amended by Act No. 11609, Jan. 1, 2013> |
| 1. | Where revenue and expenditure related to a direct public-interest project is received or settled through a financial company, etc. prescribed by Presidential Decree; |
| 2. | Where donations, contributions or membership fees are received: Provided, That this shall be excluded in cases prescribed by Presidential Decree where cash is received directly; |
| 3. | Where personnel expenses and rent are paid; |
| 4. | Where expenses for a direct public-interest project prescribed by Presidential Decree, such as donations, scholarship, research expenses, etc. are paid: Provided, That it shall be limited to where such expenses exceed one million won; |
| 5. | Where the money obtained by disposing of property for profit-making or profit-making projects and other operating income are transferred to the accounting of a proper purpose business (applicable only when the transfer of funds, such as cash, is accompanied). |
| (2) | A public service corporation, etc. shall separately prepare and keep detailed statements in any cases not falling under any of the subparagraphs of paragraph (1) in connection with direct public-interest projects: Provided, That this shall not apply to revenue and expenditure prescribed by Presidential Decree, including cases where evidentiary documents falling under Article 160-2 (2) 3 or 4 of the Income Tax Act are prepared. |
| (3) | A public service corporation, etc. shall open an exclusive account within three months from the date it initially becomes a public service corporation, etc., and shall report thereon to the head of the tax office having jurisdiction over the place for tax payment of the public service corporation, etc.: Provided, That a public corporation may file a report on opening an exclusive account by June 30, 2019, where it fails to file such report pursuant to the main clause of this Article, and where the sum amount of the two amounts specified in (A) and (B) as follows is less than 500 million won: (A) the amount of income (referring to the amount of income under the Income Tax Act related to the relevant public project or the amount of income related to profit-making business subject to corporate taxation under the Corporate Tax Act) for the taxable period for income tax or for the business year for corporate tax to which January 1, 2016, January 1, 2017, or January 1, 2018 belongs; and (B) the value amount of property contributed for such taxable period for income tax or for such business year for corporate tax. <Amended by Act No. 16102, Dec. 31, 2018> |
| (4) | Where a public service corporation, etc. intends to change an exclusive account or open an additional exclusive account, it shall report thereon, as prescribed by Presidential Decree. |
| (5) | The opening, reporting, change and addition of exclusive accounts of a public service corporation, etc. and the method of reporting, extent of using exclusive accounts, necessary matters for preparing detailed statements shall be prescribed by Presidential Decree. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 50-3 (Obligations of Public Service Corporations to Publicly Announce Statements of Settlement of Accounts) |
| (1) | A public service corporation, etc. (excluding a public service corporation, etc. prescribed by Presidential Decree, based on the size of assets, the characteristics of business, etc.; hereafter in this Article the same shall apply) shall publicly announce the following documents, etc. (hereafter in this Article referred to as "statement of settlement of accounts, etc.") by posting them on the website of the National Tax Service within four months from the last day of a taxable period or business year of the relevant public service corporation, etc., as prescribed by Presidential Decree: <Amended by Act No. 10411, Dec. 27, 2010; Act No. 14388, Dec. 20, 2016; Act No. 16102, Dec. 31, 2018> |
| 1. | A statement of financial position; |
| 2. | A statement of comprehensive income; |
| 3. | Details of collection and disbursement of donations; |
| 4. | Matters concerning the representative, directors, contributors, location, and intended projects of the relevant public service corporation, etc.; |
| 5. | Details of use of income accrued from operating the contributed property; |
| 6. | An audit report and its attached financial statements, in cases of a public service corporation, etc. obliged to undergo an audit pursuant to Article 50 (3); |
| 7. | Matters prescribed by Presidential Decree, such as status of the stocks owned or held. |
| (2) | Where a public service corporation, etc. fails to publicly announce the statement of settlement of accounts, etc. pursuant to paragraph (1) or where any erroneous information is included in the details publicly announced, the Commissioner of the National Tax Service may request the public service corporation, etc. to publicly announce them within the specified period of one month, or to correct such erroneous information. |
| (3) | The Commissioner of the National Tax Service may provide the statement of settlement of accounts, etc. publicly announced by a public service corporation, etc. to persons prescribed by Presidential Decree. <Newly Inserted by Act No. 11130, Dec. 31, 2011> |
| (4) | A public announcement on the settlement of settlement of accounts, etc. and the procedures for requesting correction thereof, under paragraphs (1) and (2) and other matters shall be prescribed by Presidential Decree. <Amended by Act No. 11130, Dec. 31, 2011> |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 50-4 (Accounting Standards Applied to Public Service Corporations) |
| (1) | Where a public service corporation, etc. (excluding a public service corporation, etc. prescribed by Presidential Decree, based on the characteristics of business) performs its obligations to undergo an audit conducted under Article 50 (3) and to publicly announce financial statements, etc. prescribed in Article 50-3, it shall comply with accounting standards prescribed by Presidential Decree. |
| (2) | Matters necessary for the operation of an accounting system, procedures for the operation thereof, etc., such as the formulation and amendment of accounting standards prescribed in paragraph (1), shall be prescribed by Presidential Decree. |
[This Article Newly Inserted by Act No. 14388, Dec. 20, 2016]
| Article 51 (Duty to Prepare and Keep Books and Records) |
| (1) | A public service corporation, etc. shall prepare books and records concerning the contributed property and details on the operation of public interest projects by taxable period of income tax or by business year of corporate tax, and keep significant evidentiary documents related to such books and records. |
| (2) | Books, records and significant evidentiary documents under paragraph (1) shall be preserved for 10 years from the last date of a taxable period of income tax or a business year of corporate tax. |
| (3) | Books, records and significant evidentiary documents concerning profit-making projects of a public service corporation, etc. prepared and kept pursuant to Article 160 of the Income Tax Act and the proviso of Article 112 of the Corporate Tax Act shall be deemed books, records and significant evidentiary documents prepared and kept pursuant to paragraph (1). In such cases, the books, records and significant evidentiary documents include anything stored in a microfilm, magnetic disk, diskette, or any other information storage device. |
| (4) | Necessary matters concerning the preparation and keeping of books, records and evidentiary documents under paragraphs (1) through (3) shall be prescribed by Presidential Decree. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 52 (Non-Inclusion of Property Held in Public Trust in Taxable Value) |
The property among donated property that a donor contributes to a public service corporation, etc. through a public trust prescribed by the Public Trust Act for religious, charitable, academic or other public interest purposes shall not be included in the taxable value of gift. In such cases, Article 17 (2) shall apply mutatis mutandis. <Amended by Act No. 10924, Jul. 25, 2011; Act No. 12420, Mar. 18. 2014> [This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 52-2 (Non-Inclusion in Taxable Value of Property Donated to Disabled Persons) |
| (1) | Where a disabled person prescribed by Presidential Decree receives any property donated (referring to that prescribed by Presidential Decree, which can be trusted to a trust business entity prescribed by the Financial Investment Services and Capital Markets Act; hereafter in this Article the same shall apply), and meets all of the following requirements by the reporting deadline prescribed in Article 68, no value of the donated property (referring to the total value of property donated to the disabled person for his or her life and the ceiling is 500 million won) shall be included in the taxable value of donated property: <Amended by Act No. 14388, Dec. 20, 2016> |
| 2. | The disabled person shall be the beneficiary who receives all profits accruing from the trust; |
| 3. | The period of trust shall be until the time the disabled person dies: Provided, That where the period of trust expires before the disabled person dies, the period shall be extended by up to the time of his or her death. |
| (2) | Where a disabled person who has received any property donated under paragraph (1) falls under any of the following subparagraphs, the head of the competent tax office, etc. shall promptly impose gift tax on the disabled person, deeming that the value of the relevant property is donated to the disabled person on the date prescribed by Presidential Decree: Provided, That the foregoing shall not apply where the disabled person withdraws money from his or her bank account for purposes prescribed by Presidential Decree, such as the purpose of paying his or her medical expenses, or where he or she is under extenuating circumstances prescribed by Presidential Decree: <Amended by Act No. 15224, Dec. 19, 2017> |
| 1. | Where a trust is rescinded, or the period of trust is not extended after its expiration; |
| 2. | Where the beneficiary of a trust is changed during the period of trust or the value of the donated property prescribed in paragraph (1) 1 is decreased; |
| 3. | Where it is verified that all or part of the profits accruing from the trust reverts to a person other than the relevant disabled person. |
| (3) | A person who intends to be governed by paragraph (1) shall report to the head of the tax office having jurisdiction over the place for tax payment by the reporting deadline prescribed in Article 68, as prescribed by Presidential Decree. |
| (4) | The methods for calculating the amount of gift tax prescribed in paragraph (2), the range of persons with disabilities under the proviso of paragraph (2), and other necessary matters shall be prescribed by Presidential Decree. <Amended by Act No. 15224, Dec. 19, 2017> |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
SECTION 5 Donation Deductions
| Article 53 (Gift Deductions) |
Where a resident receives a donation from any of the following persons, an amount stipulated in the following classifications shall be deducted from the taxable value of gift. In such cases, if the sum of an amount for which a donee has received a deduction within 10 years before receiving the relevant donation and an amount deductible from the value of the relevant donation exceeds any of the following amounts, the excess portion is not entitled to deduction: <Amended by Act No. 11130, Dec. 31, 2011; Act No. 12168, Jan. 1, 2014; Act No. 13557, Dec. 15, 2015>
| 1. | Where a donation is received from a spouse: 600 million won; |
| 2. | Where a donation is received from a lineal ascendant (including a spouse in a marital relationship (excluding any de facto marriage; hereafter in this Article the same shall apply) with any lineal ascendant of the donee): 50 million won: Provided, That where a minor receives a donation from his or her lineal ascendant, 20 million won shall be deducted; |
| 3. | Where a donation is received from a lineal descendant (including any lineal descendant of the spouse in a marital relationship with the donee): 50 million won; |
| 4. | Where a donation is received from a relative by blood within the sixth degree or a relative by marriage within the fourth degree, other than those prescribed by subparagraphs 2 and 3: 10 million won. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 54 (Provisions to be Applied Mutatis Mutandis) |
Article 23 shall apply mutatis mutandis to deduction of the taxable value of donated property where the donated property is destroyed or damaged due to a disaster. In such cases, "when inheritance commences due to the death of a resident" in Article 23 (1) shall be construed as "when property is donated by a third party"; "Article 67" as "Article 68"; "inherited property" as "donated property"; "taxable value of inherited property" as "taxable value of donated property"; and "heir or legatee" in Article 23 (2) shall be construed as "donee". [This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
SECTION 6 Tax Basis and Tax Rate
| Article 55 (Gift Tax Base and Minimum Taxable Gift) |
| (1) | The gift tax base shall be an amount obtained by deducting an appraisal and assessment fee for the donated property prescribed by Presidential Decree from any of the following amounts: <Amended by Act No. 11130, Dec. 31, 2011; Act No. 13557, Dec. 15, 2015; Act No. 16102, Dec. 31, 2018> |
| 1. | Deeming property registered in the name of another person to have been donated pursuant to Article 45-2: The amount of the property registered in the name of another person; |
| 2. | Deeming profits under Article 45-3 or 45-4 to have been donated: Profits deemed donated; |
| 3. | Donated property excluding any summing-up, excluding those stipulated in subparagraphs 1 and 2: An amount derived by deducting 30 million won from the value of the relevant donated property; |
| 4. | In cases other than those stipulated in subparagraphs 1 through 3: The amount derived by deducting the amount under Articles 53 and 54 from the taxable value of gift under Article 47 (1). |
| (2) | When the tax basis is less than 500,000 won, no gift tax shall be levied. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 56 (Gift Tax Rates) |
Gift tax shall be the amount calculated (hereinafter referred to as "calculated amount of gift tax") by applying the tax rate stipulated under Article 26 to the tax basis under Article 55. [This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 57 (Extra Taxation on Donation to Lineal Descendants) |
| (1) | Where a donee is a lineal descendant who is not an offspring of a donor, an amount equivalent to 30/100 (40/100 where a donee is a lineal descendant of a donor and, at the same time, is a minor while not being an offspring of the donor, and where the value of donated property exceeds two billion won) of the calculated amount of gift tax shall be added: Provided, That where a lineal descendant of a donor who is the closest relative thereof dies, and where a lineal descendant who is the closest relative of the dead person receives the donation, this shall not apply. <Amended by Act No. 13557, Dec. 15, 2015> |
| (2) | Necessary matters, such as the method of calculating extra tax, etc. shall be prescribed by Presidential Decree. <Newly Inserted by Act No. 13557, Dec. 15, 2015> |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 58 (Credit of Amount of Tax Already Paid or to be Paid) |
| (1) | The amount of gift tax (meaning the calculated amount of the gift tax on the relevant donated property as at the time of donation) paid or to be paid with respect to the value of the donated property (meaning the aggregate of the values of the donated property when not less than two donations are made) added to the taxable value of donated property pursuant to Article 47 (2) shall be deducted from the amount of gift tax calculated: Provided, That this shall not apply where gift tax is not levied on the donated property added to the taxable value of donated property due to the expiration of the period stipulated under Article 26-2 (1) 4 or (4) of the Framework Act on National Taxes. |
| (2) | In cases under paragraph (1), the amount of gift tax to be deducted shall be limited to that calculated by multiplying the calculated amount of gift tax by the ratio of the tax basis of donated property added to the tax basis of aggregated amounts of the value of relevant donated property and of the value of the donated property added under Article 47 (2). |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 59 (Deduction of Amount of Tax Paid in Foreign Countries) |
If gift tax is levied on any donated property in a foreign country pursuant to any statutes and regulations of such foreign country when a person receives a donation of property from a third person, an amount equivalent to gift tax levied shall be deducted from the calculated amount of gift tax, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
CHAPTER IV ASSESSMENT OF PROPERTY
| Article 60 (Principles of Assessment) |
| (1) | The value of the property on which inheritance tax or gift tax is levied pursuant to this Act shall be based on its current market price as at the commencement date of inheritance, or as at the date of donation (hereinafter referred to as "base date of assessment"). In such cases, the value (excluding cases falling under Article 63 (2)) assessed in accordance with the assessment methods prescribed in Article 63 (1) 1 (a) shall be deemed the current market value of the property. <Amended by Act No. 14388, Dec. 20, 2016> |
| (2) | The current market price prescribed in paragraph (1) shall be the value deemed to be normally established when many and unspecified persons engage in transactions freely, and include what is accepted as the current market price, as prescribed by Presidential Decree, such as the price of expropriation, price of public auction, and appraised value. |
| (3) | Where it is impracticable to calculate the current market price in applying paragraph (1), the value assessed by the methods stipulated in Articles 61 through 65, based on the kinds, scale, transaction circumstances, etc. of the relevant property, shall be deemed the current market price. |
| (4) | For the purposes of applying paragraph (1), the value of the donated property added to the value of the inherited property pursuant to Article 13 shall be based on the current market price as at the date of donation. |
| (5) | In determining the appraised value prescribed in paragraph (2), requests shall be made for at least two appraisal institutions (in cases of real estate whose value is not more than the amount prescribed by Presidential Decree, at least one appraisal institution), as prescribed by Presidential Decree. In such cases, where grounds prescribed by Presidential Decree exist, such as that the value appraised by an appraisal institution is below 80/100 of the value appraised by another appraisal institution, etc., the head of the competent tax office or the Director of a regional National Tax Service may designate the relevant appraisal institution as an appraisal institution whose appraisal of market price is not approved within a fixed period not exceeding one year following procedures prescribed by Presidential Decree, as prescribed by Presidential Decree, and the value appraised by an appraisal institution designated as an appraisal institution whose appraisal of market price is not approved while it is designated as such shall not be deemed a market price. <Newly Inserted by Act No. 13557, Dec. 15, 2015; Act No. 14388, Dec. 20, 2016; Act No. 15224, Dec. 19, 2017> |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 61 (Assessment of Real Estate) |
| (1) | Real estate shall be assessed by any of the following methods: <Amended by Act No. 12168, Jan. 1, 2014; Act No. 13796, Jan. 19, 2016; Act No. 14388, Dec. 20, 2016> |
| 1. | Land: The officially assessed individual land prices prescribed in the Act on the Public Announcement of Real Estate Values (hereinafter referred to as “officially assessed individual land prices”): Provided, That the value of land, the officially assessed individual price of which has yet to be established (specific assessment criteria shall be prescribed by Presidential Decree), shall be an amount assessed by the head of the tax office having jurisdiction over the place for tax payment in a manner prescribed by Presidential Decree, based on the officially assessed individual land price of similar land adjacent thereto, and the value of land in an area where land price rises sharply, which is prescribed by Presidential Decree, shall be an amount assessed by using a multiplication method; |
| 2. | Building: The price calculated and publicly notified by the Commissioner of the National Tax Service at least once a year, based on the construction costs, structure, purposes of use, location, year of construction, etc. of the relevant building (excluding buildings falling under subparagraph 3 or 4); |
| 3. | Officetel and commercial buildings: For an officetel and a commercial building (including land attached thereto) under sectional ownership in which the attached land is jointly owned and which is prescribed by Presidential Decree, based on the purpose of use and size of the building, the number of buildings under sectional ownership, etc., the prices of land and buildings calculated and publicly notified by the Commissioner of the National Tax Service collectively at least once a year, based on the type, scale, transaction situation, location, etc. of the relevant building; |
| 4. | Housing: The individual housing price or collective housing price prescribed in the Act on the Public Announcement of Real Estate Values (if any collective housing price is determined and publicly notified by the Commissioner of the National Tax Service pursuant to the proviso of Article 18 (1) of the same Act, referring to such price; hereafter in this subparagraph referred to as “publicly notified housing price”): Provided, That in either of the following cases, the price shall be an amount assessed by the head of the tax office having jurisdiction over the place for tax payment in a manner prescribed by Presidential Decree, in consideration of the publicly notified housing price of similar housing adjacent thereto: |
| (a) | Where there is no publicly notified housing price for the relevant housing; |
| (b) | Where it is inappropriate that the relevant housing is assessed, based on its publicly notified housing price, because it is substantially repaired or remodelled under Article 2 (1) 9 or 10 of the Building Act after the public notification of the price. |
| (2) | "Multiplication method" in the proviso of paragraph (1) 1 means a method of calculation, based on amounts calculated by multiplying officially assessed individual land price by a rate prescribed by Presidential Decree. |
| (3) | The value of superficies, a right to acquire real estate and a right to use specific facilities shall be an amount assessed according to methods prescribed by Presidential Decree, based on the remaining period, nature, substance, transaction circumstances, etc. of such right. |
| (4) | The value of other facilities or structures shall be an amount assessed according to methods prescribed by Presidential Decree, based on the value required to rebuild or reacquire such facilities or structures as at the base date of assessment. |
| (5) | The value of property, the lease contract of which is de facto concluded or the leasehold of which is registered, shall be the larger of the assessed value based on its rent, etc. according to methods prescribed by Presidential Decree and the value assessed under paragraphs (1) through (4). <Amended by Act No. 13557, Dec. 15, 2015> |
| (6) | Articles 99 (4) through (6) and 99-2 of the Income Tax Act shall apply mutatis mutandis to the hearing of opinions of owners and any other interested persons about the value calculated and publicly notified by the Commissioner of the National Tax Service pursuant to paragraph (1) 3 as well as an application for re-calculation and public notification. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 62 (Assessment of Vessels and other Tangible Assets) |
| (1) | Vessels, aircraft, vehicles, machinery/equipment, and standing timber subject to application of the Standing Timber Act shall be assessed according to methods prescribed by Presidential Decree, in consideration of the types, size, circumstances of transactions, etc. of the relevant assets. |
| (2) | Goods, products, paintings/writings, antiques, animals subject to ownership and any other tangible assets shall be assessed according to methods prescribed by Presidential Decree, in consideration of the types, size, circumstances of transactions, etc. of the relevant assets. |
| (3) | The value of property the lease contract of which is de facto concluded or the leasehold of which is registered shall be the larger of the assessed value based on its rent, etc. according to methods prescribed by Presidential Decree and the value assessed under paragraphs (1) and (2). |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 63 (Assessment of Securities) |
| (1) | Securities shall be assessed by any of the following methods: <Amended by Act No. 11845, May 28, 2013; Act No. 14388, Dec. 20, 2016> |
| 1. | Assessment of shares of stock, etc.: |
| (a) | With regard to shares, etc. prescribed by Presidential Decree (hereafter in this subparagraph referred to as "exchange-listed shares") among shares of corporations listed on the stock exchange, traded in the stock market prescribed by Presidential Decree, which is provided for in the Financial Investment Services and Capital Markets Act, the average amount (where it is inappropriate to calculate the average amount for two months before and after the base date of assessment because any grounds for the increase of capital, merger, etc. arise during that period, the average amount shall be calculated for the period prescribed by Presidential Decree during the period of two months before and after the base date of assessment) of closing market prices (irrespective of whether trading was conducted or not) on a daily basis in the stock exchange permitted pursuant to the Financial Investment Services and Capital Markets Act publicly announced for two months before and after the base date of assessment (where the base date of assessment is no trading day prescribed by Presidential Decree, such as a public holiday, the base date of assessment shall be the day before the date): Provided, That where profits generated from a merger are calculated pursuant to Article 38, market prices of exchange-listed shares owned by a corporation that ceases to exist or is acquired, or newly incorporated or surviving corporation through a merger (including a merger after division) shall be closing market prices in the stock exchange as at the base date of assessment; |
| (b) | Stocks, etc. other than those prescribed in item (a) shall be assessed in accordance with the methods prescribed by Presidential Decree, based on the assets, earnings, etc. of the relevant corporation; |
| (c) | Deleted; <by Act No. 14388, Dec. 20, 2016> |
| 2. | Securities other than those prescribed in subparagraph 1, such as government bonds and public bonds, shall be assessed in accordance with the methods prescribed by Presidential Decree, based on the type, size, transaction circumstances, etc. of the relevant property. |
| (2) | Notwithstanding paragraph (1) 1, any of the following stocks, etc. shall be assessed according to the methods prescribed by Presidential Decree, based on the business feasibility, transaction circumstances, etc. of the relevant corporation: <Amended by Act No. 11845, May 28, 2013; Act No. 13557, Dec. 15, 2015> |
| 1. | Stocks, etc. of a corporation that has reported on its securities to the Financial Services Commission for the purpose of public offer within the period prescribed by Presidential Decree; |
| 2. | Of the stocks, etc. mentioned in paragraph (1) 1 (c), stocks, etc. of a corporation that has applied for listing to the securities exchange prescribed by the Financial Investment Services and Capital Markets Act, which is prescribed by Presidential Decree, within the period prescribed by Presidential Decree for the purpose of trading its stocks, etc. on the securities exchange; |
| 3. | Of the stocks of a corporation listed on an exchange, new stocks acquired as a result of an increase in capital of the relevant corporation, but not listed as at the base date of assessment. |
| (3) | In applying paragraphs (1) 1 and (2), and Article 60 (2), stocks, etc. (excluding the stocks, etc. prescribed by Presidential Decree, such as those of a corporation that has continued to have deficits under Article 14 (2) of the Corporate Tax Act during three or less business years prior to the business year in which the base date of assessment falls) of the largest shareholder or the largest investor prescribed by Presidential Decree and a shareholder, etc. who are specially related to the largest shareholder or the largest investor (hereafter in this paragraph referred to as "largest shareholder, etc.") shall be calculated by adding 20/100 (10/100, in cases of a small or medium enterprise prescribed by Presidential Decree) of the value assessed in accordance with paragraphs (1) 1 and (2) or the value recognized in accordance with Article 60 (2) to such value, but where the largest shareholder, etc. owns in excess of 50/100 of the total number of issued shares with voting rights or the total amount of invested capital of the relevant corporation, 30/100 (15/100, in cases of a small or medium enterprise prescribed by Presidential Decree) shall be added thereto. In such cases, the method of calculating stocks, etc. held by the largest shareholder, etc. shall be prescribed by Presidential Decree. <Amended by Act No. 11130, Dec. 31, 2011; Act No. 13557, Dec. 15, 2015; Act No. 14388, Dec. 20, 2016> |
| (4) | Deposits, savings, installment savings, etc. shall be assessed, based on the value derived by deducting an amount equivalent to the withholding tax prescribed in Article 127 (1) of the Income Tax Act from the aggregate of the total amount of deposits and receipts as at the base date of assessment and the amount of accrued interest receivable as at the same date. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 64 (Value of Intangible Property Rights) |
The value of an intangible property right shall be the larger of the following amounts:
| 1. | An amount derived by deducting the depreciation cost specified in the Corporate Tax Act accruing from the date of acquisition to the base date of assessment from the acquisition cost of the property; |
| 2. | An amount assessed according to the methods prescribed by Presidential Decree in consideration of future economic earnings, etc. |
[This Article Wholly Amended by Act No. 12168, Jan. 1, 2014]
| Article 65 (Assessment of other Conditional Rights) |
| (1) | The value of conditional rights, rights with undetermined duration, rights to receive profits accruing from trusts, rights in pending litigation, and rights to receive money payable in periodical installments prescribed by Presidential Decree shall be assessed according to methods prescribed by Presidential Decree, based on the nature, substance, remaining duration, etc. of the relevant right. |
| (2) | Assessment methods stipulated under paragraph (1) and Articles 60 through 64 shall apply mutatis mutandis to the assessment of property, the assessment methods of which are not prescribed by this Act. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 66 (Special Cases concerning Assessment of Property for which Mortgages are Created) |
Notwithstanding Article 60, the value of any of the following property shall be the value assessed according to the methods prescribed by Presidential Decree based on the amount of claims secured by such property, or the value assessed according to Article 60, whichever is larger: <Amended by Act No. 10366, Jun. 10, 2010; Act No. 16102, Dec. 31, 2018> | 2. | Property transferred for security; |
| 3. | Property registered as leasehold on a deposit basis (including property leased in return for lease deposit); |
| 4. | Property concerning which a trust contract prescribed by Presidential Decree is concluded for the purpose of securing the performance of obligation by the truster. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
CHAPTER V REPORTING AND PAYMENT
| Article 67 (Inheritance Tax Base Return) |
| (1) | An heir or a legatee under an obligation to pay inheritance tax pursuant to Article 3-2 shall file the taxable value of inheritance and inheritance tax base under Articles 13 and 25 (1) to the head of a tax office having jurisdiction over the place of payment of tax within six months from the last day of the month in which the commencement date of the inheritance falls, as prescribed by Presidential Decree. <Amended by Act No. 13557, Dec. 15, 2015> |
| (2) | A report under paragraph (1) shall be accompanied by what is prescribed by Presidential Decree, such as documents substantiating the kinds, quantities, and assessed values of inherited property, division of property, various deductions, etc. necessary for the calculation of the tax basis of inherited property. |
| (3) | With respect to the executor of a will or the administrator of inherited property, the period stipulated under paragraph (1) shall be applicable only when he or she is designated or appointed within said period, reckoning from the date of his or her designation or appointment. <Amended by Act No. 12168, Jan. 1, 2014> |
| (4) | Where an ancestor or his or her heir has established a domicile in a foreign country, the period stipulated under paragraph (1) shall be nine months. |
| (5) | Where an heir is not determined by the reporting deadline under paragraph (1), a document stating the inheritance relationship with the determined heir shall be submitted to the head of the tax office having jurisdiction over the place for tax payment within 30 days from the date on which the heir is determined, in addition to a report under paragraph (1). |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 68 (Gift Tax Base Return) |
| (1) | A person under an obligation to pay gift tax pursuant to Article 4-2 shall file the taxable value of gift and gift tax base under Articles 47 and 55 (1) to the head of a tax office having jurisdiction over the place of payment of tax within three months from the last day of the month in which the date of donation falls, as prescribed by Presidential Decree: Provided, That the deadline to file adjusted gift tax base following the listing of unlisted stocks or merger, etc. of corporations pursuant to Articles 41-3 and 41-5 shall be the day three months from the last day of the month in which the adjustment base date falls, and the deadline to file gift tax base under Articles 45-3 and 45-5 shall be the day three months from the last day of the month in which the deadline to file tax base under Article 60 (1) of the Corporate Tax Act by a beneficiary corporation or a specific corporation falls. <Amended by Act No. 11130, Dec. 31, 2011; Act No. 13557, Dec. 15, 2015> |
| (2) | A report under paragraph (1) shall be accompanied by what is prescribed by Presidential Decree, such as documents substantiating the kinds, quantities and assessed values of donated property, various deductions, etc. necessary for the calculation of the tax basis of donated property. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 69 (Deduction of Reported Amount of Tax) |
| (1) | Where the tax basis of inherited property is reported pursuant to Article 67, an amount equivalent to 3/100 of the amount derived from deducting any of the following amounts from the calculated amount of inheritance tax (including amounts added to the tax amount calculated pursuant to Article 27) shall be deducted from the calculated amount of inheritance tax: <Amended by Act No. 14388, Dec. 20, 2016; Act No. 15224, Dec. 19, 2017> |
| 1. | An amount, the collection of which is deferred pursuant to Article 74; |
| 2. | An amount that is deducted, reduced or exempted from the amount of tax calculated pursuant to this Act or other Acts. |
| (2) | Where gift tax base is filed pursuant to Article 68, an amount equivalent to 3/100 of the amount obtained by deducting following amount from the calculated amount of gift tax (including an amount added to the calculated amount of tax pursuant to Article 57) shall be deducted from the calculated amount of gift tax: <Amended by Act No. 13557, Dec. 15, 2015; Act No. 14388, Dec. 20, 2016; Act No. 15224, Dec. 19, 2017> |
| 1. | An amount, the collection of which is deferred pursuant to Article 75; |
| 2. | An amount that is deducted, reduced or exempted from the amount of tax calculated pursuant to this Act or other statutes. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 70 (Voluntary Payment) |
| (1) | A person who reports inheritance tax or gift tax pursuant to Article 67 or 68 shall pay an amount derived by deducting any of the following amounts from the calculated amount of each tax to the tax office having jurisdiction over the place for tax payment, the Bank of Korea, or the post office, by the respective reporting deadline, as prescribed by Presidential Decree: |
| 1. | An amount stipulated under Article 69 (1) 1 and 2; |
| 2. | An amount to be deducted pursuant to Article 69 (1), with the exception of its subparagraphs, in cases of inheritance tax; |
| 3. | An amount to be deducted pursuant to Article 69 (2) in case of gift tax; |
| 4. | An amount on which an application for payment in annual installments is made pursuant to Article 71; |
| 5. | An amount on which an application for payment in kind is made pursuant to Article 73. |
| (2) | Where the amount to be paid under paragraph (1) exceeds 10 million won, part of such payable amounts may be paid in installments within two months after the payment deadline expires, as prescribed by Presidential Decree: Provided, That this shall not apply where payment in annual installments is permitted under Article 71. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 71 (Payment in Annual Installments) |
| (1) | Where the amount of inheritance tax or gift tax exceeds 20 million won, the head of the tax office having jurisdiction over the place for tax payment may grant permission for the payment of such tax in annual installments upon an application by a taxpayer, as prescribed by Presidential Decree. In such cases, the taxpayer shall provide security, and where the taxpayer applies for permission for payment in annual installments by providing security stipulated in subparagraphs 1 through 5 of Article 29 of the Framework Act on National Taxes, he or she shall be deemed to have been permitted to pay in annual installments on the date of such application. |
| (2) | The period of payment in annual installments under paragraph (1) shall be a period applied for by the relevant taxpayer within the period under the following classifications: Provided, That the period of payment in annual installments shall be fixed so that the amount of the tax to be paid in each installment exceeds 10 million won: <Amended by Act No. 13557, Dec. 15, 2015; Act No. 15224, Dec. 19, 2017> |
| 1. | Where an heir gets a deduction for family business succession pursuant to Article 18 (2) 1 or inherits a family business in accordance with requirements prescribed by Presidential Decree, the inherited property of the family business (including property prescribed by Presidential Decree, such as property directly used in a private preschool prescribed in subparagraph 3 of Article 7 of the Early Childhood Education Act): 10 years from the date permission to pay inheritance tax in annual installments is granted or seven years from the date three years elapse after permission to pay inheritance tax in annual installments is granted: Provided, That where the inherited property of the family business accounts for at least 50/100 of the inherited property (excluding property bequeathed to a person who is not an heir), 20 years from the date permission to pay inheritance tax in annual installments is granted or 15 years from the date five years elapse after permission to pay inheritance tax in annual installments is granted; |
| 2. | Cases other than subparagraph 1: Five years from the date permission to pay inheritance tax in annual installments is granted. |
| (3) | For the purposes of applying paragraph (2), the method of calculating the amount of annual installment payments shall be prescribed by Presidential Decree. |
| (4) | Where a taxpayer who has obtained permission for payment in annual installments under paragraph (1) falls under any of the following subparagraphs, the head of a tax office having jurisdiction over the place of payment of tax may cancel or change permission for payment in annual installments, as prescribed by Presidential Decree, and accordingly collect all or part of the amount related to payment in annual installments: <Amended by Act No. 13557, Dec. 15, 2015; Act No. 15224, Dec. 19, 2017> |
| 1. | Where he or she fails to pay the amount of tax to be paid in annual installments by the designated deadline for payment (referring to the scheduled payment date of tax to be paid in annual installments where he or she is deemed to have been permitted under the latter part of paragraph (1)); |
| 2. | Where he or she changes security or fails to comply with an order issued by the head of the competent tax office that is necessary for the preservation of security; |
| 3. | Where he or she falls under any subparagraph of Article 14 (1) of the National Tax Collection Act, and thus it is deemed that the entire amount of tax related to the payment in annual installments cannot be collected by the deadline for payment in annual installments; |
| 4. | Where he or she falls under grounds prescribed by Presidential Decree, such as cases where he or she closes down the inherited family business or he or she does not engage in the family business any longer; |
| 5. | Cases prescribed by Presidential Decree, such as that the property prescribed by Presidential Decree, such as property, etc. used directly for a private kindergarten prescribed in subparagraph 3 of Article 7 of the Early Childhood Education Act, is not used directly for relevant business, etc. |
| (5) | Where the head of the tax office having jurisdiction over the place for tax payment either grants permission for payment in annual installments pursuant to paragraph (1) (excluding cases where the taxpayer is deemed to have been permitted under the latter part of paragraph (1)), or cancels permission for payment in annual installments pursuant to paragraph (4), he or she shall notify the taxpayer of such fact. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 72 (Additional Dues on Payment in Annual Installments) |
A person who has obtained permission for payment in annual installments pursuant to Article 71 shall make a payment to which is added an amount stipulated in any of the following subparagraphs to the amount of tax to be paid in each installment: | 1. | With respect to the first tax installment, an amount calculated by multiplying the rate prescribed by Presidential Decree by the number of days until the deadline for payment of the tax installments in question, starting from the day immediately after the reporting deadline under Articles 67 and 68 or the deadline for payment specified in the tax payment notice, and then the sum shall be multiplied by the total amount of tax for which payment in annual installments is permitted; |
| 2. | With respect to tax installments, other than that under subparagraph 1, an amount calculated by multiplying the rate prescribed by Presidential Decree by the number of days until the deadline for payment of the relevant tax installment from the following day of the deadline for payment of the immediately preceding tax installment, and then the sum shall be multiplied by the balance derived by deducting the total amount of the tax installments paid up to the immediately preceding tax installment, from the total amount of tax for which payment in annual installments is permitted. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 73 (Payment in Kind) |
| (1) | The head of a tax office having jurisdiction over the place for payment of tax may permit payment in kind upon a request by a person under an obligation to pay tax, as prescribed by Presidential Decree, where all of the following requirements are met: Provided, That the head of a tax office having jurisdiction over the place for payment of tax may choose not to permit payment in kind if management and disposal of the property for which an application for payment in kind has been filed are deemed inappropriate. <Amended by Act No. 11845, May 28, 2013; Act No. 12168, Jan. 1, 2014; Act No. 13557, Dec. 15, 2015; Act No. 15224, Dec. 19, 2017> |
| 1. | That the value of real estate and securities (limited to property that can be appropriated for payment in kind prescribed by Presidential Decree, such as real estate located in Korea, etc.) among inherited property (including donated property which an heir and a legatee has received among donated property that is added to inherited property pursuant to Article 13) shall exceed 1/2 of the value of the inherited property; |
| 2. | That the amount of inheritance tax shall exceed 20 million won; |
| 3. | That the amount of inheritance tax shall exceed the amount of financial property prescribed by Presidential Decree among the value of inherited property. |
| (2) | The scope of property appropriable for payment in kind, cases where management and disposal are deemed inappropriate, and other matters necessary for procedures of payment in kind and application for payment in kind shall be prescribed by Presidential Decree. <Amended by Act No. 11130, Dec. 31, 2011> |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 74 (Deferment of Collection of Inheritance Tax on Cultural Heritage Resources) |
| (1) | Where inherited property includes any of the following property, the head of the tax office having jurisdiction over the place for tax payment shall defer the collection of the amount of inheritance tax that is imposed on the value of such inherited property calculated under Presidential Decree: <Amended by Act No. 10000, Feb. 4, 2010; Act No. 16057, Dec. 24, 2018> |
| 2. | Among museum materials or art gallery materials (hereafter in this Article referred to as "museum materials") registered pursuant to the Museum and Art Gallery Support Act, property being exhibited or preserved in a museum or an art gallery (referring to those falling under public service corporations, etc. in cases of private museums or private art galleries) pursuant to the said Act. |
| (2) | Where an heir or legatee to whom cultural heritage resources, etc. or museum materials are inherited either transfers such property for consideration or withdraws the museum materials due to other reasons prescribed by Presidential Decree, the head of the tax office having jurisdiction over the place for tax payment shall promptly collect inheritance tax, the collection of which is deferred. |
| (3) | Where inheritance recommences due to the death of the heir or legatee who possesses the cultural heritage resources, etc. or museum materials during the deferment period of collection under paragraph (1), the head of the tax office having jurisdiction over the place for tax payment shall cancel a decision to impose the amount of inheritance tax, the collection of which has been deferred, and shall not reimpose the cancelled amount of inheritance tax. |
| (4) | A person who intends to receive a deferment of collection pursuant to paragraph (1) shall provide security equivalent to such deferred amount of inheritance tax. In such cases, Article 71 shall apply mutatis mutandis to the provision of security. |
| (5) | Cases where the heir exhibits or preserves museum materials or art gallery materials, among the inherited property at a museum or art gallery pursuant to the Museum and Art Gallery Support Act, as prescribed by Presidential Decree by the reporting deadline (where a museum or art gallery is established and any inevitable ground exists, it means six months from the last day of the month in which the date such reason ceases to exist falls) under Article 67 are subject to application of paragraph (1). |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 75 (Provisions to be Applied Mutatis Mutandis) |
Article 74 (1) (excluding subparagraph 1) and (2) through (4) shall apply mutatis mutandis to the deferment of collection of gift tax on cultural heritage resources, etc. In such cases, in Article 74 (1), the term "inherited property" shall be construed as "donated property", the term "amount of inheritance tax" as "amount of gift tax", and in paragraph (2) of the same Article, the term "heir or legatee who has received inheritance" shall be construed as "donee", the term "inheritance tax" as "gift tax", and in paragraph (3) of the same Article, the term "heir or legatee" shall be construed as "donee", the term "where inheritance recommences" as "where inheritance commences", and in paragraphs (3) and (4) of the same Article, the term "amount of inheritance tax" shall be construed as "amount of gift tax", respectively. [This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
CHAPTER VI DETERMINATION AND CORRECTION
| Article 76 (Determination and Correction) |
| (1) | The head of the competent tax office, etc. shall determine the tax basis and amount of tax based on a report filed pursuant to Article 67 or 68: Provided, That if a taxpayer fails to file a report, or an omission or error exists in the reported tax basis or amount of tax, the head of the competent tax office, etc. shall determine the tax basis and amount of tax after conducting an investigation thereon. |
| (2) | Where a ground falling under any of the subparagraphs of Article 14 (1) of the National Tax Collection Act exists, the head of the competent tax office, etc. may determine the tax basis and the amount of tax at any time even before the reporting deadline under Articles 67 and 68 expires, notwithstanding paragraph (1). |
| (3) | The head of the competent tax office, etc. shall determine the tax basis and the amount of tax within a period (hereinafter referred to as a "statutory deadline for determination") prescribed by Presidential Decree from the date on which he or she has received a report under paragraph (1): Provided, That where the head of the competent tax office, etc. is unable to make a determination within the said period due to any extenuating circumstance, such as taking a long time to conduct an investigation of the inherited or donated property, an assessment of its value, etc., he or she shall notify the heir, legatee, or donee of such circumstance. |
| (4) | Where the head of the competent tax office, etc. is either unable to determine the tax basis or amount of tax pursuant to paragraph (1) or (2), or discovers an omission or error in the determined tax basis or amount of tax, he or she shall promptly investigate such tax basis and amount of tax and make a determination or correction. |
| (5) | Where the value of the inherited property determined pursuant to paragraph (1) or (2) is not less than three billion won in applying paragraph (4), and the value of real estate, stocks, or other major property prescribed by Presidential Decree that are retained by the heir significantly increases compared to that as at the time of the commencement of inheritance within a period prescribed by Presidential Decree after the commencement of inheritance, the head of the competent tax office, etc. shall investigate as to whether any omission or error exists in the determined tax basis and the amount of tax, as prescribed by Presidential Decree: Provided, That this shall not apply where the heir has proven the source of the funds for the increased property, as prescribed by Presidential Decree. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 77 (Notification of Determination of Tax Base and Amount of Tax) |
As prescribed by Presidential Decree, the head of a tax office, etc. shall notify an heir, legatee, or donee of tax base and the amount of tax determined pursuant to Article 76. In such cases, if two or more heirs or legatees exist, the head of a tax office, etc. shall notify all of the heirs or legatees. <Amended by Act No. 13557, Dec. 15, 2015> [This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 78 (Additional Tax) |
| (1) | and (2) Deleted. <by Act No. 8139, Dec. 30, 2006> |
| (3) | Where a public service corporation, etc. fails to submit a report required under Article 48 (5), or the details of the report submitted are unclear as prescribed by Presidential Decree, the head of the competent tax office, etc. shall collect an amount equivalent to 1/100 of the amount of inheritance tax or gift tax to be imposed on the portion that a report is not submitted or the reported details are unclear. <Amended by Act No. 9916, Jan. 1, 2010> |
| (4) | Where a public service corporation, etc. continues possessing stocks, etc. in excess of the upper limits of holding stocks, etc. prescribed in Article 49 (1) even after the deadline stipulated under each subparagraph of the same paragraph expires, the head of the competent tax office, etc. shall impose an amount equivalent to 5/100 of the current market value of shares with voting rights or equity stakes (hereafter in this paragraph and paragraph (7) referred to as "shares, etc.") in excess of the upper limits of holding stocks, etc. as at the expiration date of the deadline stipulated in each subparagraph of the same paragraph (in cases of a public service corporation, etc, governed by the proviso of Article 49 (1) (excluding its subparagraphs), as at the last day of the taxable period for income tax or business year for corporate tax during which the public service corporation, etc. fails to meet the standards under the same proviso), as at the end of each year, in addition to an amount of tax payable by such public service corporation, etc., as prescribed by Presidential Decree. In such cases, the period for imposition of additional tax shall not exceed 10 years. <Amended by Act No. 9916, Jan. 1, 2010; Act No. 14388, Dec. 20, 2016> |
| (5) | Where a public service corporation, etc. falls under any of the following, the head of the competent tax office, etc. shall collect an amount calculated (if, in cases falling under subparagraph 1, the amount calculated is less than one million won, it shall be deemed one million won) by multiplying 7/10,000 by the aggregate of the amount of income in the taxable period of income tax or the business year of corporate tax prescribed by Presidential Decree and the value of the property received through contribution during the relevant taxable period or the business year as the inheritance tax or gift tax: Provided That this shall not apply in cases prescribed by Presidential Decree, based on the characteristics of the public service corporation, etc., the scale of the property received through contribution, and the operational performance, etc. of public interest projects: <Amended by Act No. 9916, Jan. 1, 2010; Act No. 12168, Jan. 1, 2014; Act No. 14388, Dec. 20, 2016> |
| 1. | Where it fails to perform its reporting duty, etc. on tax verification by outside experts pursuant to Article 50 (1) and (2); |
| 2. | Where it fails to perform its duty to prepare and keep books and records pursuant to Article 51; |
| 3. | Where it fails to undergo an audit pursuant to Article 50 (3). |
| (6) | Where directors, or executives and employees exist in excess of the number of directors stipulated under Article 48 (8), the head of the competent tax office, etc. shall impose the full amount equivalent to direct and indirect expenses prescribed by Presidential Decree that are incurred in connection with such persons, in addition to the amount of tax payable by the public service corporation, etc. each year, as prescribed by Presidential Decree. <Amended by Act No. 9916, Jan. 1, 2010> |
| (7) | Where a public service corporation, etc. holds the stocks, etc. in excess of the upper limits of holding stocks, etc. of a domestic corporation prescribed in Article 48 (9), the head of the competent tax office, etc. shall impose an amount equivalent to 5/100 of the current market value of the stocks, etc. excessively held by the public service corporation, etc. as at the end of each business year, in addition to the amount of tax payable by such public service corporation, etc., as prescribed by Presidential Decree. <Amended by Act No. 9916, Jan. 1, 2010> |
| (8) | Where a public service corporation, etc. advertises or publicizes pursuant to Article 48 (10), the head of the competent tax office, etc. shall impose an amount equivalent to expenses directly incurred in connection with such acts, in addition to the amount of tax payable by the public service corporation, etc., as prescribed by Presidential Decree. <Amended by Act No. 9916, Jan. 1, 2010> |
| (9) | Where a public service corporation, etc. falls under any of the following, the head of the competent tax office, etc. shall impose an amount equivalent to 10/100 of the amount classified as follows, in addition to the amount of tax payable by the public service corporation, etc., as prescribed by Presidential Decree: <Amended by Act No. 9916, Jan. 1, 2010; Act No. 14388, Dec. 20, 2016> |
| 1. | Where the public service corporation, etc. fails to use operating income less than the base amount prescribed by Presidential Decree pursuant to Article 48 (2) 5: |
| 2. | Where the public service corporation, etc. fails to use the proceeds from the sale less than the base amount prescribed by Presidential Decree pursuant to Article 48 (2) 5: Unused amount among the proceeds from the sale; |
| 3. | Where the public service corporation, etc. falls under Article 48 (2) 7: Amount obtained by subtracting the amount directly used for a public service project from the base amount. |
| (10) | Where a public service corporation, etc. falls under any of the following subparagraphs, the head of the competent tax office, etc. shall impose the amount in the relevant subparagraph, in addition to the amount of tax payable by the public service corporation, etc., as prescribed by Presidential Decree: <Amended by Act No. 9916, Jan. 1, 2010> |
| 1. | Where a public service corporation, etc. fails to use an exclusive account in cases falling under any subparagraph of Article 50-2 (1): Amount equivalent to 5/1,000 of the amount that has not occupied an exclusive account; |
| 2. | Where a public service corporation, etc. fails to open or report an exclusive account prescribed in Article 50-2 (3): Whichever is the larger of the following items: |
| (a) | Amount equivalent to 5/1,000 of the total amount of revenue relating to a direct public-interest project of each taxable period or business year during which an exclusive account has not been opened or reported; |
| (b) | Amount equivalent to 5/1,000 of the total amount of transactions conducted under the subparagraphs of Article 50-2 (1). |
| (11) | Where a public service corporation, etc. fails to comply with a request by the Commissioner of the National Tax Service for providing public notice or making a correction by the specified deadline as the public service corporation, etc. fails to provide public notice on the settlement of accounts, etc. pursuant to Article 50-3, or erroneous information is included in the details of the public notice, the head of the competent tax office, etc. shall impose an amount equivalent to 5/1,000 of the total amount of property of the public service corporation, etc. as at the end date of the taxable period or business year subject to public notice, in addition to the amount of tax payable by such public service corporation, etc., as prescribed by Presidential Decree. <Amended by Act No. 9916, Jan. 1, 2010> |
| (12) | Where a person obligated to submit payment records, etc. prescribed in Article 82 (1), (3), (4), or (6) fails to do so or submits them with omissions, or unclear matters prescribed by Presidential Decree are included in the submitted payment records, etc., the head of the competent tax office, etc. shall collect an amount equivalent to 2/1,000 (2/10,000 in cases falling under Article 82 (3) and (4)) of the amount equivalent to those that are not submitted, omitted or unclear, in addition to income tax or corporate tax. In such cases, the additional tax shall be collected even if no amount of tax is calculated. <Amended by Act No. 9916, Jan. 1, 2010; Act No. 10411, Dec. 27, 2010> |
| (13) | Where payment records, etc. are submitted within one month after the deadline for submission has expired in applying paragraph (12), an amount equivalent to 1/1,000 (1/10,000 in cases falling under Article 82 (3) and (4)) shall be collected, in addition to income tax or corporate tax. In such cases, the additional tax shall be collected even if no amount of tax is calculated. <Amended by Act No. 9916, Jan. 1, 2010; Act No. 10411, Dec. 27, 2010> |
| Article 79 (Special Cases concerning Requests for Correction) |
| (1) | Where any of the following cases occurs to a person who has reported the tax basis of inherited property and the amount of inheritance tax pursuant to Article 67, or a person who has received a determination or collection of the tax basis of inherited property and the amount of inheritance tax prescribed in Article 76, such person may request a determination or correction within six months from the date on which such case occurs, as prescribed by Presidential Decree: |
| 1. | Where the value of property inherited to each heir is changed as at the commencement date of inheritance due to any ground prescribed by Presidential Decree, such as a lawsuit, etc. to request the recovery of inheritance with respect to the inherited property; |
| 2. | Where the value of the inherited property significantly decreases by the date on which one year has elapsed since the commencement of inheritance due to any ground prescribed by Presidential Decree, such as expropriation, etc. of the inherited property. |
| (2) | In any of the following cases, a request for determination or correction may be made within three months from the date on which the relevant reason occurs, as prescribed by Presidential Decree: <Amended by Act No. 14388, Dec. 20, 2016> |
| 1. | Where a person, on whom gift tax prescribed in Article 37 has been determined or corrected, inherits or receives the donation of the relevant real estate from the real estate owner during the gratuitous use period of real estate prescribed by Presidential Decree, or no longer gratuitously uses the relevant real estate due to any ground prescribed by Presidential Decree; |
| 2. | Where a person in whose case gift tax prescribed in Article 41-4 has been determined or corrected, inherits or receives the donation of the relevant money from the lender during the loan period prescribed in paragraph (2) of the aforesaid Article, or is unable to borrow the relevant money without needing to repay it or at an interest rate lower than the reasonable interest rate for any grounds prescribed by Presidential Decree; |
| 3. | Where a person, in whose case gift tax prescribed in Article 42 has been determined or corrected because he or she borrowed money, etc. using other's property without compensation as collateral, inherits or receives the donation of the relevant property from the provider of the property during the period of use of the property prescribed in paragraph (2) of the aforesaid Article, or is unable to borrow the relevant money without needing to repay it or at an interest rate lower than the reasonable interest rate for any grounds prescribed by Presidential Decree. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
CHAPTER VII SUPPLEMENTARY PROVISIONS
| Article 80 (Provision of Data) |
| (1) | For the imposition and collection of inheritance tax and gift tax, the Commissioner of the National Tax Service may request the chief of the office of court administration to furnish computerized information data on registration matters concerning family relationship prescribed in Article 9 of the Act on Registration, etc. of Family Relations. In such cases, the chief of the office of court administration who has received such request shall actively comply with it unless there is a compelling reason not to do so. |
| (2) | The Minister of the Interior and Safety, the Special Metropolitan City Mayor, a Metropolitan City Mayor, a Do Governor, or a Special Self-Governing Province Governor shall furnish data concerning land, buildings and houses subject to the imposition of property tax to the Commissioner of the National Tax Service each year, as prescribed by Presidential Decree. <Amended by Act No. 11690, Mar. 23, 2013; Act No. 12844, Nov. 19, 2014; Act No. 14839, Jul. 26, 2017> |
[This Article Wholly Amended by Act No. 10411, Dec. 27, 2010]
| Article 81 Deleted. <by Act No. 8828, Dec. 31, 2007> |
| Article 82 (Submission of Payment Records) |
| (1) | Any of the following persons living in the Republic of Korea shall submit payment records or details on the modification of titles to the head of the competent tax office, as prescribed by Presidential Decree: <Amended by Act No. 12168, Jan. 1, 2014> |
| 1. | A person who pays insurance proceeds (including surrender value and early withdrawal) or deals with modification of title of a life or non-life insurance policy stipulated under Articles 8 and 34; |
| 2. | A person who pays retirement grants, allowances, merit pay, or others (excluding pensions) similar thereto stipulated under Article 10. |
| (2) | A person equipped with computer processing facilities among those who fall under paragraph (1) 1 shall submit payment records on a computer-processed tape, diskette, etc., as prescribed by Presidential Decree. <Amended by Act No. 12168, Jan. 1, 2014> |
| (3) | A person who deals with the transfer or modification of title to shares, equity stakes, public bonds, corporate bonds, claims and specific facilities (including a person who has been entrusted with duties to verify the transfer or modification of title by the State or a local government) and a depositor who deposits foreign currency securities prescribed in Article 3 (1) 8 of the Foreign Exchange Transactions Act, which were deposited in him or her by investors, again in the Korea Securities Depository prescribed in Article 294 of the Financial Investment Services and Capital Markets Act shall submit the details of the transfer or modification of title to the head of the competent tax office, as prescribed by Presidential Decree. <Amended by Act No. 14388, Dec. 20, 2016> |
| (4) | A person who deals with trust business shall submit a detailed statement on any trust, the truster of which is different from its beneficiary, among the trusted property, to the head of the competent tax office, as prescribed by Presidential Decree. |
| (6) | A corporation that issues convertible bonds, etc. stipulated under Article 40 (1) (excluding a listed-stock corporation prescribed by the Financial Investment Services and Capital Markets Act that issues convertible bonds, etc. through public offering of securities pursuant to Article 9 (7) of the same Act, but including an underwriter under the same Act) shall submit details on the issuance of the relevant convertible bonds, etc. and on their underwriters to the head of the competent tax office, as prescribed by Presidential Decree. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 83 (General Inquiry about Financial Property) |
| (1) | When the head of the competent tax office, etc. conducts an investigation in order to determine or correct inheritance tax or gift tax pursuant to Article 76, the Commissioner of the National Tax Service (including the Commissioner of the Regional Tax Office; hereafter in this Article the same shall apply) may request the heads of financial companies, etc. to inquire en bloc about taxation data on any of the following financial property, notwithstanding Article 4 of the Act on Real Name Financial Transactions and Confidentiality: <Amended by Act No. 10854, Jul. 14, 2011; Act No. 11609, Jan. 1, 2013; Act No. 13557, Dec. 15, 2015> |
| 1. | A person suspected of evading inheritance tax or gift tax in light of his or her occupation, age, property state, status of income return, etc.; |
| 2. | An heir/ancestor or donor/donee subject to the application of Article 85 (1) (hereafter in this Article referred to as "ancestor, etc."). |
| (2) | The head of a financial company, etc., in receipt of a request for inquiry about financial property under paragraph (1), shall promptly submit the requested taxation data to the Commissioner of the National Tax Service. <Amended by Act No. 10854, Jul. 14, 2011> |
| (3) | When the Commissioner of the National Tax Service makes an inquiry about the taxation data to the head of a financial company, etc. pursuant to paragraph (1), he or she shall do so in writing stating the following matters: <Amended by Act No. 10854, Jul. 14, 2011> |
| 1. | Personal details of the ancestor, etc.; |
| 3. | Details of data requested, etc. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 84 (Questioning and Investigations) |
Where it is necessary to conduct an investigation and duties in connection with inheritance tax or gift tax, a public official engaged in tax affairs may ask questions to any of the following persons, investigate relevant books, documents or other things, or order such persons to submit the relevant books, documents or other things. In such cases, when the public official engaged in tax affairs asks questions, conducts an investigation, or requires the submission of the books, documents or other things, he or she shall not abuse his or her authority for any other purpose beyond the scope necessary for performing his or her duties. <Amended by Act No. 16102, Dec. 31, 2018>:
| 1. | A taxpayer or a person deemed to have a tax liability; |
| 2. | An ancestor, or a person either deemed to have given or received property to/from a person under subparagraph 1, or deemed to have a right to receive or give such property; |
| 3. | A person liable to submit payment records, etc., stipulated under Article 82. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 85 (Collection and Management of Taxation Data by Each Taxpayer) |
| (1) | For the purpose of efficiently carrying out the affairs of imposing and collecting inheritance tax or gift tax on/from persons prescribed by Presidential Decree, in consideration of the scale of their property, income levels, etc., the Commissioner of the National Tax Service shall annually manage taxation data submitted by taxpayers, etc. pursuant to tax laws, or property data, including real estate, financial property, etc. collected for taxation and collection purposes by each taxpayer through a computer system so that such data can be used for the aforesaid purposes. |
| (2) | The Commissioner of the National Tax Service shall neither use the taxation data of property collected and managed under paragraph (1) for purposes other than taxation, nor provide or divulge such data to any third party, and no person shall request the provision or use of taxation data of property under paragraph (1) to the Commissioner of the National Tax Service: Provided, That this shall not apply to any case falling under the subparagraphs of Article 81-13 (1) of the Framework Act on National Taxes. <Amended by Act No. 10411, Dec. 27, 2010> |
| (3) | The provision of and request for taxation data of property pursuant to the proviso of paragraph (2) shall be made to the extent that the essence of guaranteeing confidentiality for taxpayers is not harmed by clearly stating the specific purpose of such provision or request, and the provided taxation data of property shall be used only for the original purposes requested, and shall not be divulged to any third party. |
| (4) | A person who requests the taxation data of property to the Commissioner of the National Tax Service pursuant to the proviso of paragraph (2) shall do so in writing stating the following matters: |
| 1. | Personal details of the taxpayer, etc.; |
| 3. | Details of the requested taxation data of property. |
| (5) | Detailed matters necessary for the management and operation of the computer system for each taxpayer pertaining to the taxation data of property under paragraph (1) shall be prescribed by the Commissioner of the National Tax Service. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 86 (Prohibition on Levy of Value-Added Tax) |
No local government or other public organization may levy value-added tax on inheritance tax or gift tax.
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 1997.
Article 2 (General Applicability)
This Act shall be begin to apply from the very first succession which commences or property being donated, after this Act enters into force.
Article 3 (Applicability to Non-Taxation of Designated Cultural Heritage)
Among designated cultural heritage whose taxes were deferred from collection, pursuant to the previous provisions of Article 8-3 (1) 1, where, as at the time this Act enters into force, there is heritage which falls under one of the amended provisions of subparagraph 2 of Article 12, the head of tax office concerned shall revoke the levy decision on the amount of such inheritance taxes whose collection was deferred and the amount of such revoked inheritance taxes shall not again be levied. Article 4 (Applicability to Follow-up Management of Public Service Corporation)
| (1) | The amended provisions of Articles 16 (1) and 48 (1) and (2) 1 through 3 and 5, and paragraph (3) of the same Article shall be begin to apply from the occurrence of the main taxable cause, with respect to property received, through contribution, pursuant to the previous provisions, as at the time this Act enters into force. |
| (2) | The amended provisions of Article 48 (2) 4 shall be begin to apply from the very first sale of property received, through contribution, under the previous provisions, as at the time this Act enters into force. |
Article 5 (Applicability to Succession Deductions of Farmland, Grazing Land, and Forest Land)
As at the time this Act enters into force, should an inheritance deduction, pertaining to farmland, grazing land, forest land, etc., be received, pursuant to the provisions of the previous Article 11-3 (1) and (2), in case which falls under the provisions of the previous Article 11-3 (4), after the enforcement of this Act, inheritance tax shall be levied, pursuant to the previous provisions.
Article 6 (Applicability to Deductions of Gift Tax Amount Deducted from Tax Assessment)
The amended provisions of Articles 28 and 58 shall be begin to apply from the very first inheritance tax or gift tax being determined after the enforcement of this Act. Article 7 (Applicability to Stocks under Assumed Names being Converted Back to Names of True Owners)
With respect to stocks, etc. either entered in the register of stockholders or in the register of members under the names of third parties, or entered with a change of holders at the time this Act enters into force, the amended provisions of Article 43 (1) 2 shall be begin to apply from the very first stocks, etc. which is being converted back to the name of the true owner, after the enforcement of this Act. Article 8 (Applicability to Tax Verifications by outside Experts concerning Public Service Corporations)
| (1) | The amended provisions of Articles 50 and 51 shall be begin to apply from the tax whose taxable period or fiscal year commences the earliest, after the enforcement of this Act. |
| (2) | A public service corporation, etc. incorporated prior to the enforcement of this Act shall receive an initial tax verification by outside experts with respect to the period up to the expiration date of the taxable period or the fiscal year within which falls the day previous to the date on which it becomes two years after the enforcement of this Act. |
| (3) | A public service corporation, etc. incorporated at the outset, after the enforcement of this Act, shall receive an initial tax verification by outside experts with respect to the period up to the expiration date of the taxable period or the fiscal year within which falls the date on which two years has elapsed from the incorporation date of the public service corporation, etc. concerned. |
Article 9 (Transitional Measures concerning Appraisals)
| (1) | The amended provisions of Article 61 (1) 1 being applicable with respect to property for which the succession commenced prior to December 31, 1990, the appraisal of the lands among such inherited property reported within the report deadline of the inheritance tax shall be based on the value appraised pursuant to one of the following subparagraphs, as at the commencement date of succession: |
| 1. | Concerning specific regions, as determined by the Commissioner of the National Tax Service, the value appraised in accordance with a multiplication method, pursuant to the provisions of Article 9 (1) of the amendment to the Inheritance Tax Act of Act No. 4022; |
| 2. | With respect to regions besides those of subparagraph 1, the current base value used taxation prescribed by the Local Tax Act prior to it being amended to Act 4995. |
| (2) | Appraised values, prior to the enforcement of this Act, pertaining to properties having values appraised pursuant to the provisions of the previous Article 9 (2), shall be regarded as values appraised pursuant to the amended provisions of Article 61 (2), and appraisals, after the enforcement of this Act, pertaining to buildings assessed and publicly notified by the Commissioner of the National Tax Service, pursuant to the amended provisions of Article 61 (2), shall be begin to apply from those buildings either being donated or unto which succession commences, after January 1, 1998. |
Article 10 (Applicability to Payment in Kind and Payment by Annual Installments)
The amended provisions of Articles 71 and 73 shall be begin to apply from the first tax for which payment in kind and payment by annual installments is applied. Article 11 (Applicability to Submissions of Payment Records)
The amended provisions of Article 82 (1) through (4) shall be begin to apply from the first payment being paid out or such fact being handled, after the enforcement of this Act. Article 12 (Applicability to General Inquiry into Financial Property)
The amended provisions of Article 83 shall be begin to apply from the first inheritance tax being determined, after the enforcement of this Act. Article 13 (General Transitional Measures)
Prior to the enforcement of this Act, any inheritance taxes or gift taxes levied or to be levied with respect to successions which commenced or property donated shall be pursuant to the previous provisions.
Article 14 Omitted.
Article 15 (Relationship to Other Statutes and Regulations)
In case, at the time of the enforcement of this Act, the previous Inheritance Tax Act or a provision thereof has been cited in other statutes and regulations, and if, among this Act, there is a provision falling into such statutes and regulations, then the citation shall be regarded as having been of this Act or a provision falling into this Act, in place of the previous provisions.
ADDENDA <Act No. 5493, Dec. 31, 1997>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation.
Articles 2 through 13 Omitted.
Article 14 (Applicability to Amendment to Other Statutes)
| (1) | The amended provisions of the Inheritance Tax and Gift Tax Act as referred to in Article 13 (3) of the Addenda shall be begin to apply from the inheritance tax or gift tax determined for the first time after this Act enters into force. |
ADDENDA <Act No. 5498, Jan. 8, 1998>
Article 1 (Enforcement Date)
This Act shall enter into force on April 1, 1998. (Proviso Omitted.)
Articles 2 through 15 Omitted.
ADDENDA <Act No. 5582, Dec. 28, 1998>
| (1) | (Enforcement Date) This Act shall enter into force on January 1, 1999. |
| (2) | (General Applicability) This Act shall apply to successions commencing or donations made on or after the enforcement date of this Act. |
| (3) | (Applicability on Notification of Data on Taxables of Aggregate Land Tax) The amended provisions of Article 80 (3) shall begin to apply from the aggregate land taxes imposed (including those which are subject to non-taxation, reduced or exempted, and not collectable because the amount is too small) on or after the enforcement date of this Act. |
| (4) | (Transitional Measures Following Extension of Total Period) In the imposition of the inheritance and gift taxes the duty for payment of which is established after the enforcement of this Act, the value of a donation for which the total period has not passed under the previous provisions of Articles 13 (1), 14 (1) 3, 47 (2), and 53 (1) shall, notwithstanding their amendments, be the total value of donations made prior to the enforcement of this Act calculated by applying the total period under the respective previous provisions concerned, and the value of the donation for which the total period has passed under the previous provisions of Articles 13 (1), 14 (1) 3, 47 (2), and 53 (1) shall not include the value of a donation made prior to the enforcement of this Act as prescribed by the amendments to the said Articles. |
ADDENDA <Act No. 6048, Dec. 28, 1999>
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2000: Provided, That the amended provisions of Article 78 (4) shall enter into force on the date its promulgation and the amended provisions of Article 61 (1) 2 shall enter into force on July 1, 2000. Article 2 (General Applicability)
This Act shall begin to apply from the portion of any inheritance or any donation made for the first time after the enforcement of this Act: Provided, That the amended provisions of Article 41-3 shall begin to apply from the portion of the stocks, etc. and convertible bonds, etc. acquired for the first time after the enforcement of this Act. Article 3 (Applicability to Additional Tax in Case of Excess Number of Directors of Public Service Corporation)
The amended provisions of Article 48 (8) through (10) and Article 78 (6) through (8) shall apply to the portion of the business year commencing for the first time after the enforcement of this Act. Article 4 (Applicability to Payment in Annual Installments and Payment in Kind)
The amended provisions of Articles 71 through 73 shall apply to the portion of any payment in annual installments and any payment in kind for which an application is filed for the first time after the enforcement of this Act. Article 5 (Transitional Measures concerning Tax Rates Change)
In imposing any inheritance tax and any gift tax that come into a tax payment liability after the enforcement of this Act, where the portion of a donation made prior to the enforcement of this Act is taxed by adding up in accordance with the provisions of Articles 13 and 47 and such added-up tax base exceeds 3 billion won, a tax amount to be calculated shall be calculated according to the classification falling under any of the following subparagraphs notwithstanding the amended provisions of Article 26: | 1. | An amount added up by an amount falling under any of the following items in case that the portion of any donation prior to the enforcement of this Act exceeds 3 billion won: |
| (a) | A tax amount calculated according to the previous provisions of Article 26 with respect to the portion of any donation made prior to the enforcement of this Act; |
| (b) | An amount calculated by multiplying a tax base corresponding to a property inherited or donated after the enforcement of this Act by 50/100; |
| 2. | An amount added up by the amount falling under any of the following items in case that the portion of a donation made prior to the enforcement of this Act falls short of 3 billion won: |
| (a) | With respect to the portion of any donation made prior to the enforcement of this Act, a tax amount calculated according the previous provisions of Article 26; |
| (b) | An amount obtained by deducting the amount of (a) from an amount calculated by applying the tax rates described in the provisions of Article 26 with 3 billion won taken as a tax base; |
| (c) | An amount obtained by multiplying the balance resulting from the deduction of 3 billion won from a tax base added up by the portion of a donation made prior to the enforcement of this Act by 50/100. |
Article 6 (Transitional Measures concerning Legal Fiction of Loan as Donation)
In applying the amended provisions of Articles 41 and 41-4, any person who receives financial loans, property and rendering of services, etc. as at the day that this Act is enforced shall be deemed to receive them anew on January 1, 2000. Article 7 (Transitional Measures concerning Possession Standard of Stocks)
| (1) | Where any public service corporation, etc. that holds the stocks, etc. in excess of the possession standard of the stocks, etc. in accordance with the amended provisions of Article 48 (1) and (2) 2 as at the day that this Act is enforced disposes of such excess stocks, etc. by December 31, 2001, the amended provisions of Article 78 (4) shall not apply thereto. |
| (2) | Where any public service corporation, etc. in which contributors and any specially related parties of such contributors hold office as directors in excess of 1/5 of the fixed number of directors in accordance with the amended provisions of Article 48 (8) as at the day that this Act is enforced reduces the excess number of directors corresponding to not less than 50/100 by December 31, 2000 and the remaining excess number of directors by December 31, 2001, the amended provisions of Article 78 (6) shall not apply thereto. |
| (3) | Where any public service corporation, etc. that holds the stocks, etc. in excess of the possession standard of the stocks, etc. for domestic corporations in accordance with the amended provisions of Article 48 (9) as at the day that this Act is enforced disposes of not less than 50/100 of such excess stocks, etc. by December 31, 2000 and the remaining stocks, etc. by December 31, 2001, the amended provisions of Article 78 (7) shall not apply thereto. |
ADDENDA <Act No. 6124, Jan. 12, 2000>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation.
Articles 2 through 6 Omitted.
ADDENDA <Act No. 6301, Dec. 29, 2000>
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2001: Provided, That the amendments to Articles 48 (2) 3, 4, 4-2 and 78 (9) shall enter into force on the date of its promulgation. Article 2 (General Applicability)
This Act shall begin to apply from the portion of inheritance first commenced or first gifted after the enforcement of this Act.
Article 3 (Applicability to Non-taxable Inherited Property)
The amendments to subparagraph 2 of Article 12 and Article 74 (1) 1 shall begin to apply from the portion of decision on the inheritance tax first done after the enforcement of this Act. Article 4 (Applicability to Permit for Excessive Possession of Stocks by Public Service Corporation)
| (1) | The amendments to Articles 16 (2), 48 (1) and (2) 2 shall begin to apply from the portion of decision on the inheritance tax or the gift tax first done after the enforcement of this Act. |
| (2) | The amendments to Articles 48 (2) 3, 4, 4-2 and 78 (9) shall begin to apply from the portion of business year within which falls the date of promulgation of this Act. |
Article 5 (Applicability to Profits from Conversion of Convertible Bonds into Stocks)
| (1) | The amended provisions of Article 40 (1) 2 shall begin to apply from the portion of first acceptance or acquisition of the convertible bonds, etc. after the enforcement of this Act. |
| (2) | The amended provisions of Article 82 (6) shall begin to apply from the portion of first issuance of the convertible bonds, etc. after the enforcement of this Act. |
Article 6 (Applicability to Payment in Installments and Annual Installments)
The amended provisions of Articles 70 (2) and 71 (2) 2 shall begin to apply from the portion of first application for the payment in installments and annual installments after the enforcement of this Act. Article 7 (Applicability to Application for Payment of Deposits by Successors Who are Non-Residents)
The amended provisions of Article 81 (3) shall begin to apply from the portion of first application for payment of inherited property to the financial institution by the successors, etc. who are non-residents after the enforcement of this Act.
ADDENDA <Act No. 6780, Dec. 18, 2002>
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2003: Provided, That the amended provisions of Articles 16 (2) and (4), and 48 (2) and (4) shall enter into force on the date of its promulgation. Article 2 (General Applicability)
This Act shall begin to apply from the portion of inheritance first commenced or first gifted after the enforcement of this Act.
Article 3 (Applicability to Permit for Excessive Possession of Stocks by Public Service Corporation)
The amended provisions of Articles 16 (2) and (4), 48 (2) and (4) shall begin to apply from the portion of business year whereto belongs the date of promulgation of this Act. Article 4 (Applicability to Legal Fiction of Insurance Money as Donation)
The amended provisions of Article 34 (1) shall begin to apply from the portion of paying the premiums with the money first donated after the enforcement of this Act. Article 5 (Applicability to Legal Fiction of Title Trust Property as Donation)
The amended provisions of Article 41-2 (1) and (2) shall begin to apply from the portion of ownership first acquired after the enforcement of this Act. Article 6 (Applicability to Legal Fiction of Profits from Listing of Stocks or Equity Shares as Donation)
The amended provisions of Articles 41-3 and 41-5 shall begin to apply from the portion of the stocks, etc. first donated or acquired with compensation after the enforcement of this Act. Article 7 (Applicability to Deferment of Collection of Cultural Heritage Data)
The amended provisions of Article 74 (1) through (3) shall begin to apply from the portion of application first filed after the enforcement of this Act. Article 8 (Applicability to Additional Tax)
The amended provisions of Article 78 (2) 2 shall begin to apply from the portion for which the deadline of payment first arrives after the enforcement of this Act. Article 9 (Transitional Measures concerning Title Trust Property)
With regard to the portion whose ownership has been acquired before the enforcement of this Act, and the change of holders under amended provisions of Article 41-2 (1) and (2) has not been made as at the date of enforcement of this Act, it shall be deemed to have acquired an ownership on the date of enforcement of this Act. Article 10 (Transitional Measures concerning Deduction of Property Donated by Spouse)
In case where the amount deducted under the previous provision for the portion of donation before the enforcement of this Act exceeds 300 million won, such excessive amount shall be deducted from the taxable amount of gift taxes, notwithstanding the amended provisions of Article 53 (1) 1. Article 11 (Applicability to Disputed Case against Assessment of Value of Inherited Property)
With regard to the dispositions to be made by applying the provisions of Article 9 (1) of the previous Inheritance Tax Act (referring to the Act prior to the amendment by Act No. 4805 on December 22, 1994), and those to have been made (limited to those against which any objection, request for examination, request for adjudication, or administrative litigation, has been instituted), the provisions of Article 9 (1) and (2) of the previous Inheritance Tax Act (referring to what has been amended by Act No. 4805) shall be applicable.
ADDENDA <Act No. 7010, Dec. 30, 2003>
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2004.
Article 2 (General Applicability)
This Act shall begin to apply from the portion of commencing inheritance or of donating after the enforcement of this Act.
Article 3 (Applicability to Donation of Insurance Money)
The amended provisions of Article 34 (1) shall begin to apply from the portion of paying the premiums with the assets donated after the enforcement of this Act. Article 4 (Applicability to Donation of Benefits Accompanying Transfer at Lower or Higher Prices)
The amended provisions of Article 35 shall begin to apply from the portion of taking over or transferring after the enforcement of this Act. Article 5 (Applicability to Donation of Benefits Accompanying Gratuitous Use of Real Estate)
The amended provisions of Article 37 shall begin to apply from the portion of using real estate gratuitously after the enforcement of this Act. In such cases, with regard to the portion of gratuitous use of real estate from prior to the enforcement of this Act, and the portion of continued gratuitous use at the time of the enforcement of this Act, it shall be deemed to newly use the real estate on the date of enforcement of this Act. Article 6 (Applicability to Donation of Benefits Accompanying Investment in Kind)
The amended provisions of Articles 39-3 shall begin to apply from the portion of investments in kind after the enforcement of this Act. Article 7 (Applicability to Deferment of Term of Merger Relating to Donations of Profits, Such as Listing Due to Merger)
The amended provisions of Article 41-5 (1) shall begin to apply from the portion of receiving a donation of stocks, etc. or acquiring for value after the enforcement of this Act. Article 8 (Applicability to Donation of Other Benefits)
| (1) | The amended provisions of Article 42 (1) 1 and 2 shall begin to apply from the portion of using the assets or letting to use and of providing service or receiving its provision after the enforcement of this Act. |
| (2) | The amended provisions of Article 42 (1) 3 shall begin to apply from the portion of trade to increase or decrease the corporate capital (including the investment amount), or the portion of making the transfer or takeover of business, exchange of business and organizational change of corporation etc. after the enforcement of this Act. |
| (3) | The amended provisions of Article 42 (4) shall begin to apply from the portion of occurrence of causes for increasing the assets value under the same paragraph after acquiring the assets due to the causes falling under each of the same paragraph, after the enforcement of this Act. |
Article 9 (Applicability to Adjustment of Double Taxation of Gift Tax and Income Tax Relating to Presumption of Donations at Time of Transfer to Spouse)
The amended provisions of proviso of Article 44 (2) and (4) shall begin to apply from the portion of determining the gift tax after the enforcement of this Act. Article 10 (Applicability to Legal Fiction of Donation of Title Trust Assets)
The amended provisions of Article 45-2 (3) shall begin to apply from the portion of submitting the documents for shareholders, etc. and the specifications of changing status of stocks, etc. under the provisions of Articles 109 (1) and 119 of the Corporate Tax Act after the enforcement of this Act. Article 11 (Applicability to Deferment of Period for Payment by Annual Installments for Inherited Property of Family Business)
The amended provisions of Article 71 (2) 2 shall begin to apply from the portion of filing an application for payment by annual installments after the enforcement of this Act. Article 12 (Applicability to Additional Taxes)
The amended provisions of Article 78 (1) and (2) shall begin to apply from the portion of arrival of the deadline for payment after the enforcement of this Act. Article 13 (Applicability to Submission of Issuance of Convertible Bonds and Details of Undertakers)
The amended provisions of Article 82 (6) shall begin to apply from the portion of issuing the convertible bonds, etc. after the enforcement of this Act.
ADDENDA <Act No. 7335, Jan. 14, 2005>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation.
Articles 2 through 12 Omitted.
ADDENDA <Act No. 7580, Jul. 13, 2005>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation.
Article 2 (General Applicability)
This Act shall begin to apply from the portion of any inheritance that is first commenced and any donation that is first made after its promulgation.
Article 3 (Special Cases concerning Appraised Value of Collective Housing Whose Prices Are Nonexistent)
Where the prices of the collective housing prescribed by the amended provisions of Article 61 (1) 4 are nonexistent at the time of the enforcement of this Act, the previous provisions of Article 61 (3) shall apply to the calculation and the publication of the prices of the collective housing on or before the time that the Commissioner of the National Tax Office determines and publishes the prices of the relevant collective housing pursuant to the provisions of the proviso of Article 17 (1) of the Act on the Public Announcement of Values and Appraisal of Real Estate, notwithstanding the amended provisons of Article 61 (1) 4. Article 4 (Applicability to Hearing of Opinions and Application Filed for Recalculation and Publication)
The amended provisions of Article 61 (8) shall begin to apply from the portion that is first calculated and published after the enforcement of this Act.
ADDENDA <Act No. 8139, Dec. 30, 2006>
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2007. (Proviso Omitted.)
Articles 2 through 15 Omitted.
Article 16 (Transitional Measures concerning Amendment to Other Statutes)
The additional tax that was imposed or is to be imposed pursuant to the provisions of the tax-related Act falling under each of the following subparagraphs before this Act enters into force, shall be governed by the previous provisions of the corresponding tax-related Act, notwithstanding the corresponding tax-related Act amended by Article 15 (1) through (7) of the Addenda:
ADDENDA <Act No. 8346, Apr. 11, 2007>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation. (Proviso Omitted.)
Articles 2 through 13 Omitted.
ADDENDA <Act No. 8347, Apr. 11, 2007>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation. (Proviso Omitted.)
Articles 2 through 5 Omitted.
ADDENDA <Act No. 8435, May 17, 2007>
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2008. (Proviso Omitted.)
Articles 2 through 9 Omitted.
ADDENDA <Act No. 8828, Dec. 31, 2007>
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2008: Provided, That the amended provisions of Articles 48 (9) and 78 (10) shall enter into force on January 1, 2009. Article 2 (General Applicability)
This Act shall begin to apply from the first case where inheritance commences or a gift is made after this Act enters into force.
Article 3 (Applicability to Contribution and Acquisition of Stocks of Public Service Corporation)
The amended provisions of the main clause of Article 16 (2), with the exception of its subparagraphs, the proviso of Article 48 (1), with the exception of its subparagraphs, and paragraphs (2) 2 and (11) of the same Article shall begin to apply from the first case where stocks, etc. are contributed to a public service corporation, etc., or a public service corporation, etc. acquires stocks, etc. after this Act enters into force. Article 4 (Applicability to Additional Tax to Stocks of Domestic Corporation in Special Relationship held by Public Service Corporation)
The amended provisions of Article 48 (9) shall begin to apply from the first case where taxation period or business year begins after January 1, 2009. Article 5 (Applicability to Tax Verification of Public Service Corporation by Outside Experts)
The amended provisions of Article 50 (1) and (3) shall begin to apply from the first case where taxation period or business year begins after this Act enters into force. Article 6 (Applicability to Responsibility of Establishment and Use of Exclusive Account by Public Service Corporation)
The amended provisions of Article 50-2 shall begin to apply from the first case where revenue or expenditure received or disbursed by a public service corporation, etc. after this Act enters into force. Article 7 (Applicability to Responsibility of Publicly Announcing Statement of Accounts of Public Service Corporation)
The amended provisions of Article 50-3 shall begin to apply from the first case where taxation period or business year begins after this Act enters into force. Article 8 (Applicability to Payment in Annual Installments)
The amended provisions of Article 71 (1), (2) and (4) shall begin to apply from the first case where payment in annual installments is applied over the portion for which inheritance commences or a gift is made after this Act enters into force. Article 9 (Applicability to Payment in Kind)
The amended provisions of the main clause of Article 73 (1) shall begin to apply from the first case where payment in kind is applied over the portion for which inheritance commences or a gift is made after this Act enters into force. Article 10 (Applicability to Additional Tax)
| (1) | The amended provisions of Article 78 (10) shall begin to apply from the first case where taxation period or business year begins after January 1, 2009. |
| (2) | The amended provisions of Article 78 (11) shall begin to apply from the first case where taxation period or business year begins after this Act enters into force. |
Article 11 (Applicability to Notification of Taxable Data of Property Tax)
The amended provisions of Article 80 (3) shall begin to apply from the first case where that is notified to the Commissioner of the National Tax Service after this Act enters into force. Article 12 (Applicability to Submission of Payment Detail)
| (1) | The amended provisions of Article 82 (1) 1 shall begin to apply from the first case where a payment is made this Act enters into force. |
| (2) | The amended provisions of Article 82 (3) shall begin to apply from the first case where the details of the change of names or of modification are submitted after this Act enters into force. |
Article 13 (Special Cases concerning Establishment and Report of Exclusive Account of Public Service Corporation)
Where a corporation falls under public service corporations, etc. as at the time this Act enters into force or falls under public service corporations, etc. before March 31, 2008, it may open and report an exclusive account between the date this Act enters into force and June 30, 2008, notwithstanding the amended provisions of Article 50-2 (3).
ADDENDA <Act No. 8852, Feb. 29, 2008>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation. (Proviso Omitted.)
Articles 2 through 7 Omitted.
ADDENDA <Act No. 8863, Feb. 29, 2008>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation. (Proviso Omitted.)
Articles 2 through 5 Omitted.
ADDENDA <Act No. 9269, Dec. 26, 2008>
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2009.
Article 2 (General Applicability)
This Act shall begin to apply from the first inheritance or donation that commences or is made after this Act enters into force.
Article 3 (Applicability to Appraisal of Securities)
The amended provisions of Article 63 (3) shall begin to apply from the first securities inherited or donated, that are appraised after this Act enters into force. Article 4 (Applicability to Payment by Annual Installments)
The amended provisions of Article 71 (1), (4) and (5) shall begin to apply from the first payment in annual installments applied after this Act enters into force. Article 5 (Applicability to Additional Tax)
The amended provisions of Article 78 (12) and (13) shall begin to apply from the first obligation to submit payment details, etc. that arises after this Act enters into force.
ADDENDA <Act No. 9916, Jan. 1, 2010>
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2010.
Article 2 (General Applicability)
This Act shall begin to apply from the first inheritance commencing or donation made after this Act enters into force.
Article 3 (Applicability to Special Cases concerning Requests for Correction)
The amended provisions of Article 79 (2) shall begin to apply from the first decision or correction made after this Act enters into force.
ADDENDA <Act No. 9924, Jan. 1, 2010>
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2010.
Articles 2 through 7 Omitted.
ADDENDA <Act No. 10000, Feb. 4, 2010>
Article 1 (Enforcement Date)
This Act shall enter into force one year after the date of its promulgation. (Proviso Omitted.)
Articles 2 through 7 Omitted.
ADDENDA <Act No. 10305, May 20, 2010>
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation. (Proviso Omitted.)
Articles 2 through 6 Omitted.
ADDENDA <Act No. 10361, Jun. 8, 2010>
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation. (Proviso Omitted.)
Articles 2 through 12 Omitted.
ADDENDA <Act No. 10366, Jun. 10, 2010>
Article 1 (Enforcement Date)
This Act shall enter into force two years after the date of its promulgation.
Articles 2 through 4 Omitted.
ADDENDA <Act No. 10411, Dec. 27, 2010>
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2011.
Article 2 (General Applicability)
This Act shall begin to apply from the first case of commencing inheritance or receiving a donation after this Act enters into force.
Article 3 (Applicability to Non-Inclusion of Property Contributed to Public Service Corporation in Taxable Value of Inheritance)
The amended provisions of Article 16 (2), with the exception of its subparagraphs, shall begin to apply from the first contribution of stocks, etc. made to public service corporation, etc. after this Act enters into force. Article 4 (Applicability to Additional Tax)
The amended provisions of Article 78 (12) and (13) shall begin to apply from the first decision or correction made after this Act enters into force.
ADDENDA <Act No. 10854, Jul. 14, 2011>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation. (Proviso Omitted.)
Articles 2 and 3 Omitted.
ADDENDA <Act No. 10907, Jul. 25, 2011>
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation.
Articles 2 and 3 Omitted.
ADDENDA <Act No. 10924, Jul. 25, 2011>
Article 1 (Enforcement Date)
This Act shall enter into force one year after the date of its promulgation.
Articles 2 through 4 Omitted.
ADDENDA <Act No. 11130, Dec. 31, 2011>
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2012.
Article 2 (General Applicability)
This Act shall begin to apply from the first case of commencing inheritance or receiving a donation after this Act enters into force.
Article 3 (Applicability to Profits Deemed Donated through Transactions with Specially Related Corporations)
The amended provisions of Articles 2 (2), 4 (4), 45-3, 47 (1), 55 (1), and 68 (1) shall begin to apply from the transactions with a specially related corporation occurred in the first business year after this Act enters into force.
ADDENDA <Act No. 11609, Jan. 1, 2013>
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2013.
Article 2 (General Applicability)
This Act shall begin to apply from regard to property the inheritance of which commences or which is donated on or after the date this Act enters into force.
Article 3 (Applicability to Requirements for Conscientious Public Service Corporations regarding Non-Inclusion of Property Contributed to Public Service Corporations in Taxable Value of Inheritance and Gift)
The amended provisions of Article 16 (2) shall begin to apply from the taxable period of income tax or the business year of corporate tax beginning on or after the date this Act enters into force; and if a corporation corresponds to a conscientious public service corporation, etc. under the previous provisions as at the time this Act enters into force, it shall be deemed a conscientious public service corporation, etc. for purposes of applying this Act until the end of the first taxable period of income tax or the first business year of corporate tax that begins on or after the date this Act enters into force. Article 4 (Applicability to Presumption of Donation of Property Held in Accounts whose Real Holder has been Verified)
The amended provisions of Article 45 (4) shall begin to apply from reporting, determination, or correction made on or after the date this Act enters into force. Article 5 (Applicability to Legal Fiction as Donation of Profits through Transactions with Specially Related Corporations)
The amended provisions of Article 45-3 shall begin to apply from transactions with a specially related corporation made in a business year that comes on or after the date this Act enters into force.
ADDENDA <Act No. 11690, Mar. 23, 2013>
Article 1 (Enforcement Date)
| (1) | This Act shall enter into force on the date of its promulgation. |
Articles 2 through 7 Omitted.
ADDENDA <Act No. 11845, May 28, 2013>
Article 1 (Enforcement Date)
This Act shall enter into force three months after the date of its promulgation. (Proviso Omitted.)
Articles 2 through 17 Omitted.
ADDENDA <Act No. 12168, Jan. 1, 2014>
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2014.
Article 2 (General Applicability)
This Act shall begin to apply from property the inheritance of which commences or which is donated on or after the date this Act enters into force.
Article 3 (Applicability to Jurisdiction over Taxation)
The amended provisions of Article 6 (3) shall begin to apply from reporting, determination, or correction made on or after the date this Act enters into force. Article 4 (Applicability to Follow-up Management of Inheritance Deductions for Family Businesses)
The amended provisions of Article 18 (5) and (8) shall begin to apply from the taxable period or business year beginning on or after the date this Act enters into force. Article 5 (Applicability to Inheritance Deductions for Surviving Spouse)
The amended provisions of the main clause of Article 19 (3) shall begin to apply from the inherited property of which division is reported on or after the date this Act enters into force. Article 6 (Applicability to Legal Fiction as Donation of Profits through Transactions with Specially Related Corporations)
The amended provisions of Article 45-3 shall begin to apply from profits whose deadline of reporting arrives on or after the date this Act enters into force. Article 7 (Applicability to Payment in Kind)
The amended provisions of the main clause of Article 73 (1) shall begin to apply from payment in kind applied for on or after the date this Act enters into force. Article 8 (Applicability to Additional Taxes Following Non-Performance of Tax Verification by Public Service Corporations)
The amended provisions of Article 78 (5) shall begin to apply from the taxable period or business year beginning on or after the date this Act enters into force.
ADDENDA <Act No. 12420, Mar. 18, 2014>
Article 1 (Enforcement Date)
This Act shall enter into force one year after the date of its promulgation.
Articles 2 through 4 Omitted.
ADDENDA <Act No. 12844, Nov. 19, 2014>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation: Provided, That the parts that amend Acts among the Acts amended pursuant to Article 6 of Addenda, which were promulgated before this Act enters into force but of which enforcement date has not arrived, shall enter into force on the date respective Acts enter into force.
Articles 2 through 7 Omitted.
ADDENDA <Act No. 13557, Dec. 15, 2015>
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2016.
Article 2 (General Applicability)
This Act shall begin to apply from cases in which inheritance commences or donation is received after this Act enters into force.
Article 3 (Applicability to Deeming Property Registered in Name of Another Person to Have Been Donated)
| (1) | The amended provisions of Article 45-2 (1), with the exception of its subparagraphs, shall begin to apply from cases in which donation is deemed to be made after this Act enters into force. |
| (2) | The amended provisions of Article 45-2 (3) shall begin to apply from cases in which a report is filed after this Act enters into force. |
Article 4 (Applicability to Deeming Profits Accruing from Business Opportunities Provided by Specially Related Corporations to Have Been Donated)
The amended provisions of Article 45-4 shall begin to apply from cases in which business opportunities are provided in a business year that begins after this Act enters into force. Article 5 (Applicability to Reasons for Special Cases concerning Imposition of Additional Tax on Public Service Corporations)
The amended provisions of the proviso of Article 48 (8) shall begin to apply from cases in which the amount of inheritance tax or gift tax is determined or corrected after this Act enters into force. Article 6 (Applicability to Cases Eligible for Payment in Kind and Requirements for Payment in Kind)
| (1) | The amended provisions of Article 73 (1) shall begin to apply from cases in which application for payment in kind is filed after this Act enters into force. |
| (2) | Notwithstanding the amended provisions of Article 73 (1), previous provisions shall apply to cases in which application for payment in kind is filed before this Act enters into force. |
Article 7 (Applicability to Notification of Determination of Tax Base and Amount of Tax)
The amended provisions of the latter part of Article 77 shall begin to apply from cases in which the head of a tax office, etc. make notification after this Act enters into force. Article 8 (Special Cases concerning Donation of Profits from Gratuitous Loans of Money)
Where less than 100 million won is borrowed at no cost or at an interest rate below fair interest rate for a period of one year or more, the amended provisions of Article 41-4 shall begin to apply on the day on which a new loan is deemed to have been taken out pursuant to the latter part of the previous Article 41-4 (1), with the exception of its subparagraphs. Article 9 (Special Cases concerning Donation of Profits from Use of Property, Provision of Services)
| (1) | Where a person uses property of less than 100 million won without paying compensation to another person or after paying him or her a price below the market value, or allows another person to use such property after receiving a price higher than the market value, and where the period of use of the property is one year or more, the amended provisions of Article 42 shall apply on the day on which the property is deemed to be newly used pursuant to previous Article 42 (2) after this Act enters into force. |
| (2) | Where a person is provided with services by another person, of which price usual among a large number of unspecified persons is less than 10 million won, without paying compensation to him or her or after paying him or her a price below the market value or a person provides services to another person at a price above the market value, and where the period of being provided with or providing such services is one year or more, the amended provisions of Article 42 shall apply on the day on which the person is deemed to have newly provided or to have been newly provided with such services pursuant to previous Article 42 (2) after this Act enters into force. |
Article 10 (Transitional Measures concerning Donation of Profits through Transactions with Specific Corporations)
Where a person having a special relationship with the shareholders, etc. of a specific corporation has transactions with the specific corporation before this Act enters into force, previous Article 41 shall apply notwithstanding the amended provisions of Article 45-5. In such cases, the amended provisions of the proviso of Article 68 (1) shall apply to the deadline to file gift tax base, notwithstanding the main body of Article 68 (1). Article 11 (Transitional Measures concerning Reasons for Special Cases concerning Deeming Property Registered in Name of Another Person to Have Been Donated)
Previous provisions shall apply to property registered in the name of another person to which pervious Article 45-2 (1) 2 is applicable before this Act enters into force, notwithstanding the amended provisions of Article 45-2.
ADDENDA <Act No. 13796, Jan. 19, 2016>
Article 1 (Enforcement Date)
This Act shall enter into force on September 1, 2016.
Articles 2 through 4 Omitted.
ADDENDA <Act No. 14388, Dec. 20, 2016>
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2017: Provided, That the details of amendment with regard to an exemplary public service corporation, etc. which does not have a special relationship with a conglomerate restricted from mutual investment among Article 16 (2), the proviso of Article 48 (1) and paragraph (2) 2 of the aforesaid Article, and the amended provisions of Article 60 (5) shall enter into force on July 1, 2017, and the amended provisions of Articles 48 (2) 7, 50-3 (1), 50-4 (1), and 78 (9) shall enter into force on January 1, 2018. Article 2 (General Applicability)
This Act shall begin to apply from cases where inheritance takes place or donation is made after this Act enters into force.
Article 3 (Applicability to Non-Inclusion of Property Donated to Public Service Corporations in Taxable Value of Inherited Property)
The amended provisions of Article 16 shall begin to apply from any donation made after this Act enters into force: Provided, That the details of amendment with regard to an exemplary public service corporation, etc. which does not have a special relationship with a conglomerate restricted from mutual investment among the amended provisions of Article 16 (2), with the exception of its subparagraphs, shall begin to apply from any donation made after July 1, 2017. Article 4 (Applicability to Deduction for Family Business Succession and Farming Succession)
The amended provisions of the latter part of Article 18 (5), with the exception of its subparagraphs, shall begin to apply from the period in which income tax is imposed or the business year in which corporate tax is imposed, which commences after this Act enters into force. Article 5 (Applicability to Donation of Profits Following Capital Increase)
| (1) | The amended provisions of Article 39 (1) 1 (c) shall begin to apply from the underwriting or acquisition of new shares after this Act enters into force. |
| (2) | The amended provisions of Article 39 (1) 3 shall begin to apply from the issuance of new shares after this Act enters into force. |
Article 6 (Applicability to Donation of Profits Following Conversion, etc. of Convertible Bonds to Shares)
The amended provisions of Article 40 (1) 1 (b) shall begin to apply from the underwriting or acquisition of convertible bonds, etc. after this Act enters into force. Article 7 (Applicability to Deemed Donation of Profits through Trading with Corporation in Special Relationship)
The amended provisions of Article 45-3 (1) shall begin to apply from any donation on which the deadline for reporting has come after this Act enters into force. Article 8 (Applicability to Deemed Donation of Profits Generated from Business Opportunity Provided by Corporation in Special Relationship)
The amended provisions of Article 45-4 (1) shall begin to apply from any donation on which the deadline for reporting has come after this Act enters into force. Article 9 (Applicability to Non-Inclusion of Property Donated to Public Service Corporations in Taxable Value of Property)
| (1) | The amended provisions of Article 48 (1), (2) 2 and (11) shall begin to apply from property donated or acquired after this Act enters into force: Provided, That the details of amendment with regard to an exemplary public service corporation, etc. which does not have a special relationship with a conglomerate restricted from mutual investment among the amended provisions of the proviso of Articles 48 (1) and the main clause of paragraph (2) 2 of the aforesaid Article, shall begin to apply from property donated or acquired after July 1, 2017. |
| (2) | The amended provisions of Article 48 (2) 4 shall begin to apply from property donated during the period in which income tax is imposed or the business year in which corporate tax is imposed, which commences after this Act enters into force. |
| (3) | The amended provisions of Articles 48 (2) 7 and 78 (9) shall begin to apply from property donated during the period in which income tax is imposed or the business year in which corporate tax is imposed, which commences after January 1, 2018. |
Article 10 (Applicability to Obligations of Public Service Corporations to Undergo Tax Verification and Audit)
The amended provisions of the proviso of Article 50 (1) and 78 (5) 3 shall begin to apply from property donated during the period in which income tax is imposed or the business year in which corporate tax is imposed, which commences after this Act enters into force. Article 11 (Applicability to Public Announcement of Financial Statements of Public Service Corporations)
The amended provisions of Article 50-3 (1) shall begin to apply from financial statements, etc. for the period in which income tax is imposed or the business year in which corporate tax is imposed, which commences after January 1, 2018. Article 12 (Applicability to Accounting Standards Applied to Public Service Corporations)
The amended provisions of Article 50-4 (1) shall begin to apply from accounting standards for the period in which income tax is imposed or the business year in which corporate tax is imposed, which commences after January 1, 2018. Article 13 (Applicability to Special Cases concerning Demand for Correction)
The amended provisions of Article 79 (2) 3 shall also apply where the relevant ground arises before this Act enters into force. Article 14 (Applicability to Submission of Detailed Statements of Payments)
The amended provisions of Article 82 (3) shall begin to apply from cases where a depositor deposits foreign currency securities, which were deposited in him or her by investors, again in the Korea Securities Depository after this Act enters into force. Article 15 (Special Cases concerning Non-Inclusion of Property Donated to Public Service Corporations in Taxable Value of Property)
The amended provisions of Articles 48 (2) 7 and 78 (9) shall apply to an exemplary public service corporation, etc. which owns shares with voting rights, etc. of a domestic corporation, in excess of 5/100 of the total number of issued shares, etc. of the domestic corporation, which has a special relationship with a conglomerate restricted from mutual investment as at the time the amended provisions of Articles 48 (2) 7 and 78 (9) enter into force. Article 16 (Transitional Measures concerning Donation of Profits Following Listing of Shares)
Notwithstanding the amended provisions of Article 41-3 (1), the former provision thereof shall apply to cases where shares, etc. were listed on the stock exchange before this Act enters into force. Article 17 (Transitional Measures concerning Designation of Appraisal Institutions Whose Appraisal of Market Price Is not Approved)
Notwithstanding the amended provisions of the latter part of Article 60 (5), the previous provisions thereof shall apply to cases where an appraisal institution is requested to appraise the market price before July 1, 2017.
ADDENDA <Act No. 14839, Jul. 26, 2017>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation: Provided, That among Acts amended pursuant to Article 5 of the Addenda, the amended parts of Acts which were promulgated before this Act enters into force, but the enforcement dates of which have not arrived, shall enter into force on the enforcement dates of the relevant Acts, respectively.
Articles 2 through 6 Omitted.
ADDENDA <Act No. 15224, Dec. 19, 2017>
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2018: Provided, That the amended provisions of Article 52-2 (2) and (4), and 60 (5) shall enter into force on April 1, 2018, and the amended provisions of Article 18 (3) on January 1, 2019. Article 2 (General Applicability)
This Act shall begin to apply from cases where inheritance takes place or a person receives a donation after this Act enters into force.
Article 3 (Applicability to Deductions for Family Business Succession and Farming Business Succession)
The amended provisions of Article 18 (8) shall begin to apply from cases where grounds prescribed in the subparagraphs of paragraph (6) of the aforesaid Article arise after this Act enters into force. Article 4 (Applicability to Imposition of Gift Tax on Property Donated to Public-Service Corporations Which Has not Been Included in Amount of Tax Assessed)
The amended provisions of Article 48 (2), with the exception of its subparagraphs, and subparagraph 6 of the aforesaid paragraph shall begin to apply from cases where the public-service corporation, etc. exercises voting rights of shares, etc. after this Act enters into force. Article 5 (Applicability to Non-Inclusion of Property Donated to Disabled Persons in Amount of Tax Assessed)
The amended provisions of the proviso of Article 52-2 (2), with the exception of its subparagraphs, and paragraph (4) of the aforesaid Article shall begin to apply from money the public-service corporation, etc. withdraws from its bank account after April 1, 2018. Article 6 (Applicability to Determination of Appraised Price)
The amended provisions of Article 60 (5) shall begin to apply from cases where the head of a tax office entrusts an appraisal institution with the appraisal of property after April 1, 2018. Article 7 (Applicability to Payment in Kind)
The amended provisions of Article 73 (1) 1 shall begin to apply from cases where a taxpayer files an application for payment of inheritance tax in kind after this Act enters into force. Article 8 (Special Cases concerning Deductions from Amount of Tax Return Filed)
Where a taxpayer files a tax return on property, for which inheritance takes place or which is donated to him or her during the period from January 1 to December 31, 2018 pursuant to Articles 67 and 68, notwithstanding the amended provisions of Article 69 (1) and (2), Article 69 shall apply to deductions from the amount of a tax return filed by altering "3/100" to "5/100", respectively. Article 9 (Transitional Measures concerning Non-Inclusion of Property Donated to Public-Service Corporations in Amount of Inheritance Tax Assessed)
Notwithstanding the amended provisions of Article 16, the previous provisions thereof shall apply where shares, etc. of a domestic corporation have been donated to the public-service corporation, etc. before this Act enters into force. Article 10 (Transitional Measures concerning Profits Deemed Donated through Transactions with Corporations That Have Special Relationship)
Notwithstanding the amended provisions of Article 45 (3), the former provision thereof shall apply to profits deemed donated pursuant to the previous provisions of Article 45-3 before this Act enters into force. Article 11 (Transitional Measures concerning Non-Inclusion of Property Donated to Public-Service Corporations in Amount of Gift Tax Assessed)
Notwithstanding the amended provisions of the proviso of Article 48 (1), paragraphs (2) 2 and (4) of the aforesaid Article, the previous provisions thereof shall apply where shares, etc. of a domestic corporation have been donated to the public-service corporation, etc. before this Act enters into force.
ADDENDA <Act No. 15522, Mar. 20, 2018>
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation. (Proviso Omitted.)
Articles 2 through 30 Omitted.
ADDENDA <Act No. 16057, Dec. 24, 2018>
Article 1 (Enforcement Date)
This Act shall enter into force one year after the date of its promulgation.
Articles 2 through 3 Omitted.
ADDENDA <Act No. 16102, Dec. 31, 2018>
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2019.
Article 2 (General Applicability)
This Act shall begin to apply from cases where inheritance commences or a donation is received on or after this Act enters into force.
Article 3 (Applicability to Obligation to Pay Gift Tax for Property Registered in Name of Any Other Person, Which, by Legal Fiction, Is Deemed Donated)
The amended provisions of Articles 4-2 (2), (6) and (9), 6 (2), 45-2 (1) and (2), 47 (1), and 55 (1) 3 shall begin to apply from portions deemed by legal fiction donated on or after this Act enters into force. Article 4 (Applicability to Imposition of Inheritance Tax at Time of Disposing of Property for Family Business Which Receives Deduction for Family Business Succession)
The amended provisions of the former part of the main clause of Article 18 (6) shall begin to apply from the portion of property for family business which is disposed of on or after this Act enters into force. Article 5 (Applicability to Obligations of Public Service Corporations, etc. to Publicly Announce Statement of Settlement of Accounts)
The amended provisions of Article 50-3 (1) 5 and 6 shall begin to apply from the portion of the statement of settlement of accounts, etc., the public announcement of which is made on or after this Act enters into force. Article 6 (Applicability to Obligation to Pay Gift Tax for Property Registered in Name of Any Other Person, Which, by Legal Fiction, Is Deemed Donated)
Notwithstanding the amended provisions of Articles 4-2 (2), (6) and (9), 6 (2), 45-2 (1) and (2), 47 (1), and 55 (1) 3, the previous provisions shall apply to portions deemed by legal fiction donated on or after this Act enters into force, as an actual owner has obtained ownership of the relevant property but failed to transfer the property title to him or her as the actual owner before this Act enters into force.