CHAPTER I GENERAL PROVISIONS
| Article 1 (Inheritance Tax Taxables) |
| (1) | Inheritance tax shall be levied, as prescribed by this Act, on any inherited property constituting the following, as of the commencement date of inheritance (if inheritance commences due to an adjudication of disappearance, it means the day on which such adjudication of disappearance is made; hereinafter the same shall apply) due to inheritance (including a bequest, a donation becoming effective due to the death of a donor (including a donation made by a donor who has died in the course of discharging his/her donated debts; hereinafter the same shall apply) and a divisional donation of inherited property to a special relative under
Article 1057-2 of the Civil Act; hereinafter the same shall apply):
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| 1. | Where a person who has established a domicile in the Republic of Korea or has maintained residency therein for not less than one year (hereinafter referred to as "resident") dies: all of a resident's inherited property (including property bequeathed by an ancestor and donated property becoming effective due to the death of an ancestor; hereinafter the same shall apply); |
| 2. | Where a person other than a resident (hereinafter referred to as a "non-resident") dies: all of a non-resident's inherited property in the Republic of Korea. |
| (2) | Necessary matters concerning domicile and residency, and the definition of "resident" and "non-resident", and other matters shall be prescribed by Presidential Decree. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 2 (Gift Tax Taxables) |
| (1) | Gift tax shall be levied, as prescribed by Presidential Decree, on any donated property constituting the following, as of the date of donation due to donation by any third person (excluding donation becoming effective due to the death of a donor; hereinafter the same shall apply): |
| 1. | Where a person to whom property is donated (hereinafter referred to as "donee") is a resident (including a non-profit corporation, the head office or main office of which is located in Korea; hereafter the same shall apply in this paragraph and
Articles 54 and
59): all property donated to the resident;
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| 2. | Where a donee is a non-resident (including a non-profit corporation, the head office or main office of which is not located in Korea; hereafter the same shall apply in this paragraph and
Articles 4 (2) and 6 (2) and (3)): all property donated to the non-resident that is in Korea.
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| (2) | When income tax under the
Income Tax Act and corporate tax under the
Corporate Tax Act are levied on the donee, with respect to donated property under paragraph (1), gift tax shall not be levied. In such cases, this shall also apply where income tax and corporate tax are exempted or reduced under the
Income Tax Act, the
Corporate Tax Act, or any other Act.
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| (3) | The term "donation" in this Act means a gratuitous transfer (including the transfer of property at a remarkably low price) of any tangible or intangible property having economic values to any third person in a direct or indirect manner, regardless of the title, form, purpose, etc. of the relevant act or transaction, or an increase of property values of any third person by donation. |
| (4) | Where inheritance tax or gift tax is deemed unlawfully reduced by indirect means via a third party, or by means of performing or making two or more acts or transactions, paragraph (3) shall be applied by deeming that such transactions are directly made by the interested party, or such acts or transactions are an ongoing single act or transaction in accordance with the relevant economic substance. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 3 (Who is Liable for Inheritance Tax) |
| (1) | With respect to inheritance tax levied under this Act, an heir (referring to an heir under
Articles 1000,
1001,
1003, and
1004 of the
Civil Act, including a person who renounces inheritance under
Article 1019 (1) of the same Act and a special relative under
Article 1057-2 of the same Act; hereinafter the same shall apply) or a person to whom a bequest is made (including a person who acquires property through donation becoming effective due to the death of a donor; hereinafter referred to as "legatee") is liable to pay inheritance tax according to the rate calculated, as prescribed by Presidential Decree, based on the inherited property received or to be received by the heir:
Provided, That where the special relative or legatee is a profit-making corporation, the profit-making corporation shall be exempted from paying inheritance tax.
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| (2) | The inherited property under paragraph (3) shall include the donated property the heir or legatee has received, among the donated property to be added to the inherited property under
Article 13.
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| (3) | Heirs or legatees are jointly and severally liable to pay inheritance tax under paragraph (1) within the limits of the property received or to be received by each heir or legatee. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 4 (Who is Liable for Gift Tax) |
| (1) | A donee is liable to pay gift tax pursuant to this Act:
Provided, That where the donee is a profit-making corporation, the profit-making corporation shall be exempted from paying gift tax, but where the profit-making corporation that is a holder of the title has been exempted from paying gift tax under
Article 45-2, the real owner (excluding a for-profit corporation) shall be liable to pay such gift tax.
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| (2) | Where a donee is a non-resident as of the date of donation, the donee is liable to pay gift tax only for the donated property in Korea. |
| (3) | For the purposes of paragraphs (1) and (2), when a donee is deemed incapable of paying gift tax in cases falling under
Articles 35 through 37, and
41-4, the donee shall be exempted from paying all or part of gift tax equivalent thereto.
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| (4) | Where a donee falls under any of the following cases, the donor is jointly and severally liable to pay gift tax payable by the donee:
Provided, That this shall not apply in cases falling under
Articles 35,
37 through
41,
41-3 through
41-5,
42 and
48 (limited to cases prescribed by Presidential Decree where a contributor is not responsible for the management of the relevant public-service corporation):
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| 1. | Where it is difficult to secure the tax claim due to the unknown domicile or residence; |
| 2. | Where it is difficult to secure the tax claim even though taking a disposition of default due to a defaulting tax and the donee is deemed incapable of paying gift tax. |
| (5) | In cases under paragraph (2) and
Article 45-2, the donor shall be liable to pay gift tax jointly with the donee even though the donee does not fall under any subparagraph of paragraph (4).
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| (6) | Where the head of the relevant tax office requires the donor to pay gift tax under paragraph (4), he/she shall notify the donor of the grounds therefor. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 5 (Location of Inherited Property, etc.) |
| (1) | The location of inherited property or donated property shall be the place decided according to the following classifications: |
| 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, investment shares, or debentures: the location of the head or main office of the corporation that has issued such stocks, investment shares, or debentures, or in which such stocks, investment shares, or debentures have been invested:
Provided, That in respect of stocks, investment shares, or debentures issued by a foreign corporation in Korea pursuant to local Acts, the location of the place of business of the financial institution handling such transactions;
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| 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 respect to trust property, other than a monetary trust, the location of the trusted property;
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| 8. | Financial property prescribed by Presidential Decree, other than subparagraph 7: the location of the place of business of the financial institution handling such property; |
| 9. | A claim on a loan: the location of the domicile of the debtor; |
| 10. | Tangible property or movables, other than those under 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 under subparagraphs 1 through 12: the location of his/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) | A decision on the location of property under 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 to Taxation) |
| (1) | Inheritance tax shall be levied by the head of the 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 the ancestor (referring to his/her residence if his/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 the tax office, etc. having jurisdiction over the place where the inherited property is located, and where the inherited property extends over jurisdiction of the heads of two or more tax offices, etc., inheritance tax shall be levied by the head of the tax office, etc. having jurisdiction over the place where the main property is located.
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| (2) | Gift tax shall be levied by the head of the tax office, etc. having jurisdiction over the place of the domicile of the donee (referring to his/her residence if his/her domicile does not exist or is unknown; hereafter the same shall apply in this paragraph):
Provided, That where a donee is a non-resident, or his/her domicile or residence is unknown, gift tax shall be levied by the head of the tax office, etc. having jurisdiction over the domicile of the donor.
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| (3) | Where the donee and the donor are both non-residents, or their domiciles and residences are unknown, gift tax shall be levied by the head of the tax office, etc. having jurisdiction over the place where the donated property is located. |
[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 (Scope of Inherited Property) |
| (1) | The inherited property stipulated under
Article 1 includes the property belonging to the ancestor, being all articles having economic value realizable in money and all
de facto or
de jure rights having property value.
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| (2) | Those exclusively belonging to the ancestor himself/herself that become extinct due to the death of the ancestor shall be excluded from inherited property pursuant to paragraph (1). |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| 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.
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| (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, etc. Deemed Inherited Property) |
Retirement grants, allowances, merit pay, pension, or others similar thereto payable to an ancestor that 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>
| 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;
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| 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;
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| 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;
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| 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/her duty, by applying
mutatis mutandis the
Labor Standards Act, etc.;
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| 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, etc.) |
| (1) | Where inheritance commences due to death in battle, or other death equivalent thereto, or death caused by an injury or disease incurred in the course of performing official duties in a war or others equivalent thereto, inheritance tax shall not be levied. |
| (2) | The scope of death equivalent to death in battle, and the scope of official duties equivalent to those in a war under paragraph (1) shall be prescribed Presidential Decree. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| 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;
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| 5. | Intra-company labor welfare fund pursuant to the Labor Welfare Fund Act, 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 stipulated under
Article 14 therefrom:
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| 1. | The value of property donated by an ancestor to his/her heir within ten years prior to the commencement date of inheritance; |
| 2. | The value of property donated by an ancestor to a person other than his/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).
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[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 14 (Public Imposts, etc. 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 of 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/her heir within ten years prior to the commencement date of inheritance, and donated debts owed by the ancestor to a person other than his/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: |
| 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 or debts secured as mortgages;
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| 3. | Public imposts and debts for business that are verified by books and records kept at the place of business in 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, etc. of Inheritance to Property Disposed of, etc. Prior to Commencement Date of Inheritance) |
| (1) | Where an ancestor has either disposed of his/her property or repaid his/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:
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| 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 institution prescribed by Presidential Decree, as prescribed by Presidential Decree, such debt shall be added to the taxable value of inherited property under
Article 13.
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| (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 Contributed to Public Service Corporation, etc. in Taxable Value of Inheritance) |
| (1) | The value of the inherited property, an ancestor or his/her heir contributes to a person operating a business for religious, charitable, academic or other public interests (hereinafter referred to as "public service corporation, etc.") by the reporting deadline stipulated under
Article 67 (where a public service corporation, etc. is incorporated by contributing the inherited property, and an inevitable ground exists otherwise, it refers to six months from the last day of the month to which the date such ground ceases to exist belongs) shall not be included in the taxable value of inherited property.
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| (2) | For the purpose of paragraph (1), where voting stocks or investment shares (hereafter referred to as "stocks, etc." in this Article,
Articles 48,
49, and
78 (4) and (7)) of a domestic corporation are contributed and the aggregate of the stocks, etc. to be contributed and any of the following stocks, etc. is in excess of 5/100 (10/100 in cases of contributions to public service corporations, etc. that meet standards prescribed by Presidential Decree, and undergo external audits pursuant to
Article 50 (3), open and use exclusive accounts pursuant to
Article 50-2 and provide public notice on their statement of accounts, etc. pursuant to
Article 50-3 (hereinafter "conscientious public service corporation, etc.")) of the total number of voting stocks issued by such domestic corporation or total amount of investment shares (hereafter referred to as "total number, etc. of issued stocks" in this Article,
Articles 48,
49, and
63 (3)), the excess value shall be added to the taxable value of inherited property:
Provided, That this shall not apply to cases prescribed by Presidential Decree where any public service corporation, etc. falls under the proviso to the main body of
Article 49 (1) (excluding its subparagraphs) and is not specially related to the enterprise group subject to the limitations on mutual investment under
Article 9 of the Monopoly Regulation and Fair Trade Act (hereinafter referred to as "enterprise group subject to the limitations on mutual investment"), and where the stocks, etc. of the domestic corporation that is not specially related to the contributors to such public service corporation, etc. are contributed to such public service corporation, etc.:
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| 1. | The stocks, etc. of a domestic corporation that are the same as those a public service corporation, etc. concerned owns as at the time of contributions; |
| 2. | The stocks, etc. of a domestic corporation that are the same as those contributed by investors and persons specially related thereto to a public service corporation, etc. other than the public service corporation, etc. concerned. |
| (3) | Where property not included in the taxable value of inherited property pursuant to paragraph (1), and all or part of the gains accruing from such property belong to the heir and a person in a special relationship with the heir, the value prescribed by Presidential Decree shall be deemed to be inherited by the heir and a person in a special relationship with the heir, and as such they shall be included in the taxable value of inherited property and inheritance tax shall be promptly levied. |
| (4) | The scope of a public service corporation, etc., the method of contributing inherited property, the method of calculating the value in excess of 5/100 (10/100 in cases of a conscientious public service corporation, etc.) of the total number, etc. of issued stocks, decision method on a conscientious public service corporation, etc., the scope of public service corporations, etc. not specially related to the enterprise group subject to limitations on mutual investment, the scope of domestic corporations not specially related to the contributors to the relevant public service corporation, etc., the scope of persons specially related to the contributors, the scope of persons specially related to the heir, provided for in paragraphs (1) through (3) and other necessary matters shall be prescribed by Presidential Decree. |
[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/her heir contributes to a public service corporation, etc. as a trust for public interest pursuant to
Article 65 of the Trust Act, through a trust for religious, charitable, academic or other public interest (hereafter referred to as "trust for public interest" in this Article) shall not be included in the taxable value of inherited property.
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| (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 commences 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) | In any of the following cases where inheritance commences due to the death of a resident, the following amount shall be deducted from the taxable value of inherited property: |
| 1. | Succession (hereinafter referred to as "inheritance of a family business") to a family business (referring to a small or medium enterprise prescribed by Presidential Decree that has been continuously run by the ancestor for ten or more years; hereinafter the same shall apply): The larger of the amounts classified under the following items: |
| (a) | An amount equivalent to 40/100 of the value of property of the inherited family business:
Provided, That where such amount exceeds six billion won, six billion won shall be the ceiling; where the ancestor has continuously run the business for 15 or more years, the ceiling shall be eight billion won; and where the ancestor has continuously run the business for 20 or more years, the ceiling shall be ten billion won;
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| (b) | 200 million won:
Provided, That if the value of property of the inherited family business is less than 200 million won, the amount shall be equivalent to the value of property of the inherited family business;
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| 2. | Succession to a farming business (including livestock raising, fishing, and forest management; hereafter the same shall apply in this Article): The value of the inherited farming business (where the value exceeds 200 million won, 200 million won shall be the ceiling). |
| (3) | 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.
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| (4) | For the purposes of paragraph (2), the scope of inheritance of a family business and farming business, such as requirements of an ancestor and an heir, the method of application in cases of inheriting stocks, etc., and other necessary matters shall be prescribed by Presidential Decree. |
| (5) | Where an ancestor who has taken the deduction under the subparagraphs of paragraph (1) falls under any of the following within ten years (five years in cases under subparagraph 2) from the commencement date of inheritance without any justifiable ground prescribed by Presidential Decree, inheritance tax shall be levied by including the deducted amount under paragraph (2) in the taxable value of inherited property as at the time of the commencement of inheritance: |
| 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 not less than 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 under
Article 22 (2);
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| 2. | Where the ancestor either disposes of the inherited property used in 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. |
| (6) | 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. |
| (7) | For the purposes of paragraph (5), necessary matters concerning the scope of property for a family business, the method of calculating the disposal ratio of property for a family business, the method of determining decrease in the share, the method of including such deducted amount, etc. shall be prescribed by Presidential Decree. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 19 (Inheritance Deductions for Surviving Spouse) |
| (1) | The actual amount inherited by a surviving spouse due to the death of a resident shall be deducted from the taxable value of inherited property:
Provided, That the ceiling of such amount shall be calculated by multiplying the value of the inherited property (excluding property bequeathed, etc. to a legatee who is not an heir, but including property stipulated under
Article 13 (1) 1, among the inherited property) by the spouse's legal portion in inheritance under
Article 1009 of the Civil Act (where a co-heir has renounced his/her inheritance, it means the legal portion in inheritance the spouse would be entitled to succeed if the co-heir would have not renounced his/her inheritance), less the tax basis (referring to the tax basis under
Article 55 (1)) on the property donated to the spouse (where such amount exceeds three billion won, the ceiling shall be three billion won), among donated property added to the inherited property pursuant to
Article 13.
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| (2) | The inheritance deduction for a surviving spouse under 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 the same shall apply in this Article) by the date on which six months elapse from the following day of the deadline to report a tax basis of inherited property under
Article 67 (hereafter referred to as "division deadline of the inherited property of a spouse" in this Article):
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.
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| (3) | Notwithstanding paragraph (2), if the inherited property of a spouse is divided and a report thereon is filed by no later than the date on which six months elapse from the date immediately following the division deadline of the inherited property of a spouse (where the tax basis and amount of tax under
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) since it is not possible to divide the inherited property of a spouse by no later than the division deadline of such property due to any inevitable ground prescribed by Presidential Decree, 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.
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| (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 under paragraph (1), 500 million won shall be deducted, notwithstanding paragraph (2). |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 20 (Other Personal Deductions) |
| (1) | Where inheritance commences due to the death of a resident, the relevant amount shall be deducted from the taxable value of inherited property in any of the followings cases. In such cases, when a person falling under subparagraph 1 falls under subparagraph 2, or when a person falling under subparagraph 4 falls under subparagraphs 1 through 3 or
Article 19, such respective amounts shall be aggregated and deducted:
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| 1. | With respect to one child, 30 million won; |
| 2. | With respect to an heir (excluding his/her spouse) or a minor among the ancestor's cohabiting family members, an amount calculated by multiplying five million won by the number of years until the attainment of 20 years of age; |
| 3. | With respect to an heir (excluding his/her spouse) or a person who is 60 years of age or older among the ancestor's cohabiting family members, 30 million won; |
| 4. | With respect to an heir or a disabled person, among the ancestor's cohabiting family members, an amount calculated by multiplying five million won by the number of years until the attainment of 75 years of age. |
| (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 Deductions of Financial Property) |
| (1) | Where the value of financial property prescribed by Presidential Decree (hereafter referred to as "value of net financial property" in this Article) less a financial debt prescribed by Presidential Decree remains among the value of the inherited property as of 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 provided for in paragraph (1) does not include stocks or investment shares possessed by the largest shareholder or largest investor prescribed by Presidential Decree. |
[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 Deduction of House Living Together) |
| (1) | Where the house in which an ancestor and his/her heir have been living together continuously for not less than ten years counting retroactively from the commencement date of inheritance meets all of the following requirements when inheritance commences due to the death of a resident, the amount equivalent to 40/100 of the value of the house (including the value of the land incidental to the house) shall be deducted from the taxable value of inherited property:
Provided, That the ceiling of amount to be deducted shall be 500 million won:
|
| 1. | The house shall be one house for one household under
Article 89 (1) 3 of the Income Tax Act (including an expensive house under the same subparagraph) as of the commencement date of inheritance;
|
| 2. | The house shall be inherited by the heir who is not a homeowner as of the commencement date of inheritance. |
| (2) | Where an ancestor and his/her heir have not been able to live together due to a reason prescribed by Presidential Decree when applying paragraph (1), they are deemed to have been 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. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 24 (Cap in Application of Deductions) |
The ceiling of amounts to be deducted pursuant to
Articles 18 through 23 and
23-2 shall be the value minus any of the following values from the taxable value of inherited property:
| 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 under
Article 13 (where any amount is deducted under
Article 53 (1) 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:
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 27 (Premium Taxation on Generation-Skipping Inheritance) |
Where an heir or legatee is a lineal descent, other than a son or daughter, of the ancestor, an amount equivalent to 30/100 of the amount computed by multiplying the rate of the property the heir or legatee is received or to be received in inherited property (including the donated property that is added to the inherited property under
Article 13 and received by the heir or legatee) 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.
[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 this shall not apply where gift tax is not levied on the donated property added to the taxable value of inherited property due to the expiry of the period stipulated under
Article 26-2 (1) 4 or (4) of the Framework Act on National Taxes.
|
| (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 the same shall apply in this paragraph) 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 the Acts and subordinate statutes 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 ten 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:
|
| (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 (Scope of Donated Property) |
| (1) | Donated property stipulated under
Article 2 includes property belonging to the donee that is all articles having economic value realizable in money, and all
de facto or
de jure rights having property value.
<Amended by Act No. 9916, Jan. 1, 2010>
|
| (2) | Deleted.
<by Act No. 5582, Dec. 28, 1998>
|
| (3) | After the commencement of inheritance, with respect to inherited property, after the shares in inheritance of each heir are determined and registration, recording, or entry of a change of holders is complete (hereinafter referred to as "registration, etc."), by means of registration, etc., then, with respect to such inherited property, the value of property being received by a specific heir in excess of the original shares in inheritance, as a result of dividing such inherited property by the co-heirs through consultation, shall be included in the property received as a donation from the heir whose shares in inheritance decreased, due to such division:
Provided, That this shall not apply where property is acquired in excess of the original portion of inheritance by a re-division by the reporting deadline of the tax basis of inherited property under
Article 67, and where any justifiable ground prescribed by Presidential Decree exists, such as invalidity, revocation, etc. of the re-division of the originally inherited property.
<Amended by Act No. 5582, Dec. 28, 1998; Act No. 9916, Jan. 1, 2010>
|
| (4) | Where donated property (excluding money) after being donated is returned by the reporting deadline under
Article 68 pursuant to agreement between the relevant parties, it shall be deemed that such donation of property had not been made originally:
Provided, That this shall not apply where the tax basis and amount of tax is determined pursuant to
Article 76 prior to the return of property.
<Amended by Act No. 9916, Jan. 1, 2010>
|
| (5) | Where the donee returns the donated property (excluding money) to the donor or re-donates such property to the donor within three months after the reporting deadline under
Article 68 expires, gift tax shall not be levied on such returned or re-donated property.
<Amended by Act No. 9916, Jan. 1, 2010>
|
SECTION 2 Calculation of Value of Donated Property
| Article 32 Deleted. <by Act No. 7010, Dec. 30, 2003> |
| Article 33 (Donation of Trust Benefits) |
| (1) | Where a truster has designated a third person as a beneficiary to receive all or part of trust benefits, by means of a trust contract, the value of a right to receive the trust benefits shall be deemed the value of the property donated to the beneficiary in any of the following cases: In such cases, the value of the donated property shall be calculated by the method prescribed by Presidential Decree if the principal and profits are received over several occasions: |
| 1. | Where the trust contract requires the beneficiary to hold the right to receive benefits accruing from the principal: when the beneficiary receives such capital; |
| 2. | Where the trust contract requires the beneficiary to hold the right to receive benefits accruing from the profits: when the beneficiary receives such profits. |
| (2) | Where a beneficiary is not specified or none exists in cases under paragraph (1), the truster or his/her heir shall be deemed the beneficiary, and when a beneficiary is either specified or becomes existent, it shall be deemed that a new trust exists. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 34 (Donation of Insurance Proceeds) |
| (1) | Where the beneficiary of insurance proceeds is different from the payer of insurance premiums on a life insurance or non-life insurance policy, the amount equivalent to the insurance proceeds shall be deemed the value of property donated to the beneficiary of insurance proceeds in cases of an occurrence of an insurance accident, and where the beneficiary of the insurance proceeds has paid the insurance premiums by receiving a donation of property from a third person for the period of insurance policy, the amount obtained by deducting the paid amount of relevant insurance premiums from the amount equivalent to the insurance proceeds in return for the paid amount of such insurance premiums shall be deemed the value of property donated to the beneficiary of insurance proceeds. |
| (2) | Paragraph (1) shall not apply if insurance proceeds are deemed inherited property pursuant to
Article 8.
|
| (3) | For the purposes of paragraph (1), where a beneficiary of insurance proceeds pays a portion of insurance premiums, only an amount equivalent to the rate of the insurance premiums paid by a person other than the beneficiary of the insurance proceeds in the total amount of the paid insurance premiums from the insurance proceeds shall be deemed the value of the donated property. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 35 (Donation, etc. of Profits from Transfer at Low or High Price) |
| (1) | Where any of the following persons transfers or takes over the relevant property, an amount equivalent to the difference between the original cost and the market price and equivalent to profits prescribed by Presidential Decree shall be deemed the value of donated property: |
| 1. | Where a person takes over property from a third person at a price lower than the market price: the transferee of such property; |
| 2. | Where a person transfers property to a third person at a price higher than the market price: the transferor of such property. |
| (2) | For the purposes of paragraph (1), if the property has been transferred or taken over between persons other than those in a special relationship at a price significantly lower or higher than the marker price without any justifiable reasons in the standard practices of transactions, the amount equivalent to profits prescribed by Presidential Decree shall be deemed the value of property donated to the person who has obtained such profits by presuming that the amount equivalent to the difference between the original cost and the market price has been donated. |
| (3) | Persons in a special relationship under paragraph (2) and the scope of significantly lower or higher price shall be prescribed by Presidential Decree. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 36 (Donation Following Exemption, etc. from Financial Obligation) |
Where a person has been exempted from his/her financial obligation from a creditor, or received from a third party an acceptance or performance of financial obligation, the amount equivalent to the profits accruing from such exemption, acceptance, or performance (referring to an amount minus an indemnity, if such indemnity is paid) shall be deemed the value of property donated to a person who has obtained such profits.
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 37 (Donation of Profits Following Gratuitous Use of Real Estate) |
| (1) | Where a person has obtained profits prescribed by Presidential Decree by gratuitously using the real estate of a person in a special relationship (excluding the housing in which the person resides together with the owner of the relevant real estate and the land incidental thereto), an amount equivalent to such profits shall be deemed the value of property donated to the gratuitous user of the real estate.
<Amended by Act No. 9916, Jan. 1, 2010>
|
| (2) | Deleted.
<by Act No. 6780, Dec. 18, 2002>
|
| (3) | For the purposes of paragraph (1), the scope of persons in a special relationship, timing of donation, method of calculating profits accruing from the gratuitous use of real estate, and other necessary matters shall be prescribed by Presidential Decree.
<Amended by Act No. 9916, Jan. 1, 2010>
|
| Article 38 (Donation of Profits Following Merger) |
| (1) | Where a large shareholder prescribed by Presidential Decree who is a shareholder (including an investor; hereafter the same shall apply in this Article) of a corporation to be extinguished or absorbed or of a newly established or surviving corporation (hereinafter referred to as "merged corporate party") due to a merger of corporations in a special relationship prescribed by Presidential Decree (including a merger through division; hereafter in this Article the same shall apply) has obtained profits prescribed by Presidential Decree, an amount equivalent to such profits shall be deemed the value of property donated to a person who has obtained such profits as at the date of such merger (referring to the date on which a merger registration is made). |
| (2) | The amount equivalent to the profits under paragraph (1) shall be the difference of the values appraised for the stocks or equity shares possessed by shareholders of the merged corporate party immediately before and after the merger, as prescribed by Presidential Decree. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 39 (Donation of Profits Following Increase of Capital) |
| (1) | Where any of the following profits is obtained as a corporation issues new stocks or equity shares (hereafter in this Article, referred to as "new stocks") for the purpose of increasing its capital (including amount of investment; hereafter in this Article and
Article 39-2, the same shall apply), the amount equivalent to such profits shall be deemed the value of property donated to a person who has obtained such profits:
|
| 1. | Where new stocks are issued at a price lower than the market price (referring to the price assessed under
Articles 60 and
63; hereafter the same shall apply in this paragraph): any of the following profits:
|
| (a) | Where a shareholder of the relevant corporation (including an investor; hereafter the same shall apply in this Article) has renounced all or part of his/her right to receive new stocks, and such renounced new stocks (hereafter referred to as "forfeited stocks" in this paragraph) are allocated (excluding cases where a listed stock corporation under the
Financial Investment Services and Capital Markets Act allocates such new stocks through public offering stipulated under
Article 9 (7) of the same Act; hereafter the same shall apply in this paragraph): profits acquired by those who received allocation of relevant forfeited stocks, by obtaining such allocation of forfeited stocks;
|
| (b) | Where a shareholder of the relevant corporation has renounced all or part of his/her right to receive new stocks, and such forfeited stocks are not allocated: profits acquired by those in a special relationship with a person renouncing his/her right to receive the relevant new stocks by receiving the new stocks; |
| (c) | Profits acquired by those who are not the shareholders of the relevant corporation by directly obtaining an allocation of new stocks from the relevant corporation (including cases where they directly receive or acquire the relevant new stocks from an underwriter under the
Financial Investment Services and Capital Markets Act; hereafter the same shall apply in this paragraph), or profits acquired by the shareholders of the relevant corporation by directly obtaining the allocation of new stocks in excess of the number entitled to be allocated under equal conditions in proportion to the number of stocks owned by him/her;
|
| 2. | Where new stocks are issued at a price higher than the market price, any of the following profits: |
| (a) | Where a shareholder of the relevant corporation has renounced all or part of his/her right to receive new stocks, and such forfeited stocks are allocated: profits acquired by the person renouncing the receipt of new stocks who is in a special relationship with a person to whom such forfeited stocks have been assigned, by accepting such forfeited stocks; |
| (b) | Where a shareholder of the relevant corporation has renounced all or part of his/her right to receive new stocks, and such forfeited stocks are not allocated: profits acquired by the person renouncing the receipt of new stocks who is specially related to him/her, by accepting the relevant new stocks; |
| (c) | Where those who are not the shareholders of the relevant corporation have directly obtained an allocation of new stocks from the relevant corporation, or the shareholders of relevant corporation have directly obtained an allocation of new stocks and accepted them in excess of the number entitled to be allocated under equal conditions in proportion to the number of stocks they own: profits acquired by the person in a special relationship with them; |
| 3. | Where the methods and profits are similar to those stipulated in subparagraph 1 or 2: profits acquired directly or indirectly from the person in a special relationship, by accepting or not accepting the new stocks or forfeited stocks. |
| (2) | For the purposes of paragraph (1) 1, where not less than two minority shareholders have renounced a right to receive the allocation of new stocks or have obtained an allocation of new stocks short of the number entitled to be allocated under equal conditions in proportion to the number of their possessed stocks (including cases where new stocks are not allocated), the profits shall be calculated by deeming that one of the minority shareholders has renounced or obtained the allocation insufficiently. |
| (3) | Persons in a special relationship under paragraphs (1) and (2), scope of minority shareholders, method of calculation profits and other necessary matters shall be prescribed by Presidential Decree. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 39-2 (Donation of Profits Following Decrease of Capital) |
| (1) | Where a corporation retires the stocks or equity shares of some shareholders in order to decrease its capital and the large shareholders specially related to such some shareholders have acquired profits, the amount equivalent to such profits shall be deemed the value of property donated to the relevant large shareholders. |
| (2) | The scope of large shareholders in a special relationship under paragraph (1) and the method of calculating profits shall be prescribed by Presidential Decree. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 39-3 (Donation of Profits Following Investment in Kind) |
| (1) | Where a person acquires any of the following profits by taking over the stocks or equity shares issued by a corporation (hereafter in this Article, referred to as "stocks, etc.") through investment in kind, the amount equivalent to such profits shall be deemed the value of property donated to the person who has acquired such profits: |
| 1. | Profits acquired by the investor in kind by acquiring the stocks etc. at a value lower than market value (referring to the value assessed under
Articles 60 and
63; hereafter in this Article, the same shall apply):
|
| 2. | Profits acquired by the shareholders other than the investors in kind in a special relationship, or the investors by acquiring the stocks etc. at a value higher than market value. |
| (2) | Matters necessary for the method of calculating profits referred to in paragraph (1), and the scope etc. of shareholders and investors in a special relationship shall be prescribed by Presidential Decree. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 40 (Donation of Profits Following Conversion of Convertible Bonds etc. into Stocks, etc.) |
| (1) | Where any of the following profits has been acquired by converting into or exchanging with convertible bonds, bonds with warrants (referring to company warrants, if they are separated) and other stocks, or by accepting, acquiring or transferring bonds that can be converted into stocks (hereafter in this Article, referred to as "convertible bonds, etc."), or by converting into or exchanging with the stocks with the convertible bonds, etc. or accepting the stocks, the amount equivalent to such profits shall be deemed the value of property donated to the person who has acquired such profits: |
| 1. | Any of the following profits acquired by accepting or acquiring convertible bonds, etc.: |
| (a) | Profits accruing from the acquisition of the convertible bonds, etc. from the person in a special relationship at a price lower than the market price; |
| (b) | Profits acquired by the largest shareholder of the corporation issuing the convertible bonds, etc. (excluding cases where a listed stock corporation under the
Financial Investment Services and Capital Markets Act allocates such new stocks through public offering stipulated under
Article 9 (7) of the same Act; hereafter the same shall apply in this paragraph) or other shareholders in a special relationship with the largest shareholder, by accepting or acquiring the convertible bonds, etc. from the relevant corporation at a price lower than the market price and in excess of the number entitled to be allocated under equal conditions in proportion to the number of stocks they possessed (including cases where he/she directly receives or acquires the relevant new stocks from an underwriter under
Article 9 (12) of the Financial Investment Services and Capital Markets Act; hereafter referred to as "acceptance, etc." in this paragraph);
|
| (c) | Profits acquired by non-shareholders of the corporation issuing the convertible bonds, etc. who are in a special relationship with the largest shareholder of the relevant corporation, by accepting, etc. the convertible bonds, etc. from the relevant corporation at a price lower than the market price; |
| 2. | Any of the following profits acquired by converting into or exchanging with the stocks or accepting the stocks with the convertible bonds, etc., or by transferring the convertible bonds, etc.: |
| (a) | Where the convertible bonds, etc. have been acquired from the person in a special relationship, the profits acquired 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 referred to as "conversion value, etc." in this paragraph); |
| (b) | Where the largest shareholder of the corporation issuing the convertible bonds, etc. or other shareholders in a special relationship with the largest shareholder have accepted, etc. the convertible bonds, etc. from the relevant corporation in excess of the number entitled to be allocated under equal conditions in proportion to the number of stocks they possessed, the profits acquired 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 in a special relationship with the largest shareholder has accepted, etc. the convertible bonds, etc. from the relevant corporation, the profits acquired 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 acquired by the person specially related to those to whom the relevant stocks are delivered, as the value of stocks delivered against the convertible bonds, etc. becomes lower than the conversion value, etc.; |
| (e) | Where the convertible bonds, etc. are transferred to those who are specially related, the profits acquired as the transferred value exceeds the market price; |
| 3. | Where the methods and profits are similar to those stipulated in subparagraph 1 or 2, the profits acquired directly or indirectly from the person who is specially related, by making the transaction of the convertible bonds, etc. or by converting the convertible bonds, etc. into the stocks. |
| (2) | Persons in a special relationship under paragraph (1), the largest shareholder, persons in a special relationship with the largest shareholder, the value of stocks received or to be received, the method of calculating profits, and other necessary matters shall be prescribed by Presidential Decree. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 41 (Donation of Profits from Transactions with Specified Corporation) |
| (1) | Where any person in a special relationship with the shareholders or investors of a corporation that has deficits or under business suspension or closure (hereafter in this Article, referred to as "specified corporation") makes any of the following transactions with the specified corporation, and the shareholders or investors of the specified corporation have acquired the profits, the amount equivalent to such profits shall be deemed the value of property donated to the shareholders or investors of such specified corporation: |
| 1. | Transactions in which property or services are provided without consideration; |
| 2. | Transactions in which property or services are transferred or provided at significantly low prices in light of the standard practices of transactions; |
| 3. | Transactions in which property or services are transferred or received at significantly high prices in light of the standard practices of transactions; |
| 4. | Other transactions similar to those described in subparagraphs 1 through 3 and prescribed by Presidential Decree. |
| (2) | The specified corporations, persons in a special relationship, and method of calculating profits acquired by the shareholders or investors of the specified corporation, and the scope of significantly low or high prices referred to in paragraph (1) shall be prescribed by Presidential Decree. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 41-2 Deleted. <by Act No. 7010, Dec. 30, 2003> |
| Article 41-3 (Donation of Profits from Listing, etc. of Stocks or Investment Shares) |
| (1) | When a person in a special relationship with any of the following persons (hereafter referred to as "largest shareholder, etc." in this Article and
Article 41-5) who are deemed to be in a position capable of using undisclosed information on the management, etc. of a corporation has received a donation of stocks or investment shares of the corporation (hereafter in this Article and
Article 41-5, referred to as "stocks, etc.") or acquired them with consideration, and the person has earned profits at equivalent to or above standards prescribed by Presidential Decree, by exceeding the original taxable value of donated property (excluding cases of acquiring the stocks, etc. with the donated property; hereafter in
Article 41-5, the same shall apply), or exceeding the acquired value, an amount equivalent to such profits shall be deemed the value of property donated to the person who has acquired such profits; which is the case where the value of relevant stocks, etc. has been increased as they are listed on the Korea Exchange pursuant to the
Financial Investment Services and Capital Markets Act (referring to listing on the security exchanges) within five years from the date of acquisition where he/she has acquired the stocks, etc. of the relevant corporation from a person other than the largest shareholder, etc. with the donated property (referring to the property donated by the largest shareholder within three years retroactively from the date of acquiring the stocks, etc. with consideration; hereafter in this Article and
Article 41-5, the same shall apply). In such cases, where profits are verified to be accrued from the practical growth of corporate value that is substantiated by documents prescribed by Presidential Decree, such as a financial report, etc. filed by a taxpayer, such profits shall not be included in the value of the donated property:
|
| 1. | The largest shareholder or the largest investor stipulated under
Article 22 (2);
|
| 2. | A person prescribed by Presidential Decree, who owns not less than 25/100 of the total number of stocks issued or the total amount of investment by a domestic corporation. |
| (2) | The profits under paragraph (1) shall be calculated based on the date on which three months elapse from the date on which the relevant stocks are listed (referring to the date of death, donation or transfer if a person who owns the stocks, etc. dies, donates or transfers the stocks, etc. within three months from the listing day; hereafter referred to as "adjustment base date" in this Article and Article 68). |
| (3) | In respect of any person who has acquired the profits under paragraph (1), the tax basis and amount of gift tax shall be adjusted by adding the relevant profits to the original taxable value of donated property (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 of the adjustment base date is smaller than the original taxable value of donated property 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 at the time that donation is made) may be refunded.
|
| (5) | For the purposes of paragraph (1), where the acquisition of the stocks, etc. with the donated property is not evident since the donated property and other property are mixed, it shall be presumed that the relevant stocks, etc. have been acquired with the relevant 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. |
| (6) | For the purposes of paragraph (1), the acquisition of stocks, etc. shall include the acquisition of new stocks that have been subscribed and allocated as a corporation issues new stocks in order to increase its capital (including the amount of investment). |
| (7) | Where convertible bonds that can be converted into stocks, etc. and other bonds prescribed by Presidential Decree (hereafter referred to as "convertible bond, etc." in this paragraph) are donated or acquired with consideration (including cases of direct subscription and acquisition of the convertible bonds, etc. from issuing corporations) and the convertible bonds, etc. are converted into the stocks, etc. within a period stipulated under paragraph (1) (referring to five years), such converted stocks, etc. shall be deemed donated or acquired at the time the convertible bonds, etc. are donated or acquired, and accordingly paragraphs (1) through (5) shall apply thereto. In such cases, where the convertible bonds, etc. are not converted into the stocks, etc. by the adjustment base date, such convertible bonds, etc. shall be deemed to be converted into the stocks, etc. on the adjustment base date and paragraphs (1) through (5) shall apply thereto, and where the convertible bonds, etc. are not converted into the stocks, etc. by the maturity date of convertible bonds, etc., the amount of gift tax levied based on the adjustment base date shall be refunded. |
| (8) | Matters necessary for the scope, etc. of persons in a special relationship under paragraph (1) shall be prescribed by Presidential Decree. |
| (9) |
Article 42 (6) shall apply
mutatis mutandis to donations under paragraph (1).
|
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 41-4 (Donation of Profits Following Gratuitous Loan, etc. of Money) |
| (1) | Where a person has a loan of not less than 100 million won without consideration or at an interest rate lower than the appropriate interest rate from any specially-related person, the amount under the following classifications shall be deemed the value of property donated to the person who has loaned such money at the date when such money is loaned. In such cases, where the loan period is not specified, such loan period shall be deemed one year and where the loan period is not less than one year, new loan shall be deemed to have been made each year on the date immediately following that on which one year expires and then the relevant amount shall be calculated: |
| 1. | Loan of money without consideration: an amount obtained by multiplying the loaned money by the appropriate interest rate; |
| 2. | Loan of money at an interest rate lower than the appropriate interest rate: an amount obtained by deducting an amount equivalent to the amount actually paid as interest from the amount obtained by multiplying the loaned amount by the appropriate interest rate. |
| (2) | The scope of a specially-related person under paragraph (1), the method of calculating money of not less than 100 million won, the appropriate interest rate and other necessary matters shall be prescribed by Presidential Decree. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 41-5 (Donations of Profits, Such as Listing, etc. Due to Merger) |
| (1) | Where a person specially related with the largest shareholder, etc. has received the donation of the stocks, etc. of the relevant corporation, or acquired them with consideration from the largest shareholder, etc., or where the person has acquired, with the donated property, the stocks, etc. of the relevant corporation from a person other than the largest shareholder, etc., or acquired the stocks, etc. of another corporation, and if the relevant corporation or another corporation has been merged with the specially-related, listed stock corporation within five years from the date on which the person received the donation or acquired the stocks, etc. and thus their values have been increased, and where the person having received the donation of relevant stocks, etc. or acquired them with consideration has gained the profits at equivalent to or above standards prescribed by Presidential Decree exceeding the original taxable value of donated property or the original value of acquisition, an amount equivalent to the profits shall be deemed the value of the property donated to the person who has acquired such profits. |
| (2) | The scopes of a specially-related person, of another corporation, and of a specially-related, listed stock corporation under paragraph (1) shall be prescribed by Presidential Decree. |
| (3) |
Article 41-3 (2) through (7) shall apply
mutatis mutandis to the donation of profits, such as the listing, etc., due to a merger under paragraphs (1) and (2). In such cases, the term "listing date" shall be deemed "registration date of merger".
|
| (4) |
Article 42 (6) shall apply
mutatis mutandis to donations under paragraph (1).
|
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 42 (Donations etc. of other Profits) |
| (1) | Where a person obtains any of the following profits at equivalent to or above standards prescribed by Presidential Decree by any means other than donations under
Articles 33 through 39,
39-2,
39-3,
40,
41,
41-3 through 41-5,
44 and
45, the profits shall be deemed the value of property donated to the person who has acquired such profits:
|
| 1. | Profits acquired by using third person's property worthy of 100 million won or more (excluding immovable and money; hereafter in this subparagraph and paragraph (2), the same shall apply) without consideration or at a price lower than the market price (referring to the value assessed pursuant to Chapter IV; hereinafter the same shall apply) or by allowing a third person to use the property worthy of 100 million won at a price higher than the market price. In such cases, the relevant profits shall be the difference between the market price and the price actually paid or received; |
| 2. | Profits acquired by receiving third person's services (limited to those worthy of the paid price of 10 million won or more that is normal among many and unspecified persons: hereafter in this subparagraph and paragraph (2), the same shall apply) without consideration or at a price lower than the market price, or by providing services to a third person at a price higher than the market price. In such cases, the relevant profits shall be the difference between the market price and the price actually paid or received; |
| 3. | Profits acquired from the transaction of increasing or decreasing the capital of a corporation (including the amount of investment), such as the investment, reduction of capital, merger (including merger through division: hereafter in this Article, the same shall apply), division, conversion, acceptance, exchange of stocks with convertible bonds etc. under
Article 40 (1) (hereafter in this Article, referred to as "stock conversion, etc."), or profits acquired from a change in shares owned or its value due to the transfer or takeover of business, exchange of business, organizational changes, etc. of a corporation. In such cases, the relevant profits shall be the amount obtained by deducting the value of stock conversion, etc. from the stock prices at the time of stock exchange etc. in cases of stock exchange, and shall be the assessment difference of relevant property before or after the change in shares owned or its value in cases other than the stock exchange, etc.
|
| (2) | For the purposes of paragraph (1) 1 and 2, if the period of using property or period of providing services is not specified, the said period shall be one year, and where the said period is one year or more, the property shall be deemed to have been newly used or the services have been newly provided each year on the date immediately following that on which one year elapses. |
| (3) | Paragraph (1) shall not apply to any transaction between persons other than specially-related persons, where a reasonable ground is deemed to exist in light of transaction practices. |
| (4) | Where a person prescribed by Presidential Decree, such as minors etc., has acquired property due to any of the following reasons, and obtains profits at equivalent to or above standards prescribed by Presidential Decree that accrue from the increase of the value of such property due to grounds prescribed by Presidential Decree, such as the execution of a development project, changes in the form and quality, partition of co-owned property, authorization or license of business, listing of stocks or investment shares, merger, etc. (hereafter in this Article, referred to as "grounds for increasing a property value") within five years from the date when the person has acquired such property, the relevant profits shall be deemed the value of property donated to the person who has acquired such profits: |
| 1. | Where a person receives the donation of property from a third person; |
| 2. | Where a person receives the unpublished internal information on the management, etc. of a corporation from a specially-related person, and then acquires property related with such information with consideration; |
| 3. | Where a person acquires property with funds borrowed from a specially-related person or funds borrowed with security of the property of a specially-related person. |
| (5) | Profits under paragraph (4) shall be the amount calculated, as prescribed by Presidential Decree by taking into account the value of relevant property as of the date on which a ground for increasing property values occurs, acquisition value (referring to the taxable value of donated property in cases of donations), normal appreciation in value, contribution to appreciation in value by the property acquirer, and other aspects. In such cases, if the relevant property has been transferred before the date on which a cause for increasing property value occurs, the date of such transfer shall be deemed the date on which a cause for increasing property values occurs. |
| (6) | If inheritance tax or gift tax is deemed to have been reduced by fraudulent or other illegal means in applying paragraph (4), the same provisions shall apply to donations among persons other than those in a special relationship. In such cases, paragraph (4) concerning a period shall be deemed to be nonexistent. |
| (7) | For the purposes of paragraphs (1), (3), (4) and (6), necessary matters concerning the scope of property worthy of 100 million won or more, scope of a specially-related person, method of calculating the assessment difference of the relevant asset before and after changes in the shares owned and its value, and value of stocks as at the time of conversion into stocks, etc. shall be prescribed by Presidential Decree. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 43 Deleted. <by Act No. 5582, Dec. 28, 1998> |
SECTION 2-2 Presumption and Legal Fiction of Donation
| Article 44 (Presumption of Donation of Property Transferred to Spouse etc.) |
| (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 the person in a special relationship prescribed by Presidential Decree (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 the amount of tax assessed under 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 received the donation.
|
| (3) | Paragraphs (1) and (2) shall not apply if the relevant property falls under any of the following subparagraphs: |
| 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 sentence 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, etc. to Acquire Property) |
| (1) | In cases prescribed by Presidential Decree where it is difficult to recognize that a person has acquired the property for himself/herself in view of his/her occupation, age, income, property status, etc., funds used to acquire the relevant property shall be deemed the value of property donated to the acquiror of the relevant property by presuming that the acquiror of such property has received the donation of the said funds when the acquiror has acquired such property. |
| (2) | In cases prescribed by Presidential Decree where it is difficult to recognize that a person has repaid debts (including partial repayment; the same shall apply hereafter in this paragraph) for himself/herself in view of his/her occupation, age, income, property status, etc., the funds used to repay debts shall be deemed the value of property donated to the debtor by presuming that the debtor has received the donation of the said funds when the debtor has repaid such debts. |
| (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. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 45-2 (Legal Fiction as Donation of Title Trust Property) |
| (1) | Where the actual owner of any property requiring registration, etc. in the transfer or exercise of the rights thereto (excluding land and buildings: hereafter in this Article, the same shall apply) is different from the title holder of the property, the title holder shall be deemed to have received the donation of the value of such property from the actual owner as of the date on which registration etc. has been made in the name of the title holder (where the relevant property requires a transfer of the title, referring to the date immediately following the last day of the year immediately following that in which the acquisition date of ownership falls), notwithstanding
Article 14 of the Framework Act on National Taxes:
Provided, That this shall not apply to any of the following cases:
|
| 1. | Where registration, etc. of property has been made in the name of a third person, or the transfer of title in the name the actual owner who has acquired the ownership has not been made without intention to evade taxes; |
| 2. | Where the titles of stocks or investment shares (hereafter referred to as "stocks, etc." in this Article) that have been entered on the shareholder rosters or employee rosters in the name of a third person or transferred to a third person, pursuant to a trust or an agreement before January 1, 1997 have been transferred to the actual owner by December 31, 1998 (hereafter in this Article, referred to as "grace period"):
Provided, That this shall not apply where the titles of stocks and investment shares are transferred to the person in a special relationship with shareholders or investors of the corporation that has issued the relevant stocks, etc. (hereafter in this Article, referred to as "shareholders, etc.") or to the persons who are minors as of January 1, 1997.
|
| (2) | Where registration of property, etc. in the title of a third person has been made, a failure to transfer the title of such property to the actual owner, and a failure to transfer the title of stocks, etc. to the actual owner during the grace period, it shall be presumed that a person has an intention to evade taxes:
Provided, That this shall not apply where the transferor reports the details of changes in ownership, along with a return on tax base of transfer incomes under
Articles 105 and 110 of the Income Tax Act or a return under
Article 10 of the Securities Transaction Tax Act.
|
| (3) | Where the shareholder roster or the employee roster has not been prepared in applying paragraph (1), whether a transfer of the title has been made shall be decided by the documents concerning the shareholders, etc. and the detailed statement on change of stocks, etc. submitted to the head of the tax office having jurisdiction over the place for tax payment under
Articles 109 (1) and 119 of the Corporate Tax Act.
|
| (4) | Paragraph (1) 2 shall apply only when the person who transfers the titles of stocks, etc. to the actual owner during the grace period submits the details on such transfer to the head of the tax office having jurisdiction over the main office or principal office of the corporation that has issued the relevant stocks or a corporation in which such stocks have been invested, as prescribed by Presidential Decree. |
| (5) | Paragraph (1) shall not apply where the fact that the relevant property is the trust property under the
Financial Investment Services and Capital Markets Act is registered, and any nonresident files for registration, etc. in the name of the legal representative or the manager of property.
|
| (7) | The scope of persons in a special relationship under the proviso to paragraph (2) 2 shall be prescribed by Presidential Decree. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
SECTION 3 Taxable Value of Donated Property
| Article 46 (Donated Property Subject to Tax Exemption) |
Any of the following amounts shall be exempted from gift tax:
<Amended by Act No. 10361, Jun. 8, 2010>
| 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. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 47 (Taxable Value of Donated Property) |
| (1) | The taxable value of donated property shall be the aggregate of the value of the donated property under this Act as of the date of donation (excluding the value of the donated property under
Articles 40 (1) 2,
41-3,
41-5, and
42 (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, etc.) secured with the donated property.
|
| (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 ten years prior to the relevant date of donation is not less than ten 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, etc. 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, etc. Contributed for Public Interest
| Article 48 (Non-Inclusion, etc. in Taxable Value of Property Contributed to Public Service Corporation, etc.) |
| (1) | The value of any property contributed to any public service corporation, etc. shall not be included in the taxable value of donated property:
Provided, That where the stocks, etc. of a domestic corporation are contributed to a public service corporation, etc., and the sum of the contributed stocks, etc. and any of the following stocks, etc. exceeds 5/100 (10/100 in cases of a conscientious public service corporation, etc.) of the total number, etc. of voting stocks, etc. issued by the domestic corporation (excluding cases falling under the proviso to
Article 16 (2)), an excess portion calculated, as prescribed by Presidential Decree, shall be excluded from the taxable value of donated property:
|
| 1. | The stocks, etc. of a domestic corporation that are the same as those retained by the relevant public service corporation as at the time the contributor makes contributions; |
| 2. | The stocks, etc. of a domestic corporation that are the same as those contributed by the contributor or the person in a special relationship with him/her to a public service corporation, etc. other than the relevant public service corporation, etc. |
| (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 and 6, the head of the competent tax office, etc. shall deem that the public service corporation, etc. has received the donation of the value prescribed by Presidential Decree and promptly levy gift tax:
Provided, That among property contributed from many and unspecified persons, those property prescribed by Presidential Decree and the property value of which is difficult to be calculated according to its contributors shall be excluded:
|
| 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 the same shall apply in this subparagraph) or fails to use such property for direct pubic interest projects within three years from the date on which such property is contributed:
Provided, That this shall not apply where there exist inevitable grounds prescribed by Presidential Decree, such as taking 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;
|
| 2. | Where a public service corporation, etc. uses the contributed property (including cases where the public service corporation, etc. operates such property for profit or for-profit projects, and where any operating income accrues therefrom) for acquiring stocks, etc. of a domestic corporation, and the sum of the acquired stocks, etc. and any of the following stocks exceeds 5/100 (10/100 in cases of a conscientious public service corporation, etc.) of the total number, etc. of voting stocks issued by the domestic corporation:
Provided, That this shall not apply to cases prescribed by Presidential Decree where the public service corporation, etc. that falls under the proviso to
Article 49 (1) (excluding its subparagraphs), and are not specially related to the enterprise group subject to the limitations on mutual investment acquires the stocks, etc. of a domestic corporation that is not specially related to the contributors to the relevant public service corporation, etc., and where an industry-academic cooperation group pursuant to the
Promotion of Industrial Education and Industry-Academic Cooperation Act acquires stocks, etc. prescribed by Presidential Decree:
|
| (a) | Stocks, etc. of a domestic corporation that are the same as those owned by the relevant public service corporation, etc. as at the time the stocks, etc. are acquired; |
| (b) | Stocks, 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.; |
| 3. | Where a public service corporation, etc. operates the contributed property for profit 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. sells the contributed property and then uses proceeds from sale (including any property increased by such proceeds from sale, but excluding public charges, etc. prescribed by Presidential Decree) for purposes other than public interest projects, or fails to use such proceeds from sale for public interest projects, as prescribed by Presidential Decree, by the date on which three years elapse from the date of sale; |
| 5. | Where a public service corporation, etc. uses the operating income under 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. | Other cases where a public service corporation, etc. fails to operate the contributed property or 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) 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 contributed 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, and other cases:
|
| 1. | Contributor and his/her relatives; |
| 2. | Any other public service corporation, etc. to whom the contributor makes a contribution; |
| 3. | Persons in a special relationship with those stipulated under subparagraph 1 or 2. |
| (4) | For the purposes of paragraphs (1) through (3) and (8), the scope of persons in a special relationship, the decision criteria concerning whether the contributed property is used for direct public-interest projects, the scope of public service corporations, etc. that are not specially related to the enterprise group subject to the limitations on mutual investment, the scope of domestic corporations that are not specially related to the contributors to relevant public service corporations, the scope of contributors in a special relationship, and other necessary matters shall be prescribed by Presidential Decree. |
| (5) | Where a public service corporation, etc. has received a contribution of property 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 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 gift tax or inheritance tax on a public service corporation, etc., he/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 to paragraph (1), and paragraphs (2) and (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 contributors or persons in a special relationship with such contributors hold office in excess of 1/5 (where the current number of directors is less than five, it shall be deemed five) of the current number of directors, or executives or employees (excluding directors; hereinafter the same shall apply) of the public service corporation, etc. prescribed by Presidential Decree, the additional tax under
Article 78 (6) shall be levied.
|
| (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 a conscientious public service corporation, etc.) possesses the stocks, etc. of a domestic corporation in a special relationship prescribed by Presidential Decree, and the value of the stocks, etc. of the domestic corporation exceeds 30/100 of the total value of its property (50/100 in cases of a public service corporation, etc. that undergoes external audit pursuant to
Article 50 (3), opens and uses exclusive accounts pursuant to
Article 50-2, and provides a public notice of their statement of accounts pursuant to
Article 50-3), the additional tax under
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.
|
| (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 under
Article 78 (8) shall be levied. In such cases, the scope of a domestic corporation in a special relationship, the method 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 the main sentence other than the subparagraphs of
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:
|
| 1. | Where a conscientious public service corporation, etc. has received a contribution of stocks, etc. in excess of 5/100 of the total number, etc. of voting stocks issued by a domestic corporation (including cases of acquiring stocks, etc. with the contributed property), and then it ceases to be such corporation; |
| 2. | Where a public service corporation, etc. under the proviso to
Article 16 (2) or the proviso to
Article 48 (2) 2 does not fall under a public service corporation, etc. under the proviso to
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, etc. by Public Service Corporation, etc.) |
| (1) | Where a public service corporation, etc. possesses the stocks, etc. of the same domestic corporation in excess of 5/100 of the total number, etc. of the voting stocks issued as of 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 this shall not apply to a public service corporation, etc. meeting standards prescribed by Presidential Decree by taking into account the actual results of using the contributed property for direct public-interest projects, and other contribution, etc. to public interest by the relevant public service corporation, etc., and a public service corporation, etc. established through contributions of the State or a local government, and public service corporations, etc. equivalent thereto which are prescribed by Presidential Decree:
|
| 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 method 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 (Tax Verification of Public Service Corporation, etc. by Outside Experts) |
| (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 not less than two attorneys-at-law, certified public accountants, or certified tax accountants who meet standards prescribed by Presidential Decree:
Provided, That this shall not apply to public service corporations, etc. that undergo an audit pursuant to paragraph (3), and to public service corporations, etc. prescribed by Presidential Decree in consideration of the characteristics of project operation, the scale of the contributed property, etc.
|
| (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
Article 3 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.:
|
| 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 in consideration of the characteristics of projects. |
| (4) | For the purposes of paragraphs (1) through (3), the tax verification items, the tax verification procedure and methods, the preparation of the report, the reporting procedure of findings on tax verification, methods of 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, "exclusive account") for the direct public-interest project prescribed by Presidential Decree: |
| 1. | Where revenue and expenditure related to a direct public-interest project is received or settled through a financial institution 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 cases 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. |
| (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 (Public Service Corporation's Duty to Provide Public Notice on its Statement of Accounts) |
| (1) | A public service corporation, etc. (excluding a public service corporation, etc., the scale of property of which is smaller than that prescribed by Presidential Decree and a public service corporation, etc. prescribed by Presidential Decree in consideration of the characteristics of projects; hereafter in this Article the same applies) shall provide a public notice on the following documents, etc. (hereafter in this Article, "statement of accounts, etc.") by posting them on the Internet website of the National Tax Service within four months from the last day of taxable period or business year of the relevant public service corporation, etc., as prescribed by Presidential Decree: |
| 2. | Statements of profit and loss (including statements of revenue and expenditure, etc. equivalent to the statements of profit and loss); |
| 3. | Details of collection and disbursement of donations; |
| 4. | Matters concerning the representative, directors, contributors, and intended projects of the relevant public service corporation, etc.; |
| 5. | Matters prescribed by Presidential Decree, such as stock holding status, etc. |
| (2) | Where a public service corporation, etc. fails to provide a public notice on the statement of accounts, etc. pursuant to paragraph (1) or where any erroneous information is included in the details of the public notice, the Commissioner of the National Tax Service may request the public service corporation, etc. to provide a public notice thereon within the specified period of one month, or to correct such erroneous information. |
| (3) | A public notice on the 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. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| 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 ten 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 to
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 Trusted for Public Interest in Taxable Value) |
The value of the property a donor contributes to a public service corporation, etc. through a public interest trust stipulated under
Article 65 of the Trust Act for religious, charitable, academic or any other public interest, among the donated property, shall not be included in the taxable value of donated property. In such cases,
Article 17 (2) shall apply
mutatis mutandis.
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 52-2 (Non-Inclusion in Taxable Value of Property Donated to Disabled Person) |
| (1) | Where a disabled person prescribed by Presidential Decree receives a donation of property (referring to that prescribed by Presidential Decree that can be trusted to a trust business entity under the
Financial Investment Services and Capital Markets Act; hereafter in this Article the same shall apply) from his/her lineal ascendants or descendants or other relatives prescribed by Presidential Decree, and meets all of the following requirements by the reporting deadline under
Article 68, the value of the donated property (the total value of property donated to the disabled person for his/her life and the ceiling is 500 million won) shall not be included in the taxable value of donated property:
|
| 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 to the time of his/her death.
|
| (2) | Where a disabled person who has received a donation of property 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 this shall not apply where any extenuating circumstance prescribed by Presidential Decree exists:
|
| 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 under 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 subject to paragraph (1) shall apply to the head of the tax office having jurisdiction over the place for tax payment by the reporting deadline under
Article 68, as prescribed by Presidential Decree.
|
| (4) | The method of calculating the amount of gift tax under paragraph (2) and other necessary matters shall be prescribed by Presidential Decree. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]]
SECTION 5 Donation Deductions
| Article 53 (Donated Property Deductions) |
Where a resident receives a donation from any of the following persons, an amount stipulated under the following classifications shall be deducted from the taxable value of donated property. In such cases, if the sum of an amount for which a donee has received a deduction within ten 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:
| 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
de facto marriage; hereafter the same shall apply in this subparagraph) with any lineal ascendant of the donee) or descendant (including any lineal descendant of a spouse in a marital relationship with the donee): 30 million won:
Provided, That where a minor receives a donation from his/her lineal ascendant, 15 million won shall be deducted;
|
| 3. | Where a donation is received from a relative prescribed by Presidential Decree, other than those stipulated under subparagraphs 1 and 2: five 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, in
Article 23 (1), the term "when inheritance commences due to the death of a resident" shall be construed as "when property is donated by a third party", the term "
Article 67" "
Article 68", the term "inherited property" "donated property", the term "taxable value of inherited property" "taxable value of donated property", and in
Article 23 (2), the term "heir or legatee" 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 (Tax Basis and Minimum Taxables of Gift Tax) |
| (1) | The tax basis of donated property shall be an amount derived by deducting an appraisal and assessment fee of the donated property prescribed by Presidential Decree from any of the following amounts: |
| 1. | In cases of the legal fiction as donation of title trust property under
Article 45-2: the amount of the relevant title trust property;
|
| 2. | In cases of the donated property excluding any summing-up: the amount derived by deducting 30 million won from the value of the relevant donated property; |
| 3. | In cases other than those stipulated under subparagraphs 1 and 2: the amount derived by deducting the amount under
Articles 53 and
54 from the taxable value of donated property under
Article 47 (1).
|
| (2) | When the tax basis is less than 500,000 won, gift tax shall not 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 (Premium Taxation on Donation to Lineal Descendants) |
Where the donee is a lineal descendant who is not an offspring of the donor, an amount equivalent to 30/100 of the calculated amount of gift tax shall be added:
Provided, That this shall not apply where, due to the death of a lineal descendant who is the closest relative of the donor, a lineal descendant who is the closest relative of the decedent receives the donation.
[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 Acts and subordinate statutes 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, etc. 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 under
Article 63 (1) 1 (a) and (b) shall be deemed the current market value of the property.
|
| (2) | The current market price under paragraph (1) shall be the value deemed to be normally established when many and unspecified persons make transactions freely, and include what is accepted as the current market price, as prescribed by Presidential Decree, such as price of expropriation, price of public auction, appraised value, etc. |
| (3) | Where it is difficult to calculate the current market price in applying paragraph (1), the value assessed by the methods stipulated under
Articles 61 through
65, in consideration of the kinds, scale, transaction circumstances, etc. of the relevant property shall be deemed the current market price.
|
| (4) | For the purposes of 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.
|
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 61 (Assessment of Real Estate, etc.) |
| (1) | Real estate shall be assessed by any of the following methods: |
| (1) | Real estate shall be assessed by any of the following methods: |
An officially assessed individual land value pursuant to the Public Notice of Values and Appraisal of Real Estates Act (hereinafter referred to as "officially assessed individual land value"): Provided, That in cases of land with no officially assessed individual land value, its value shall be the price assessed by the head of the tax office having jurisdiction over the place for tax payment according to methods prescribed by Presidential Decree, taking into consideration the officially assessed individual land value of those land that is adjacent and similar thereto, while the value of land in areas prescribed by Presidential Decree where the land price is soaring shall be assessed according to a multiplication method;
The value calculated and publicly announced by the Commissioner of the National Tax Service at least once a year taking into account the construction costs of a new building (excluding buildings falling under subparagraphs 3 and 4), structures, purposes, location, year of construction, etc. of a building;
| 3. | Officetels and commercial buildings: |
With respect to officetels and commercial buildings (including land annexed thereto) to which land annexed is jointly owned and which are under sectional ownership, as prescribed by Presidential Decree taking into account the purpose, area, number, etc. of buildings under sectional ownership: the lump-sum value of the land and building calculated and publicly announced by the Commissioner of the National Tax Service at least once a year taking into account the kinds, scales, transaction circumstances, locations, etc. of the buildings;
Individual housing prices or collective housing prices pursuant to the Public Notice of Values and Appraisal of Real Estate Act (referring to prices, if any, determined and publicly notified by the Commissioner of the National Tax Service pursuant to the proviso to Article 17 (1) of the same Act): Provided, That the price of housing with no individual housing price or collective housing price shall be an amount assessed by the Commissioner of the National Tax Service according to methods prescribed by Presidential Decree, taking into account the individual housing prices or collective housing prices of those housing that is adjacent and similar thereto. | (2) | "Multiplication method" in the proviso to paragraph (1) 1 means a method of calculating 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, in consideration of 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 in consideration of 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 (6).
|
| (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 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, etc.) |
| (1) | Securities shall be assessed by any of the following methods: |
| 1. | Assessment of stocks and investment shares: |
| (a) | With respect to stocks and investment shares of listed-stock corporations traded on the securities market under
Article 9 (13) 1 of the Financial Investment Services and Capital Markets Act: the average value of the daily Korea Exchange closing market value (irrespective of progression of actual trading) publicly announced for two months each prior to and after the base date of assessment:
Provided, That where grounds, such as an increase in capital, merger, etc. arise for a two-month period each prior to or after the base date of assessment in calculating the average value, and thus it becomes inappropriate to assess the value of such stocks and investment shares based on the average value, the assessment then shall be based on the average value of the period calculated, as prescribed by Presidential Decree, during a two-month period each prior to and after the base date of assessment;
|
| (c) | Stocks and investment shares other than those stipulated under item (b) and not listed on the Korea Exchange shall be assessed according to methods prescribed by Presidential Decree, in consideration of the assets, profits, etc. of the relevant corporation; |
| 2. | Other securities including public bonds, state bonds, etc. other than those stipulated under subparagraph 1 shall be assessed according to methods prescribed by Presidential Decree, in consideration of the type, size, transaction circumstances, etc. of the relevant assets. |
| (2) | Notwithstanding paragraph (1) 1, any of the following stocks or investment shares (hereafter referred to as "stocks, etc." in this paragraph and paragraph (3)) shall be assessed according to methods prescribed by Presidential Decree, in consideration of the business feasibility, transaction circumstances, etc. of the relevant corporation: |
| 1. | Stocks, etc. of a corporation that has filed a report on its securities with the Financial Services Commission for the purpose of public offer within the period prescribed by Presidential Decree; |
| 2. | Among stocks, etc. under paragraph (1) 1 (c), stocks, etc. of a corporation that has applied for listing to the Korea Exchange within the period prescribed by Presidential Decree for the purpose of trading its stocks, etc. on the KOSDAQ market under the
Financial Investment Services and Capital Markets Act;
|
| 3. | Among stocks of a corporation listed on the Korea 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) | For the purposes of paragraphs (1) 1 and (2), and
Article 60 (2), stocks, etc. (excluding stocks, etc. prescribed by Presidential Decree, such as those of any corporation that has continued suffering deficits pursuant to
Article 14 (2) of the Corporate Tax Act during three 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 or an investor in a special relationship with such largest shareholder or largest investor (hereafter referred to as "largest shareholder, etc." in this paragraph) 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, etc. of stocks issued by 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. possessed by the largest shareholder, etc. shall be prescribed by Presidential Decree.
|
| (4) | Deposits, savings, installment savings, etc. shall be assessed based on the value derived by deducting an amount equivalent to the withholding tax under
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 (Assessment of Intangible Property Rights, etc.) |
| (1) | The value of purchased intangible property rights shall be assessed based on an amount derived by deducting the depreciation under the
Corporate Tax Act accrued from the date of purchase to the base date of assessment, from the purchase price.
|
| (2) | Intangible property rights other than those under paragraph (1), such as industrial property rights, shall be assessed according to methods prescribed by Presidential Decree, in consideration of the value required to acquire the relevant property, the future economic profits, etc. of the relevant property. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 65 (Assessment of other Conditional Rights, etc.) |
| (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 provided for in this Act.
|
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 66 (Special Cases on Assessment of Property for which Mortgages, etc. are Created) |
Notwithstanding
Article 60, the value of any of the following property shall be the larger of the value assessed according to the methods prescribed by Presidential Decree based on the amount of claims secured by such property and the value assessed according to
Article 60:
| 1. | Property for which mortgage or pledge is created; |
| 2. | Property transferred for security; |
| 3. | Property registered as leasehold on a deposit basis (including property leased in return for lease deposit); |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
CHAPTER V REPORTING AND PAYMENT
| Article 67 (Reporting of Tax Basis of Inherited Property) |
| (1) | An heir or legatee liable to pay inheritance tax pursuant to
Article 3 shall report the taxable value and tax basis of inherited property under
Articles 13 and
25 (1) to the head of the tax office having jurisdiction over the place for tax payment within six months from the last day of the month in which the commencement date of the inheritance falls, as prescribed by Presidential Decree.
|
| (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 the inherited property, the period stipulated under paragraph (1) shall be reckoned starting from the date on which he/she begins his/her duties after having been designated or appointed. |
| (4) | Where an ancestor or his/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 (Reporting of Tax Basis of Donated Property) |
| (1) | A person liable to pay gift tax pursuant to
Article 4 shall report the taxable value and tax basis of property donated under
Articles 47 and
55 (1) to the head of the tax office having jurisdiction over the place for tax payment 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 reporting deadline of the adjustment of the tax basis of property donated following listing of unlisted stocks or merger, etc. of a corporation pursuant to
Articles 41-3 and
41-5 shall be the date on which three months elapse from the last day of the month in which the base date of adjustment falls.
|
| (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 10/100 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:
|
| 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 the tax basis of donated property is reported pursuant to
Article 68, an amount equivalent to 10/100 of the amount derived from deducting an amount stipulated under the subparagraphs of paragraph (1) from the calculated amount of gift tax (including amounts added to the amount of tax calculated pursuant to
Article 57) shall be deducted from the calculated amount of gift tax calculated.
|
[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 the part other than the subparagraphs of
Article 69 (1) 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 ten 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 under subparagraphs 1 through 5 of
Article 29 of the Framework Act on National Taxes, he/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 that 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 tax to be paid in each installment exceeds ten million won:
|
| 1. | Five years from the date on which two years elapse after permission for payment in annual installments is granted in cases of the property of an inherited family business:
Provided, That it shall be 12 years from the date on which three years elapse after permission for payment in annual installments is granted where the ratio of the property of an inherited family business is not less than 50/100 of the inherited property (excluding property bequeathed to a person other than the heir);
|
| 2. | Five years from the date on which permission for payment in annual installments is granted, except cases under subparagraph 1. |
| (3) | For the purposes of 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 the tax office having jurisdiction over the place for tax payment 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: |
| 1. | Where he/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/she is deemed to have been permitted under the latter part of paragraph (1)); |
| 2. | Where he/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/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;
|
| (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/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) | Where the value of real estate and securities (excluding the stocks or investment shares not listed on the Korea Exchange (hereafter referred to as "unlisted stocks, etc." in this paragraph), however this shall not apply to cases where grounds prescribed by Presidential Decree exist, such as where no inherited property exists, except for unlisted stocks, etc.; hereafter the same shall apply in this Article) exceeds 1/2 of the value of inherited or donated property, and the amount of the paid inheritance tax or gift tax exceeds 10 million won, the head of the tax office having jurisdiction over the place for tax payment may permit a payment in kind only for the real estate or securities upon application by the taxpayer, as prescribed by Presidential Decree:
Provided, That the head of the tax office having jurisdiction over the place for tax payment may choose not to permit the payment in kind if the management and disposal of the property for which an application has been filed for a payment in kind is deemed inappropriate.
|
| (2) | The scope of securities payable in kind, cases where management and disposal is deemed inappropriate, and other necessary matters concerning procedures of payment in kind shall be prescribed by Presidential Decree. |
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 74 (Deferment of Collection of Inheritance Tax on Cultural Heritage Resources, etc.) |
| (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>
|
| 1. | Cultural heritage resources pursuant to
Article 2 (2) 3 of the Cultural Heritage Protection Act and the registered cultural heritage assets pursuant to
Article 53 (1) of the same Act (hereafter referred to as "cultural heritage resources, etc." in this Article) and land prescribed by Presidential Decree within a protected area pursuant to
Article 27 (1) of the same Act;
|
| 2. | Among museum materials or art gallery materials (hereafter referred to as "museum materials" in this Article) 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/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/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/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 Basis and Amount of Tax) |
The head of the competent tax office, etc. shall notify the heir, legatee, or donee of the tax basis and the amount of tax determined pursuant to
Article 76, as prescribed by Presidential Decree. In such cases, if two or more heirs or legatees exist, the head of the competent tax office, etc. may choose to notify only one of them thereof, as prescribed by Presidential Decree, and the validity of such notification shall extend to all heirs and legatees.
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 78 (Additional Tax, etc.) |
| (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 pursuant to 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 report reported is 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. under
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 the stocks, etc. retained 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, subject to application of the proviso to
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 of 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 imposition period of additional tax shall not exceed ten years.
<Amended by Act No. 9916, Jan. 1, 2010>
|
| (5) | Where a public service corporation, etc. fails to perform its reporting duty, etc. on tax verification by outside experts pursuant to
Article 50 (1) and (2), or fails to perform its duty to prepare and keep books and records pursuant to
Article 51, the head of the competent tax office, etc. shall collect an amount calculated 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 to cases prescribed by Presidential Decree, in consideration of 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>
|
| (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 under
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
Article 48 (2) 5, the head of the competent tax office, etc. shall impose an amount equivalent to 10/100 of unused amounts among the operating income or proceeds from sale, 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>
|
| (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 under
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 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. under
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 2/100 (2/10,000 in cases 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>
|
| (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 1/100 (1/10,000 in cases 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>
|
| Article 79 (Special Cases on Request for Correction, etc.) |
| (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 under
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 reason 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 greatly decreases by the date on which one year has elapsed since the commencement of inheritance due to any reason 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: |
| 1. | Where a person, gift tax under
Article 37 on whom 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 reason prescribed by Presidential Decree;
|
| 2. | Where a person, gift tax under
Article 41-4 on whom has been determined or corrected inherits or receives the donation of the relevant money from the lender during the loan period under the latter part of
Article 41-4 (1), or no longer borrows the relevant money gratuitously or at an interest rate lower than the reasonable interest rate.
|
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
CHAPTER VII SUPPLEMENTARY PROVISIONS
| Article 80 (Notification of Commencement, etc. of Inheritance) |
| (2) | The head of the administrative agency that has received a report of a burial, etc. pursuant to the
Act on Funeral Services, etc. shall inform the head of the competent tax office of such fact, as prescribed by Presidential Decree.
|
| (3) | The Minister of Public Administration and Security, Special Metropolitan City Mayor, Metropolitan City Mayors,
Do Governors or Governor of a Special Self-Governing Province shall annually notify the Commissioner of the National Tax Service of data on the land, buildings and houses subject to property tax, as prescribed by Presidential Decree.
|
[This Article Wholly Amended by Act No. 9916, Jan. 1, 2010]
| Article 81 Deleted. <by Act No. 8828, Dec. 31, 2007> |
| Article 82 (Submission of Payment Records, etc.) |
| (1) | A person who falls under any of the following cases in Korea shall submit payment records to the head of the competent tax office, as prescribed by Presidential Decree: |
| 1. | A person who pays insurance proceeds (including surrender value and early withdrawal) on 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 pays insurance proceeds stipulated under paragraph (1) 1 shall submit the payment records on a computer-processed tape, diskette, etc., as prescribed by Presidential Decree. |
| (3) | A person who deals with the transfer or modification of titles to use stocks, investment shares, public bonds, corporate bonds, claims and specific facilities (including a person who has been entrusted with the duty of verifying the transfer or modification of titles from the State or local governments) shall submit the details on the transfer or modification of titles to the head of the competent tax office, as prescribed by Presidential Decree. |
| (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 under 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 institutions stipulated in subparagraph 1 of
Article 2 of the Act on Real Name Financial Transactions and Confidentiality to inquire en bloc about taxation data on any of the following financial property, notwithstanding
Article 4 of the same Act:
|
| 1. | A person suspected of evading inheritance tax or gift tax in light of his/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 referred to in this Article as "ancestor, etc.")
|
| (2) | The head of a financial institution, 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. |
| (3) | When the Commissioner of the National Tax Service makes an inquiry about the taxation data to the head of a financial institution pursuant to paragraph (1), he/she shall do so in writing stating the following matters: |
| 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 carry out an investigation and duties in connection with inheritance tax or gift tax, a public official engaged in tax affairs may ask question 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:
| 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 81-10 (1) of the Framework Act on National Taxes.
|
| (3) | The provision of and request for taxation data of property pursuant to the proviso to 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 to 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 Application Examples)
This Act shall be applicable beginning with the very first succession which commences or property being donated, after this Act enters into force.
Article 3 (Application Examples Pertaining to Non-Taxation of Designated Cultural Heritage)
Among designated cultural heritage whose taxes were deferred from collection, pursuant to the preceding provisions of Article 8-3 (1) 1, in case, 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 (Application Examples Pertaining to Follow-up Management of Public Service Corporation, etc.)
| (1) | The amended provisions of Articles 16 (1) and 48 (2) 1 through 3 and 5, and paragraph (3) of the same Article shall be applicable beginning with the occurrence of the main taxable cause, with respect to property received, through contribution, pursuant to the preceding provisions, at the time this Act enters into force. |
| (2) | The amended provisions of Article 48 (2) 4 shall be applicable beginning with the very first sale of property received, through contribution, under the preceding provisions, at the time this Act enters into force. |
Article 5 (Application Examples Pertaining to Succession Deductions of Farmland, Grazing Land, and Forest Land, etc.)
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 preceding Article 11-3 (1) and (2), in case which falls under the provisions of the preceding Article 11-3 (4), after the enforcement of this Act, inheritance tax shall be levied, pursuant to the preceding provisions. Article 6 (Application Examples Pertaining to Deductions of Gift Tax Amount Deducted from Tax Assessment)
The amended provisions of Articles 28 and 58 shall be applicable beginning with the very first inheritance tax or gift tax being determined after the enforcement of this Act. Article 7 (Application Examples Pertaining to Stocks, etc. 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 applicable beginning with 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 (Application Examples Pertaining to Tax Verifications, etc. by outside Experts Pertaining to Public Service Corporations, etc.)
| (1) | The amended provisions of Articles 50 and 51 shall be applicable beginning with 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 2 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 2 years has elapsed from the incorporation date of the public service corporation, etc. concerned. |
Article 9 (Transitional Measures Pertaining to 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 of 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 Amended Provisions Among Inheritance Tax Act, of Act No. 4022; and |
| 2. | With respect to regions besides those of subparagraph 1, the current base value used taxation under 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 preceding 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 applicable beginning with those buildings either being donated or unto which succession commences, after January 1, 1998. |
Article 10 (Application Examples Pertaining to Payment in Kind and Payment by Annual Installments)
The amended provisions of Articles 71 and 73 shall be applicable beginning with the first tax for which payment in kind and payment by annual installments is applied. Article 11 (Application Examples Pertaining to Submissions, etc. of Payment Records)
The amended provisions of Article 82 (1) through (4) shall be applicable beginning with the first payment being paid out or such fact being handled, after the enforcement of this Act. Article 12 (Application Examples Pertaining to General Inquiry into Financial Property)
The amended provisions of Article 83 shall be applicable beginning with 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 preceding provisions.
Article 14 Omitted.
Article 15 (Relations with Other Acts and Subordinate Statutes)
In case, at the time of the enforcement of this Act, the preceding Inheritance Tax Act or a provision thereof has been cited in other Acts and subordinate statutes, and if, among this Act, there is a provision falling into such Acts and subordinate statutes, then the citation shall be regarded as having been of this Act or a provision falling into this Act, in place of the preceding 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 (Applicable Cases subject to Amendment of Other Acts)
| (1) | The amended provisions of the
Inheritance Tax and Gift Tax Act as referred to in Article 13 (3) of the Addenda shall be applicable beginning with 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 Application Example) This Act shall apply to successions commencing or donations made on or after the enforcement date of this Act. |
| (3) | (Applicable Cases on Notification of Data on Taxables of Aggregate Land Tax) The amended provisions of Article 80 (3) shall apply to 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 due to 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 of 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 Application Example)
This Act shall apply starting with 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 apply starting with the portion of the stocks, etc. and convertible bonds, etc. acquired for the first time after the enforcement of this Act. Article 3 (Application Example of Additional Tax in Case, etc. of Excess Number of Directors of Public Service Corporation, etc.)
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 (Application Example of 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: and |
| (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; and |
| (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; and |
| (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 of 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, etc.)
| (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 of 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 persons in a special relationship with 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 of 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 of 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 Application Examples)
This Act shall be applicable from the portion of inheritance first commenced or first gifted after the enforcement of this Act.
Article 3 (Application Example to Non-taxable Inherited Property)
The amendments to subparagraph 2 of Article 12 and Article 74 (1) 1 shall be applicable from the portion of decision on the inheritance tax first done after the enforcement of this Act. Article 4 (Application Example to Permit, etc. for Excessive Possession of Stocks by Public Service Corporation, etc.)
| (1) | The amendments to Articles 16 (2), 48 (1) and (2) 2 shall be applicable 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 be applicable from the portion of business year within which falls the date of promulgation of this Act. |
Article 5 (Application Example to Profits, etc. from Conversion of Convertible Bonds, etc. into Stocks)
| (1) | The amendments to Article 40 (1) 2 shall be applicable 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 be applicable from the portion of first issuance of the convertible bonds, etc. after the enforcement of this Act. |
Article 6 (Application Example to Payment in Installments and Annual Installments)
The amended provisions of Articles 70 (2) and 71 (2) 2 shall be applicable from the portion of first application for the payment in installments and annual installments after the enforcement of this Act. Article 7 (Application Example to Application for Payment of Deposits, etc. by Successors, etc. Who are Non-Residents)
The amended provisions of Article 81 (3) shall be applicable 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 Application Examples)
This Act shall be applicable from the portion of inheritance first commenced or first gifted after the enforcement of this Act.
Article 3 (Application Example to Permit, etc. for Excessive Possession of Stocks by Public Service Corporation, etc.)
The amended provisions of Articles 16 (2) and (4), 48 (2) and (4) shall be applicable from the portion of business year whereto belongs the date of promulgation of this Act. Article 4 (Application Example to Legal Fiction of Insurance Money as Donation)
The amended provisions of Article 34 (1) shall be applicable from the portion of paying the premiums with the money first donated after the enforcement of this Act. Article 5 (Application Example to Legal Fiction of Title Trust Property as Donation)
The amended provisions of Article 41-2 (1) and (2) shall be applicable from the portion of ownership first acquired after the enforcement of this Act. Article 6 (Application Example to Legal Fiction of Profits from Listing, etc. of Stocks or Equity Shares as Donation)
The amended provisions of Articles 41-3 and 41-5 shall be applicable from the portion of the stocks, etc. first donated or acquired with compensation after the enforcement of this Act. Article 7 (Application Example to Deferment of Collection of Cultural Heritage Data, etc.)
The amended provisions of Article 74 (1) through (3) shall be applicable from the portion of application first filed after the enforcement of this Act. Article 8 (Application Example to Additional Tax)
The amended provisions of Article 78 (2) 2 shall be applicable from the portion for which the deadline of payment first arrives after the enforcement of this Act. Article 9 (Transitional Measures for 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 of 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 for 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 (Application Example to Disputed Case, etc. 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 Application Examples)
This Act shall be applicable from the portion of commencing inheritance or of donating after the enforcement of this Act.
Article 3 (Application Example concerning Donation of Insurance Money)
The amended provisions of Article 34 (1) shall be applicable from the portion of paying the premiums with the assets donated after the enforcement of this Act. Article 4 (Application Example concerning Donation of Benefits Accompanying Transfer at Lower or Higher Prices)
The amended provisions of Article 35 shall be applicable from the portion of taking over or transferring after the enforcement of this Act. Article 5 (Application Example concerning Donation of Benefits Accompanying Gratuitous Use of Real Estate)
The amended provisions of Article 37 shall be applicable from the portion of using real estate gratuitously after the enforcement of this Act. In this case, 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 (Application Example concerning Donation of Benefits Accompanying Investment in Kind)
The amended provisions of Articles 39-3 shall be applicable from the
portion of investments in kind after the enforcement of this Act. Article 7 (Application Example concerning Deferment of Term of Merger Relating to Donations of Profits, Such as Listing etc. Due to Merger)
The amended provisions of Article 41-5 (1) shall be applicable from the portion of receiving a donation of stocks, etc. or acquiring for value after the enforcement of this Act. Article 8 (Application Example concerning Donation of Other Benefits)
| (1) | The amended provisions of Article 42 (1) 1 and 2 shall be applicable 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 be applicable 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 be applicable 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 (Application Example concerning Adjustment of Double Taxation of Gift Tax and Income Tax Relating to Presumption of Donations at Time of Transfer to Spouse, etc.)
The amended provisions of proviso of Article 44 (2) and (4) shall be applicable from the portion of determining the gift tax after the enforcement of this Act. Article 10 (Application Example concerning Legal Fiction of Donation of Title Trust Assets)
The amended provisions of Article 45-2 (3) shall be applicable 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 (Application Example concerning Deferment of Period for Payment by Annual Installments for Inherited Property of Family Business)
The amended provisions of Article 71 (2) 2 shall be applicable from the portion of filing an application for payment by annual installments after the enforcement of this Act. Article 12 (Application Example concerning Additional Taxes)
The amended provisions of Article 78 (1) and (2) shall be applicable from the portion of arrival of the deadline for payment after the enforcement of this Act. Article 13 (Application Example concerning Submission of Issuance of Convertible Bonds, etc. and Details of Undertakers)
The amended provisions of Article 82 (6) shall be applicable 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 Application Example)
This Act shall apply, starting with the portion of any inheritance that is first commenced and any donation that is first made after its promulgation.
Article 3 (Special Case concerning Appraised Value of Collective Housing Whose Prices Are Nonexistent)
In case where the prices of the collective housing provided for in 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 Public Notice of Values and Appraisal of Real Estate Act, notwithstanding the amended provisons of Article 61 (1) 4. Article 4 (Application Example concerning Hearing of Opinions and Application Filed for Recalculation and Publication)
The amended provisions of Article 61 (8) shall apply, starting with 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 for Amendment to Other Acts)
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 apply beginning with the first case where inheritance commences or a gift is made after this Act enters into force.
Article 3 (Applicability concerning Contribution and Acquisition of Stocks, etc. of Public Service Corporation, etc.)
The amended provisions of the main sentence of the part other than the subparagraphs of Article 16 (2), proviso to the part other than the subparagraphs of Article 48 (1), and paragraphs (2) 2 and (11) of the same Article shall apply beginning with 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 concerning Additional Tax to Stocks, etc. of Domestic Corporation, etc. in Special Relationship held by Public Service Corporation, etc.)
The amended provisions of Article 48 (9) shall apply beginning with the first case where taxation period or business year begins after January 1, 2009. Article 5 (Applicability concerning Tax Verification, etc. of Public Service Corporation, etc. by Outside Experts)
The amended provisions of Article 50 (1) and (3) shall apply beginning with the first case where taxation period or business year begins after this Act enters into force. Article 6 (Applicability concerning Responsibility of Establishment and Use of Exclusive Account by Public Service Corporation, etc.)
The amended provisions of Article 50-2 shall apply beginning with 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 concerning Responsibility of Publicly Announcing Statement of Accounts, etc. of Public Service Corporation, etc.)
The amended provisions of Article 50-3 shall apply beginning with the first case where taxation period or business year begins after this Act enters into force. Article 8 (Applicability concerning Payment in Annual Installments)
The amended provisions of Article 71 (1), (2) and (4) shall apply beginning with 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 concerning Payment in Kind)
The amended provisions of the main sentence of Article 73 (1) shall apply beginning with 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 concerning Additional Tax)
| (1) | The amended provisions of Article 78 (10) shall apply beginning with the first case where taxation period or business year begins after January 1, 2009. |
| (2) | The amended provisions of Article 78 (11) shall apply beginning with the first case where taxation period or business year begins after this Act enters into force. |
Article 11 (Applicability concerning Notification of Taxable Data of Property Tax)
The amended provisions of Article 80 (3) shall apply beginning with the first case where that is notified to the Commissioner of the National Tax Service after this Act enters into force. Article 12 (Applicability concerning Submission of Payment Detail)
| (1) | The amended provisions of Article 82 (1) 1 shall apply beginning with the first case where a payment is made this Act enters into force. |
| (2) | The amended provisions of Article 82 (3) shall apply beginning 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, etc.)
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. 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 apply beginning with the first inheritance or donation that commences or is made after this Act enters into force.
Article 3 (Applicability concerning Appraisal of Securities, etc.)
The amended provisions of Article 63 (3) shall apply beginning with the first securities inherited or donated, that are appraised after this Act enters into force. Article 4 (Applicability concerning Payment by Annual Installments)
The amended provisions of Article 71 (1), (4) and (5) shall apply beginning with 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 apply beginning with the first obligation to submit payment details, etc. that arises after this Act enters into force.y
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 apply beginning with the first inheritance commencing or donation made after this Act enters into force.
Article 3 (Applicability concerning Special Cases on Requests for Correction, etc.)
The amended provisions of Article 79 (2) shall apply beginning 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.