CHAPTER I GENERAL PROVISIONS
[This Article Newly Inserted by Presidential Decree No. 26960, Feb. 5, 2016]
| Article 2 (Definitions of Domicile and Abode, etc.) |
[This Article Wholly Amended by Presidential Decree No. 26960, Feb. 5, 2016]
| Article 2-2 (Scope of Specially Related Persons) |
| (1) | "Person in a relationship prescribed by Presidential Decree, such as a lineal relationship, economic relationship, controlling management relationship with a principal" in subparagraph 10 of Article 2 of the Act means a person in any of the following relationships with the principal: <Amended by Presidential Decree No. 25195, Feb. 21, 2014; Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 29533, Feb. 12, 2019> |
| 2. | An employee (including an employee of a corporation controlled through investment; hereinafter the same shall apply) or a person whose livelihood is supported by the principal's property, although the person is not an employee; |
| 3. | Any of the following persons: |
| (a) | Where the principal is an individual: An enterprise [including an executive officer (referring to an executive officer prescribed in Article 40 (1) of the Enforcement Decree of the Corporate Tax Act; hereinafter the same shall apply) of the enterprise, and a person (hereinafter referred to as a “retired executive officer”) for whom three years (or five years if the enterprise is included in a business group subject to disclosure under Article 14 of the Monopoly Regulation and Fair Trade Act) have not passed since his/her retirement] affiliated with a business group defined by Ordinance of the Ministry of Strategy and Finance over which the principal exercises direct control or a person in a relationship referred to in subparagraph 1 with the principal exercises de facto control by exercising the power to appoint and dismiss executive officers, making decisions on business policies, etc.; |
| (b) | Where a principal is a corporation: A corporation (including its executive officers and retired executive officers) affiliated with a business group defined by Ordinance of the Ministry of Strategy and Finance as business group to which the principal belongs or a person in a relationship referred to in subparagraph 1 with such person and exercises de facto control over the management of such enterprise by exercising the power to appoint or dismiss executive officers of the relevant enterprise, making decisions on business policies, etc.; |
| 4. | A not-for-profit corporation established with property contributed by the principal, by a person referred to in any of subparagraphs 1 through 3, or jointly by the principal and persons referred to in subparagraphs 1 through 3 or a not-for-profit corporation the majority of directors of which are the principal and the persons referred to in subparagraphs 1 through 3; |
| 5. | A not-for-profit corporation whose president is an executive officer or retired executive officer of an enterprise as prescribed in subparagraph 3; |
| 6. | A corporation in which at least 30/100 of the total number of issued stocks or the total amount of investment (hereinafter referred to as "total number of outstanding stocks, etc.") is invested by a principal, by a person referred to in any of subparagraphs 1 through 5, or jointly by the principal and the persons referred to in subparagraphs 1 through 5; |
| 7. | A corporation in which at least 50/100 of the total number of outstanding stocks, etc. is invested by the principal, by a person referred to in any of subparagraphs 1 through 6, or jointly by the principal and the persons referred to in subparagraphs 1 through 6; |
| 8. | A not-for-profit corporation established with property contributed by the principal, by a person referred to in any of subparagraphs 1 through 7, or jointly by the principal and persons referred to in subparagraphs 1 through 7 or a not-for-profit corporation the majority of directors of which are the principal and the persons referred to in subparagraphs 1 through 7. |
| (2) | "Employee" in paragraph (1) 2 means an executive officer, a commercial employee, or any other person in an employment relationship. |
| (3) | "Corporation controlled through investment" in paragraph (1) 2 and Article 39 (1) 5 means any of the following corporations: |
| 1. | A corporation defined in paragraph (1) 6; |
| 2. | A corporation defined in paragraph (1) 7; |
| 3. | A corporation in which at least 50/100 of the total number of outstanding stocks, etc., are held by a person referred to in any of paragraph (1) 1 through 7. |
[This Article Newly Inserted by Presidential Decree No. 23591, Feb. 2, 2012]
| Article 3 (Obligation to Pay Inheritance Tax) |
| (1) | "Rate prescribed by Presidential Decree" in Article 3-2 (1) of the Act means a rate obtained by dividing an amount equivalent to the inheritance tax base of each heir or legatee (hereafter in this Article, referred to as "each heir") as calculated in accordance with subparagraph 1 by the amount defined in subparagraph 2: <Amended by Presidential Decree No. 18627, Dec. 31, 2004; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 26960, Feb. 5, 2016> |
| 1. | An amount obtained by adding the multiple of the amount defined in item (a) with the ratio of the amount defined in item (c) to the amount defined in item (b), out of the gift tax base of the property gifted to each heir, which shall be added to inherited property under Article 13 (1) of the Act; |
| (c) | An amount obtained by excluding the property gifted to each heir, which shall be added to inherited property defined in Article 13 (1) of the Act, from an amount equivalent to the taxable value of inherited property of each heir; |
| (2) | "Amount equivalent to his/her share calculated as prescribed by Presidential Decree" in Article 3-2 (2) of the Act means an amount calculated as follows: <Newly Inserted by Presidential Decree No. 25195, Feb. 21, 2014; Presidential Decree No. 26960, Feb. 5, 2016> |
| {Amount equivalent to inheritance tax on property inherited or to be inherited by a profit-making corporation - (Property inherited or to be inherited by a profit-making corporation x 10/100)} x Ratio of stocks or equity shares of an heir and his/her lineal descendents |
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| (3) | "Property each has received or is to receive" in Article 3-2 (3) of the Act means an amount obtained by subtracting the total amount of debts and the inheritance tax to be imposed or payable for inheritance from the total value of assets acquired by inheritance. <Amended by Presidential Decree No. 22579, Dec. 30, 2010; Presidential Decree No. 25195, Feb. 21, 2014; Presidential Decree No. 26960, Feb. 5, 2016> |
[This Article Newly Inserted by Presidential Decree No. 17039, Dec. 29, 2000]
| Article 3-2 (Cases subject to Gift Tax) |
"Where justifiable grounds prescribed by Presidential Decree exist, such as nullification, revocation, etc." in the proviso to Article 4 (3) of the Act means any of the following cases: <Amended by Presidential Decree No. 27835, Feb. 7, 2017> | 1. | Where heirs or inherited property change according to a final judgment of a court on a lawsuit filed to recover inheritance; |
| 2. | Where inherited property registered proportionately according to statutory inheritance of co-heirs by exercising a creditor's subrogation right defined in Article 404 of the Civil Act is re-divided by an agreement of co-heirs on division; |
| 3. | Where co-heirs filed an application for payment of inheritance tax in kind through the registration, recordation, or transfer of a portion of statutory inheritance defined in Article 1009 of the Civil Act, in order to pay inheritance tax by the deadline for filing an inheritance tax return (hereinafter referred to as "deadline for filing an inheritance tax return") prescribed in Article 67 of the Act, but fail to obtain permission to make payment in kind under Article 71 or are ordered to change the property apportioned for the payment in kind and re-divide the property initially apportioned for the payment in kind pursuant to an agreement among co-heirs on division. |
[This Article Wholly Amended by Presidential Decree No. 26960, Feb. 5, 2016]
| Article 3-3 (Obligations to Pay Gift Tax) |
| (1) | Deleted. <by Presidential Decree No. 27835, Feb. 7, 2017> |
| (2) | "Cases prescribed by Presidential Decree" in the proviso to Article 4-2 (6) of the Act, with the exception of its subparagraphs, means cases meeting all of the following requirements: <Amended by Presidential Decree No. 29533, Feb. 12, 2019> |
| 1. | The period until the date of contribution of property retroactively from the date on which a case subject to imposition of a gift tax or additional tax defined in Article 48 of the Act arises shall be at least ten years; |
| 2. | The contributor (referring to the person defined in Article 38 (10)) or any of his/her specially related persons has never served as a director, executive officer (excluding directors), or employee of the relevant public service corporation and has never had decision-making discretion on important matters concerning business operations of the public service corporation, such as appointment and dismissal of directors during the period under subparagraph 1. |
[This Article Wholly Amended by Presidential Decree No. 26960, Feb. 5, 2016]
| Article 3-4 (Scope of Financial Property) |
"Financial property prescribed by Presidential Decree" in Article 5 (1) 8 of the Act means the property exclusive of financial assets specified by Article 5 (1) 6 and 7 of the Act, out of financial assets defined in subparagraph 2 of Article 2 of the Act on Real Name Financial Transactions and Confidentiality. <Amended by Presidential Decree No. 15604, Dec. 31, 1997; Presidential Decree No. 18989, Aug. 5, 2005; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 24358, Feb. 15, 2013; Presidential Decree No. 27835, Feb. 7, 2017>
CHAPTER II INHERITANCE TAX BASE AND CALCULATION OF AMOUNT OF TAX
SECTION 1 Inherited Property
| Article 4 (Insurance Proceeds Regarded as Inheritance) |
| (1) | An amount calculated according to the following formula, shall be the amount of insurance proceeds regarded as inheritance pursuant to Article 8 (1) of the Act: <Amended by Presidential Decree No. 23591, Feb. 2, 2012; Presidential Decree No. 26069, Feb. 3, 2015> |
Total amount of insurance proceeds received × (Amount of premiums borne by an ancestor ÷ Total amount of premiums paid until the death of an ancestor according to relevant insurance contract)
| (2) | In applying paragraph (1), the amount of premiums borne by an ancestor shall be calculated according to the amount of premiums stated in the insurance policy; where dividends, etc. received by the ancestor according to the insurance contract have been appropriated to relevant premiums, an amount equivalent to the appropriated dividends, etc. shall be included in the premiums borne by the ancestor. |
| Article 5 (Trust Property Regarded as Inheritance) |
Whether one holds a right to receive profits from a trust pursuant to the proviso to Article 9 (1) of the Act and paragraph (2) of the same Article, shall be determined based upon a case in which the principal or benefit is paid to a third person pursuant to Article 25.
| Article 6 (Severance Pay, etc. Excluded from Inheritance) |
| Article 7 (Scope of Performance of Official Duties Corresponding to War) |
"Performance of official duties prescribed by Presidential Decree" in Article 11 of the Act means the conduct of military operations, such as suppression or guard, due to any incident or state of emergency corresponding thereto. [This Article Wholly Amended by Presidential Decree No. 27835, Feb. 7, 2017]
| Article 8 (Non-Taxable Inherited Property) |
| (1) | "Public organization prescribed by Presidential Decree" in subparagraph 1 of Article 12 of the Act means the following public organizations: <Newly Inserted by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 24358, Feb. 15, 2013> |
| 1. | Local government associations; |
| 2. | Deleted; <by Presidential Decree No. 16660, Dec. 31, 1999> |
| 3. | Public libraries, public museums or others similar thereto that are prescribed by Ordinance of the Ministry of Strategy and Finance. |
| (2) | "Land prescribed by Presidential Decree" in subparagraph 2 of Article 12 of the Act and Article 74 (1) 1 of the Act means land in a protected area where relevant cultural heritage or cultural heritage materials exist. <Newly Inserted by Presidential Decree No. 17039, Dec. 29, 2000; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 24358, Feb. 15, 2013> |
| (3) | "Property within the scope prescribed by Presidential Decree" in subparagraph 3 of Article 12 of the Act means the following property on the basis of an heir who presides over memorial ceremonies for ancestors (referring to all heirs who jointly preside over memorial ceremonies for ancestors where many heirs jointly preside over memorial ceremonies for ancestors): Provided, That where the sum of property under subparagraphs 1 and 2 exceeds 20 million won, 20 million won shall be the limit, and where the sum of property under subparagraph 3 exceeds 10 million won, 10 million won shall be the limit: <Amended by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 17459, Dec. 31, 2001; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 24358, Feb. 15, 2013> |
| 1. | Protected forest land not exceeding 9,900 square meters where surviving heirs preside over ancestral rites for the grave of their forefathers (hereafter referred to as "graves" in this Article); |
| 2. | Farmland not exceeding 1,980 square meters, which is adjacent to graves, and the income from which is for the management of such graves; |
| 3. | Genealogy books and ritual implements. |
| (4) | "Organization prescribed by Presidential Decree" in subparagraph 5 of Article 12 of the Act means a stock ownership association, a joint labor welfare fund, and the Labor Welfare Promotion Fund established under the Framework Act on Labor Welfare. <Amended by Presidential Decree No. 17459, Dec. 31, 2001; Presidential Decree No. 18989, Aug. 5, 2005; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 22516, Dec. 7, 2010; Presidential Decree No. 29533, Feb. 12, 2019> |
| (5) | "Property prescribed by Presidential Decree" in subparagraph 6 of Article 12 of the Act means property bequeathed to help the needy. <Amended by Presidential Decree No. 22042, Feb. 18, 2010> |
SECTION 3 Taxable Value of Inherited Property
| Article 9 (Public Imposts and Funeral Expenses) |
| (1) | Public imposts defined in Article 14 (1) and (2) of the Act mean those that an ancestor is liable to pay as at the date on which inheritance commences, which are tax, public utility charges or similar inherited by an heir, and are prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 20720, Feb. 29, 2008> |
| (2) | The sum of following amounts shall be the funeral expenses defined in Article 14 (1) 2 of the Act: <Amended by Presidential Decree No. 17459, Dec. 31, 2001; Presidential Decree No. 20791, May 26, 2008; Presidential Decree No. 22579, Dec. 30, 2010> |
| 1. | An amount (excluding an amount required for the use of an enshrinement facility or natural burial site) required directly for funeral from the date of death of an ancestor until the funeral date. In such cases, where the amount is less than five million won, five million won shall be the limit, and where the amount exceeds ten million won, ten million won shall be the limit; |
| 2. | An amount required for an enshrinement facility or natural burial site. In such cases, where the amount exceeds five million won, five million won shall be the limit. |
| Article 10 (Methods, etc. of Substantiating Debts) |
| (1) | "Amount substantiated according to the methods prescribed by Presidential Decree" in Article 14 (4) of the Act means debts of an ancestor as at the time inheritance commences, and the fact that an heir actually bears such debts shall be substantiated according to any of the following methods: <Amended by Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 26069, Feb. 3, 2015> |
| 1. | Documents verifying that debts owed to the State, local governments, finance companies, etc. are debts owed to such institutions; |
| 2. | Debts owed to persons other than those under subparagraph 1, shall be substantiated by a contract resulting in obligation, documents verifying a creditor, documents evidencing establishment of collateral and payment of interests, etc. |
| Article 11 (Scope of Property Included in Taxable Value of Inherited Property) |
| (1) | For the purposes of Article 15 (1) 1 of the Act, the proceeds from the disposal of property of and the withdrawn amount shall be an aggregate of the amounts calculated according to the following classifications: <Amended by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 17039, Dec. 29, 2000; Presidential Decree No. 20720, Feb. 29, 2008> |
| 1. | Where the property of an ancestor is disposed of, an amount actually earned within one or two years before the date inheritance commences, from the proceeds from the disposal thereof; |
| 2. | Where the property, such as money, etc., (hereafter referred to as "money, etc." in this Article) of an ancestor is withdrawn, money, etc. actually withdrawn within one or two years before the date inheritance commences from among inherited property. In such cases, where the money, etc. has been deposited in a current account, trust account, etc. prescribed by Ordinance of the Ministry of Strategy and Finance, an amount obtained by subtracting the sum of money, etc. deposited within one or two years before the date inheritance commences, from the money, etc. withdrawn within the relevant period shall be the money, etc.; and all deposited money, etc. not withdrawn from the relevant current account, trust account, etc. shall be excluded. |
| (2) | "Where use of such amount is not objectively and clearly verified, as prescribed by Presidential Decree" in Article 15 (1) 1 and 2 of the Act means any of the following cases: <Amended by Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 23591, Feb. 2, 2012> |
| 1. | Where the other party to a transaction (hereafter referred to as "the other party to a transaction" in this Article), to whom proceeds obtained by an ancestor after disposal of property, or money, etc. withdrawn from the property of an ancestor or an amount received after bearing a debt have been disbursed, is not identifiable due to lack of transactional evidence, etc.; |
| 2. | Where the other party to a transaction denies the fact that he/she has received money, etc. or the fact of receiving money, etc. is not acknowledged in view of his/her financial conditions, etc.; |
| 3. | Where the other party to a transaction is specially related to an ancestor, and thus the fact of paying disbursements is not acknowledged as socially acceptable; |
| 4. | Where other property acquired by an ancestor with the money, etc. he/she earned as he/she disposed of property or bore a debt is not verified; |
| 5. | Where the fact of paying disbursements is not acknowledged in view of the age, occupation, career, income, possessions, etc. of an ancestor. |
| (3) | "Where it is deemed that the heir is not obliged to repay any debt, as prescribed by Presidential Decree" in Article 15 (2) of the Act means where the fact that an heir actually bears the debt is not verified with the documents, etc. prescribed in Article 10 (1) 2. <Amended by Presidential Decree No. 22042, Feb. 18, 2010> |
| (4) | Where, in applying the provisions of paragraph (2), the amount not verified with the provisions of subparagraphs of the same paragraph is less than the smaller amount among the following, its use shall be presumed to be objectively unclear: <Amended by Presidential Decree No. 15509, Nov. 10, 1997; Presidential Decree No. 17828, Dec. 30, 2002> |
| 1. | An amount equivalent to 20/100 of proceeds obtained by an ancestor after disposal of property, of the amount of money, etc. withdrawn from the property of an ancestor or of the amount an ancestor receives after bearing a debt; |
| 2. | Two hundred million won. |
| (5) | "According to the types of property" in Article 15 (1) 1 of the Act means those under the following classifications: <Amended by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 22042, Feb. 18, 2010> |
| 1. | Cash, deposits, and securities; |
| 2. | Real estate and rights in real estate; |
| 3. | Deleted; <by Presidential Decree No. 15971, Dec. 31, 1998> |
| 4. | Property other than those listed in subparagraphs 1 and 2; |
| 5. | Deleted. <by Presidential Decree No. 15971, Dec. 31, 1998> |
SECTION 4 Non-Inclusion of Property Contributed for Public Interest in Taxable Value
| Article 12 (Scope of Public Service Corporations, etc.) |
"Person who conducts business prescribed by Presidential Decree" in Article 16 (1) of the Act means a person who conducts any of the following businesses (hereinafter referred to as "public service corporation, etc."): Provided, That where the person is publicly notified as a designated organization, etc. receiving donations prescribed in Article 39 (1) 1 (f) of the Enforcement Decree of the Corporate Tax Act within one year from the date of establishment when subparagraph 9 is applied, the person shall be deemed to fall under a public service corporation, etc. from the date of the establishment thereof: <Amended by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 16660, Dec. 31, 1999; Presidential Decree No. 17459, Dec. 31, 2001; Presidential Decree No. 18989, Aug. 5, 2005; Presidential Decree No. 19899, Feb. 28, 2007; Presidential Decree No. 20621, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 23591, Feb. 2, 2012; Presidential Decree No. 27835, Feb. 7, 2017; Presidential Decree No. 28074, May 29, 2017; Presidential Decree No. 28638, Feb. 13, 2018; Presidential Decree No. 29533, Feb. 12, 2019> | 1. | A project that significantly contributes to the propagation of religion and reformation of the people; |
| 5. | through 7. Deleted. <by Presidential Decree No. 28638, Feb. 13, 2018> |
| 10. | Business operated by a person who receives donations prescribed in Article 39 (1) 2 (c) of the Enforcement Decree of the Corporate Tax Act, with the donations: Provided, That a specific-purpose business that is highly unlikely to have public interest purposes, as it promotes collegiality or profits among members, or collects or pays a price for the purpose of profit-making, etc., shall be excluded; |
| 11. | Deleted. <by Presidential Decree No. 28638, Feb. 13, 2018> |
| Article 13 (Methods, etc. for Making Donations to Public Service Corporations, etc.) |
| (1) | "Extenuating circumstances prescribed by Presidential Decree, such as delay in the incorporation of a public service corporation, etc., for any legal or administrative grounds" in Article 16 (1) of the Act means any of the following cases: <Amended by Presidential Decree No. 20621, Feb. 22, 2008; Presidential Decree No. No. 23591, Feb. 2, 2012; Presidential Decree No. 24358, Feb. 15, 2013; Presidential Decree No. 27835, Feb. 7, 2017> |
| 1. | Where, in connection with the donation of property, transfer of ownership of donated property is delayed due to any legal or administrative grounds; |
| 2. | Where a public service corporation, etc. is established by donating inherited property and where permission, etc. for the establishment of public service corporation, etc. is delayed due to any legal or administrative grounds. |
| (2) | In order to exclude the value of property contributed to a public service corporation defined in Article 16 (1) of the Act, from the taxable value of inherited property, the contribution must meet the following requirements: <Amended by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 17828, Dec. 30, 2002; Presidential Decree No. 24358, Feb. 15, 2013; Presidential Decree No. 26960, Feb. 5, 2016> |
| 1. | The inherited property shall be contributed according to the heir's wishes (referring to consensual will of heirs, if the number of heirs is at least two) by a deadline specified in paragraph (1); |
| 2. | The number of heirs who become directors shall not exceed one-fifth of the number of current directors of the public service corporation to whom the heirs make a contribution prescribed in subparagraph 1 (the number of current directors shall be deemed five persons, if the number of directors is less than five persons), and heirs shall not have decision-making discretion as to any important matter concerning business operations of the public service corporation, such as appointment or dismissal of directors. |
| (3) | "Requirements prescribed by Presidential Decree" in the proviso to Article 16 (2) 2 of the Act, with the exception of its items, means the following requirements: <Newly Inserted by Presidential Decree No. 20621, Feb. 22, 2008; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. No. 23591, Feb. 2, 2012; Presidential Decree No. 24358, Feb. 15, 2013; Presidential Decree No. 26069, Feb. 3, 2015; Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 27835, Feb. 7, 2017; Presidential Decree No. 28638, Feb. 13, 2018> |
| 1. | At least 80/100 of the operating income (referring to the operating income defined in Article 38 (5)) of the relevant public service corporation shall be used directly for public interest projects; |
| 2. | The number of contributors (excluding the persons who have contributed an amount equivalent to 1/100 of the total value of the property contributed to the relevant public service corporation as at the date of contribution or 20 million won, whichever is smaller) or their specially- related persons shall not exceed one-fifth of the number of current directors of the public service corporation (the number of current directors shall be deemed five persons, if the number of directors is less than five persons): Provided, That the requirements defined in the main sentence shall be deemed to have been met continuously, if the number of contributors of their specially-related persons who have become directors exceeds one-fifth of the number of current directors due to any ground or event referred to in Article 38 (12) but does not exceed one-fifth of the number of current directors by increasing or replacing directors within two months from the date on which such ground or event occurs; |
| (4) | In applying paragraph (3) 1, Article 38 (6) shall apply mutatis mutandis to the outcomes of direct use for public interest projects and the standard amount. <Newly Inserted by Presidential Decree No. 20621, Feb. 22, 2008> |
| (5) | A conscientious public service corporation, etc. prescribed in the proviso to Article 16 (2) 2 of the Act with the exception of its items (hereinafter referred to as "conscientious public service corporation, etc.") shall obtain verification as to whether relevant requirements are met, from the head of a regional tax service having jurisdiction over the place where tax payments are made through relevant administrative agency, and thereafter obtain reverification every five years. In such cases, the head of a regional tax service shall verify the relevant fact and report whether such public service corporation, etc. falls under a conscientious public service corporation, etc. to the Commissioner of the National Tax Service, and notify the relevant public service corporation, etc. and the competent authority of the results thereof: <Newly Inserted by Presidential Decree No. 20621, Feb. 22, 2008; Presidential Decree No. No. 23591, Feb. 2, 2012; Presidential Decree No. 24358, Feb. 15, 2013; Presidential Decree No. 27835, Feb. 7, 2017; Presidential Decree No. 28638, Feb. 13, 2018> |
| (6) | Whether a conscientious public service corporation, etc. defined in paragraph (5) meets the relevant requirements shall be determined on the basis of the whole period of the relevant business year: Provided, That in cases of the requirements defined in paragraph (3) 2, whether a person operating a business prescribed in subparagraph 4 of Article 12 meets the requirements, shall be determined on the basis of the second quarter to fourth quarter of the relevant business year (limited to where it intends to be verified as a conscientious public service corporation, etc.). <Newly Inserted by Presidential Decree No. 26069, Feb. 3, 2015> |
| (7) | "Conscientious public service corporation, etc. which does not have a special relationship with a conglomerate restricted from mutual investment prescribed in Article 14 of the Monopoly Regulation and Fair Trade Act" in Article 16 (2) 2 of the Act, with the exception of its items, means a corporation belonging to a conglomerate restricted from mutual investment (hereinafter referred to as "conglomerate restricted from mutual investment") prescribed in Article 14 of the Monopoly Regulation and Fair Trade Act and a public service corporation, etc. which is not the same relevant person prescribed in subparagraph 1 of Article 3 of the Enforcement Decree of the aforesaid Act. <Amended by Presidential Decree No. 17828, Dec. 30, 2002; Presidential Decree No. 18989, Aug. 5, 2005; Presidential Decree No. 20621, Feb. 22, 2008; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 26069, Feb. 3, 2015; Presidential Decree No. 27835, Feb. 7, 2017; Presidential Decree No. 28638, Feb. 13, 2018> |
| (8) | Whether a public service corporation, etc. does not exercise the voting rights of shares, etc. contributed under Article 16 (2) 2 (a) (i) of the Act, shall be judged based on whether the articles of incorporation of the public service corporation, etc. provide that it shall not exercise the voting rights of shares contributed. <Newly Inserted by Presidential Decree No. 28638, Feb. 13, 2018> |
| (9) | Whether a pubic service corporation, etc. aims at charity, encouragement of learning or social welfare prescribed in Article 16 (2) 2 (a) (ii) of the Act shall be judged, based on whether the relevant pubic service corporation, etc. falls under any of the following: <Newly Inserted by Presidential Decree No. 28638, Feb. 13, 2018> |
| 2. | A public service corporation, etc. which spent at least 80 percent of the average amount of money directly spent for public services in the immediately preceding three taxable periods of income tax or three business years subject to corporate tax for charity, encouragement of learning or social welfare activities. |
| (10) | "Domestic corporation which does not have a special relationship with donors to such public service corporation, etc." in Article 16 (3) 1 of the Act means a domestic corporation not falling under any of the following: <Newly Inserted by Presidential Decree No. 17039, Dec. 29, 2000; Presidential Decree No. 17828, Dec. 30, 2002; Presidential Decree No. 18177, Dec. 30, 2003; Presidential Decree No. 18989, Aug. 5, 2005; Presidential Decree No. 20621, Feb. 22, 2008; Presidential Decree No. 21292, Feb. 4, 2009; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 22579, Dec. 30, 2010; Presidential Decree No. 23591, Feb. 2, 2012; Presidential Decree No. 24358, Feb. 15, 2013; Presidential Decree No. 26069, Feb. 3, 2015; Presidential Decree No. 27835, Feb. 7, 2017; Presidential Decree No. 28638, Feb. 13, 2018> |
| 1. | A domestic corporation, in which the donor (referring to the donor's heir if the donor is deceased; hereafter the same shall apply in this Article, Article 37 (2) and Article 38 (10)) or his/her specially related person (excluding the relevant public service corporation) is a shareholder or investor (hereinafter referred to as "shareholder, etc."), or in which the donor or his/her specially related person constitutes in excess of 1/5 of the current number (to be regarded as five if the number is less than five; hereafter the same shall apply in this paragraph) of executive officers, and in which the sum of shares and equity stakes (hereinafter referred to as "shares, etc."), held by the donor and his/her specially related person, is the greatest; |
| 2. | Where the sum of shares, etc. in a domestic corporation, in which the contributor or his/her specially related person (excluding relevant public service corporations, etc.) is a shareholder, etc. or in which the contributor or his/her specially-related person constitutes in excess of 1/5 of the current number of executive officers, held by the contributor, his/her specially related person and a corporation making an investment, such as a public service corporation, etc., (referring to a domestic corporation in which the relevant public service corporation, etc. holds in excess of 5/100 (10/100 in cases of a conscientious public service corporation, etc.) of the total number of shares, etc. issued by the domestic corporation; hereafter the same shall apply in this subparagraph) is the greatest, the corporation making an investment, such as the relevant public service corporation, etc. |
| (11) | "Public service corporation, etc. which does not have a special relationship with a conglomerate restricted from mutual investment" in Article 16 (3) 1 of the Act means a public service corporation, etc. prescribed in paragraph (7). <Newly Inserted by Presidential Decree No. 27835, Feb. 7, 2017> |
| (12) | "Exemplary public service corporation, etc. which does not have a special relationship with a conglomerate restricted from mutual investment" in Article 16 (3) 2 of the Act means a public service corporation, etc. prescribed in paragraph (7). <Newly Inserted by Presidential Decree No. 27835, Feb. 7, 2017> |
| (13) | "Value prescribed by Presidential Decree" in Article 16 (4) of the Act, with the exception of its subparagraphs, means the value of property or profits classified as follows, assessed pursuant to the provisions of Chapter IV as of the date on which inheritance commences: <Amended by Presidential Decree No. 17039, Dec. 29, 2000; Presidential Decree No. 20621, Feb. 22, 2008; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 22579, Dec. 30, 2010; Presidential Decree No. 23591, Feb. 2, 2012; Presidential Decree No. 27835, Feb. 7, 2017> |
| 1. | In cases falling under Article 16 (4) 1 of the Act: The value of property or profits vested in an heir (including a person who has a special relationship with the heir); |
| 2. | In cases falling under Article 16 (4) 2 of the Act: The value of shares, etc. donated in excess of 10/100 of the total number of issued shares, etc. |
| (14) | With regard to the provisions of paragraphs (3) through (5), matters necessary for the methods for verifying whether a conscientious public service corporation, etc. meets requirements, documents to be submitted, etc. shall be prescribed by Ordinance of the Ministry of Strategy and Finance. <Newly Inserted by Presidential Decree No. 24358, Feb. 15, 2013> |
| (15) | Where, in applying this Article, the relevant administrative agency or relevant Minister is unknown, the head of a competent tax office shall be deemed the relevant administrative agency or relevant Minister. <Newly Inserted by Presidential Decree No. 24358, Feb. 15, 2013> |
| Article 14 (Scope, etc. of Trust for Public Interest) |
| (1) | The trust for public interest defined in Article 17 (1) of the Act shall be one meeting all of the following requirements: <Amended by Presidential Decree No. 20621, Feb. 22, 2008> |
| 1. | That the beneficiary of the trust for public interest shall be a public service corporation, etc. prescribed in Article 12 or a beneficiary of the public service corporation, etc.; |
| 2. | That the trust for public interest shall not be terminated in the middle-term or revoked by the expiration date; |
| 3. | Where the trust for public interest is terminated in the middle-term or revoked, remaining property in the trust for public interest shall escheat to the State, a local government or another trust for public interest. |
| (2) | The property excluded from the taxable value of inherited property pursuant to Article 17 (1) of the Act shall be placed in a trust by the deadline for filing inheritance tax returns: Provided, That where placement in a trust is delayed on a legal or administrative ground, the property shall be placed in a trust within six months from the end of the month in which such reason ceases to exist. <Newly Inserted by Presidential Decree No. 20621, Feb. 22, 2008; Presidential Decree No. 23591, Feb. 2, 2012> |
SECTION 5 Inheritance Deductions
| Article 15 (Family Business Succession) |
| (1) | "Small or medium enterprise prescribed by Presidential Decree" in Article 18 (2) 1 of the Act, with the exception of its items, means an enterprise that fully meets the following requirements (hereinafter referred to as "small and medium enterprise") as of the end of the period for which a tax is imposed on income, of the period for which a tax is imposed on income immediately preceding the business year for which a corporate tax is imposed, or of the business year for which a corporate tax is imposed, in which the date on which inheritance takes place falls: <Amended by Presidential Decree No. 27835, Feb. 7, 2017; Presidential Decree No. 28638, Feb. 13, 2018> |
| 1. | It shall mainly conduct business in the category of business prescribed in the attached Table; |
| 3. | Its total assets shall be less than 500 billion won. |
| (2) | "Backbone enterprise prescribed by Presidential Decree" in Article 18 (2) 1 of the Act, with the exception of its items, means an enterprise that fully meets the following requirements (hereinafter referred to as "backbone enterprise") as of the end of the period for which a tax is imposed on income, of the period for which a tax is imposed on income immediately preceding the business year for which a corporate tax is imposed, or of the business year for which a corporate tax is imposed, in which the date on which inheritance takes place falls: <Amended by Presidential Decree No. 27835, Feb. 7, 2017; Presidential Decree No. 28638, Feb. 13, 2018> |
| 1. | It shall mainly conduct business in the category of business prescribed in the attached Table; |
| 3. | The average amount of its sales (sales shall be calculated, as prescribed by Ordinance of the Ministry of Strategy and Finance, and sales in the period for which a tax is imposed on income or the business year for which a corporate tax is imposed, which is less than one year, means its sales converted for one year) during three periods for which a tax is imposed on income or the business year for which a corporate tax is imposed immediately preceding the date on which inheritance takes place, shall be less than 300 billion won. |
| (3) | Succession to a family business defined in Article 18 (2) 1 of the Act (hereinafter referred to as "family business succession") shall be applicable only where an ancestor and an heir meet the following requirements. The same shall not apply where inheritance takes place upon the death of the person (excluding the heir who succeeded to a family business) who was the largest stockholder of the largest investor (referring to the largest stockholder or the largest investor prescribed in Article 19 (2); hereinafter referred to as "largest stockholder or investor") as at the time of family business succession after the family business succession was completed: <Amended by Presidential Decree No. 21292, Feb. 4, 2009; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 24358, Feb. 15, 2013; Presidential Decree No. 25195, Feb. 21, 2014; Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 27835, Feb. 7, 2017; Presidential Decree No. 28638, Feb. 13, 2018; Presidential Decree No. 29533, Feb. 12, 2019> |
| 1. | Where the ancestor meets all the following requirements: |
| (a) | The ancestor is the largest stockholder, etc. of a small and medium enterprise or backbone enterprise, who shall own at least 50/100 [where he/she is a corporation listed on the Exchange (hereinafter referred to as "Exchange") prescribed in Article 8-2 (2) of the Financial Investment Services and Capital Markets Act, referring to 30/100] of the total number of issued shares, etc. of the relevant enterprise totalling shares, etc. of the ancestor and persons who have a special relationship with him/her for at least ten consecutive years; |
| (b) | The ancestor has been in service as a representative director (referring to a representative in cases of a sole proprietorship; hereafter referred to as "representative director" in this Article, Articles 16 and 68) for any of the following periods during which the family business defined in Article 18 (2) 1 of the Act (hereinafter referred to as "family business") has been in operation: |
| (i) | At least 50/100 of the period; |
| (ii) | A period of at least ten years (limited to cases where the heir has been in service continuously until the date of commencement of inheritance after the heir succeeded to the ancestor's position of representative director; |
| (iii) | A period of at lest five out of ten years, retrospectively from the day inheritance commences; |
| 2. | Where the heir meets all of the following requirements. In such cases, if the spouse of the heir meets all of the following requirements, the heir shall be deemed to meet the requirements): |
| (a) | The heir is at least 18 years of age as at the date of commencement of inheritance; |
| (b) | The heir has directly engaged in the family business for at least two years before the date of commencement of inheritance (if the heir has engaged in the family business since two years before the date of commencement of inheritance but was unable to engage in the family business for a certain period during the period until the date of commencement of inheritance retroactively from the first day of the two years before the date of commencement of inheritance due to the ground or event referred to in paragraph (8) 2 (c), the heir shall be deemed to have engaged even during such period): Provided, That this shall not apply where the ancestor dies before he/she attains 65 years of age or dies due to any extenuating circumstance, such as a natural disaster or an accident caused by human error; |
| (c) | Deleted; <by Presidential Decree No. 26960, Feb. 5, 2016> |
| (d) | The heir takes office as an executive officer by a deadline for filing a tax return on the inheritance tax base and takes office as a representative director within two years from a deadline for fling a tax return on inheritance tax. |
| (4) | In applying paragraph (3), where an ancestor has engaged in at least two independent enterprises as family businesses, the limitations of deduction for the family business succession, the order of deduction, etc. shall be prescribed by Ordinance of the Ministry of Strategy and Finance. <Newly Inserted by Presidential Decree No. 26960, Feb. 5, 2016> |
| (5) | "Value of the inherited property of family business" in Article 18 (2) 1 of the Act means the value of the property that the heir who meets all the requirements under paragraph (3) 2 (hereafter referred to as "heir who succeeds to a family business" in this Article) inherit or will inherit, as determined in the following subparagraphs: <Amended by Presidential Decree No. 23591, Feb. 2, 2012; Presidential Decree No. 25195, Feb. 21, 2014; Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 27835, Feb. 7, 2017; Presidential Decree No. 28638, Feb. 13, 2018> |
| 1. | A family business to which the Income Tax Act is applicable: The value obtained by subtracting the amount of debt secured by assets for business purposes, such as land, buildings and machinery, used directly for the family business from the value of the relevant assets; |
| 2. | A family business to which the Corporate Tax Act is applicable: The value of stocks, etc. of a corporation that falls within the category of family business [referring to an amount obtained by multiplying the value of relevant stocks, etc. by the ratio of the value of assets exclusive of the following assets (referring to the value assessed in accordance with Chapter IV of the Act as at the date of commencement of inheritance; hereafter in this Article referred to as "assets irrelevant to business") as at the date of commencement of inheritance to total assets of the corporation (referring to the value assessed in accordance with Chapter IV of the Act as at the date of commencement of inheritance)]: |
| (d) | Excessive cash on hand [referring to where the amount of cash on hand exceeds 150/100 of the average amount of cash on hand at the end of five business years immediately preceding the date of commencement of inheritance (including demand deposits and financial products maturing in not more than three months from the date of acquisition)]; |
| (e) | Shares, etc., bonds, and financial products in possession without any direct connection to business activities of the corporation (excluding those referred to in item (d)). |
| (6) | The value of property which an heir who succeeds or is to succeed a family business prescribed in Article 18 (3) of the Act inherits or is to inherit, other than property he/she inherited on family business succession, shall be the amount obtained by subtracting the following amounts from the value of the property which the heir who succeeds to the family business inherits or is to inherit (including donated property which the heir who succeeds to the family business receives from among the donated property to be included in the inherited property pursuant to Article 13 of the Act): <Newly Inserted by Presidential Decree No. 28638, Feb. 13, 2018> |
| 1. | Amount of a debt proved pursuant to Article 10 (1), which the relevant heir who succeeds to the family business owes; |
| 2. | Value of property the relevant heir who succeeds to the family business inherits or is to inherit on family business succession according to the classification under the subparagraphs of paragraph (5). |
| (7) | "Amount obtained by multiplying the amount to be paid by the relevant heir as inheritance tax by the percentage prescribed by Presidential Decree" in Article 18 (3) of the Act means the amount of money obtained by multiplying the amount of inheritance tax the heir who succeeds to the family business is liable to pay, calculated pursuant to Article 3-2 (1) and (2) of the Act by 200 percent where the relevant heir who succeeds to the family business fails to get a tax deduction for family business succession prescribed in paragraph (2) 1 of the aforesaid Article. <Newly Inserted by Presidential Decree No. 28638, Feb. 13, 2018> |
| (8) | "Justifiable ground prescribed by Presidential Decree" in the former part of Article 18 (6) of the Act, with the exception of its subparagraphs, means the following: <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 23591, Feb. 2, 2012; Presidential Decree No. 24358, Feb. 15, 2013; Presidential Decree No. 25195, Feb. 21, 2014; Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 27835, Feb. 7, 2017; Presidential Decree No. 28638, Feb. 13, 2018; Presidential Decree No. 29533, Feb. 12, 2019> |
| (a) | Where assets for family business defined in paragraph (9) (hereafter referred to as "assets for family business" in this Article) are expropriated or sold pursuant to a contract, transferred to the State or a local government, or disposed by way of alteration or replacement of facilities, the relocation of the place of business, etc. prescribed in the Act on Acquisition of and Compensation for Land for Public Works Projects or any other Act: Provided, That this shall only apply where assets of the same kind as the assets disposed of are acquired as replacement and used continuously for family business; |
| (b) | Where assets for family business are donated to the State or a local government; |
| (c) | Where the heir who succeeds to the family business dies; |
| (d) | Where the ownership of assets is transferred due to reorganization, such as merger, division, consolidation, conversion of a sole proprietorship into a corporation: Provided, That this shall only apply where the type of business remains unchanged from that before reorganization and the transferred assets for family business are used continuously for the business; |
| (e) | Where assets for family business are disposed of at the end of their useful life; |
| (a) | Where the heir who succeeds to the family business is dead; |
| (b) | Where assets for family business succession are donated to the State or a local government; |
| (c) | Where a ground or event specified by Ordinance of the Ministry of Strategy and Finance affects the heir, such as the commence of military services under statutes and medical treatment of a disease; |
| (a) | Where stocks, etc. are disposed of in the course of reorganization, such as merger or division: Provided, That this shall only apply where the heir remains as the largest stockholder or investor of the corporation subsequent to reorganization, such as the merged corporation or the corporation established by division, even after disposal; |
| (b) | Where the heir's share decreases as a result of the allocation of stocks, etc. to persons other than those specially related to the heir when the corporation's capital is increased as a consequence of the expansion of business of the corporation: Provided, That this shall only apply where the heir is the largest stockholder or investor; |
| (c) | Where the heir dies: Provided, That this shall only apply where the heir to the deceased person succeeds to the status of the preceding heir and engages in the family business; |
| (d) | Where stocks, etc. are donated to the State or a local government; |
| (f) | Where stocks, etc. are reduced equally without any refund at the stock holding ratio or equity share ratio of each stockholder or investor; |
| (9) | "Property for the relevant family business" in Article 18 (6) 1 (a) of the Act means the following assets: <Amended by Presidential Decree No. 23591, Feb. 2, 2012; Presidential Decree No. 25195, Feb. 21, 2014; Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 28638, Feb. 13, 2018> |
| 1. | A family business governed by the Income Tax Act: Assets for business purposes, including the land, buildings, and machinery used directly for a family business; |
| 2. | A family business governed by the Corporate Tax Act: Fixed assets for business purposes (excluding assets irrelevant to business) used directly for the business of a corporation that amounts to family business. |
| (10) | The ratio of the value prescribed in subparagraph 2 to the value prescribed in subparagraph 1 (hereafter in this Article referred to as “disposal ratio of assets”) shall be deemed the disposal ratio of assets for family business: <Amended by Presidential Decree No. 28638, Feb. 13, 2018; Presidential Decree No. 29533, Feb. 12, 2019> |
| 1. | The value of assets for family business as at the date of commencement of inheritance; |
| 2. | The value of assets disposed of (including cases where such assets are not used for business but leased to a third person), out of assets for family business. |
| (11) | "Where the heir is no longer engaged in the family business" in Article 18 (6) 1 (b) of the Act includes the following cases: <Amended by Presidential Decree No. 25195, Feb. 21, 2014; Presidential Decree No. 26069, Feb. 3, 2015; Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 28638, Feb. 13, 2018> |
| 1. | Where the heir (or the heir's spouse in cases of the latter part of paragraph (3) 2) does not serve as a representative director; |
| 2. | Where the main business type of the family business is changed [excluding cases where the type of business is changed within a certain group defined by the standard classification formulated and publicly notified by the Commissioner of the Statistics Korea pursuant to Article 22 of the Statistics Act (hereinafter referred to as "Korean Standard Industrial Classification") and the sales of the type of business in which a family business engages as at the date of commencement of inheritance (referring to the type of business within a class defined by the Korean Standard Industrial Classification) reach at least 30/100 of the turnover as at the end of the relevant business year]; |
| 3. | Where the relevant family business is temporarily closed for at least one year (including cases where the family business has no business performance) or permanently closed. |
| (12) | "Where the equity of the heir ... has decreased" in the main sentence of Article 18 (6) 1 (c) of the Act shall include any of the following cases: <Amended by Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 23591, Feb. 2, 2012; Presidential Decree No. 28638, Feb. 13, 2018> |
| 1. | Where the heir has disposed of stocks, etc. that he/she has inherited; |
| 2. | Where the heir’s equity share rate has decreased as his/her right was forfeited, etc. when the relevant corporation increased its capital by issuing new stocks; |
| 3. | Where the heir has failed to correspond to the largest shareholder etc. because his/her right has been forfeited, etc. when a person specially related to the heir disposed of stocks, etc. or the relevant corporation increased its capital by issuing new stocks. |
| (13) | "Rate prescribed by Presidential Decree" in the former part of Article 18 (6) of the Act, with the exception of its subparagraphs, means a rate determined according to the table of rates of additional collection for each period prescribed in subparagraph 2 on the basis of the period prescribed in subparagraph 1 (hereafter referred to as "rate of surcharge by period" in this Article): Provided, That such rate means the rate of surcharge by period, multiplied by the disposal ratio of assets, if Article 18 (6) 1 (a) of the Act is applicable: <Newly Inserted by Presidential Decree No. 25195, Feb. 21, 2014; Presidential Decree No. 27835, Feb. 7, 2017; Presidential Decree No. 28638, Feb. 13, 2018; Presidential Decree No. 29533, Feb. 12, 2019> |
| 1. | Period classified as follows: |
| (b) | Where Article 18 (6) 1 (d) of the Act applies: The period from the end of the period for which a tax is imposed on income or of the business year for which a corporate tax is imposed, in which inheritance takes place, to the relevant date; |
| (c) | Where Article 18 (6) 1 (e) of the Act applies: The longest period from among the periods in which the whole average of the number of regular workers calculated by accumulating from the end of the period for which a tax is imposed on income or of the business year for which a corporate tax is imposed, in which inheritance takes place, to the end of each period for which a tax is imposed on income or of the business year for which a corporate tax is imposed, which satisfies 100/100 (120/100 in cases of a backbone enterprise) or more of the base number of employees defined in Article 18 (6) 1 (d) of the Act; |
| 2. | Table of rate of additional collection for each period: |
| Period | Rate | | Less than seven years | 100/100 | | At least seven years but less than eight years | 90/100 | | At least eight years but less than nine years | 80/100 | | At least nine years but less than ten years | 70/100 |
|
| (14) | "Amount equivalent to interest calculated pursuant to Presidential Decree" in the latter part of Article 18 (6) of the Act, with the exception of its subparagraphs, where an heir gets a tax deduction for family business succession pursuant to Article 18 (2) 1 of the Act, means an amount calculated by multiplying the amount prescribed in subparagraph 1 by the period prescribed in subparagraph 2 and the rate prescribed in subparagraph 3: <Newly Inserted by Presidential Decree No. 27835, Feb. 7, 2017; Presidential Decree No. 28638, Feb. 13, 2018> |
| 1. | Amount of inheritance tax determined pursuant to the former part of Article 18 (6) of the Act, with the exception of its subparagraphs; |
| 2. | Period from the day after a deadline for filing an inheritance tax return on inherited property on family business succession at first to the day on which grounds prescribed in the subparagraphs of Article 18 (6) of the Act arise; |
| (15) | The average number of regular workers defined in Article 18 (6) 1 (d) of the Act shall be calculated by dividing the sum of regular workers as at the end of each month of each period for which a tax is imposed on income or of each business year for which a corporate tax is imposed, by the number of months of the relevant period for which a tax is imposed on income or of the relevant business year for which a corporate tax is imposed. <Newly Inserted by Presidential Decree No. 25195, Feb. 21, 2014; Presidential Decree No. 27835, Feb. 7, 2017; Presidential Decree No. 28638, Feb. 13, 2018> |
| (16) | If a corporation that is recognized as a family business is divided or merges with another corporation in applying Article 18 (6) 1 (d) and (e) of the Act, the number of regular workers shall be calculated as follows: <Newly Inserted by Presidential Decree No. 29533, Feb. 12, 2019> |
| 1. | If some of regular workers of the corporation that is recognized as a family business are succeeded to by, and work for, another corporation following the division, such regular workers shall be deemed the regular workers of the corporation that is recognized as a family business even after the division; |
| 2. | If regular workers of another corporation are succeeded to by, and work for, the corporation that is recognized as a family business following the merger, such regular workers shall be deemed the regular workers of the corporation that is recognized as a family business even before inheritance takes place. |
| (17) | "Amount equivalent to the capital gains tax calculated as prescribed by Presidential Decree" in the main sentence of Article 18 (10) of the Act means the multiple of an amount obtained by subtracting the capital gains tax calculated by applying Article 9 of the Act7 from the capital gains tax calculated by applying Article 97-2 (4) of the Income Tax Act from the property derived from family business inheritance being transferred after receiving deductions for family business succession defined in Article 18 (2) 1 of the Act by the rate of additional collection for each period. <Newly Inserted by Presidential Decree No. 25195, Feb. 21, 2014; Presidential Decree No. 27835, Feb. 7, 2017; Presidential Decree No. 28638, Feb. 13, 2018; Presidential Decree No. 29533, Feb. 12, 2019> |
| (18) | A person who intends to receive deductions pursuant to Article 18 (2) 1 of the Act shall submit a statement of property derived from family business succession and documents substantiating the fact of family business succession prescribed by Ordinance of the Ministry of Strategy and Finance, along with an inheritance tax base return defined in Article 64 (hereinafter referred to as "inheritance tax base return") to the head of a tax office having jurisdiction over the place for payment of tax. In such cases, the head of a tax office having jurisdiction over the place for payment of tax shall manage whether deductions for family business succession are appropriate and whether the items of Article 18 (6) 1 of the Act are applicable each year; and where any violation occurs, he/she shall impose an inheritance tax including the previously deducted amount in the taxable value of inherited property as at the time inheritance commences. <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 24358, Feb. 15, 2013; Presidential Decree No. 25195, Feb. 21, 2014; Presidential Decree No. 27835, Feb. 7, 2017; Presidential Decree No. 28638, Feb. 13, 2018; Presidential Decree No. 29533, Feb. 12, 2019> |
| (19) | Where an heir files an inheritance tax return and reports an amount equivalent to interest pursuant to Article 18 (8) of the Act, he/she shall submit a report on additional collection of a tax deduction for family business succession after the fact and a calculation sheet for voluntary payment prescribed by Ordinance of the Ministry of Finance and Strategy to the head of a regional tax office having jurisdiction over the place where tax payments are made. <Newly Inserted by Presidential Decree No. 28638, Feb. 13, 2018; Presidential Decree No. 29533, Feb. 12, 2019> |
[This Article Wholly Amended by Presidential Decree No. 20621, Feb. 22, 2008]
| Article 16 (Farming Business Succession) |
| (1) | Farming business in Article 18 (2) 2 of the Act means where a person engages in agriculture, forestry, or fishery defined in the Korean Standard Industrial Classification as main business. |
| (2) | Farming business succession in Article 18 (2) 2 of the Act (hereinafter referred to as "farming business succession") shall be applicable only where the ancestor meets all the following requirements: Provided, That this shall not apply to cases falling under subparagraph 2 where inheritance commences upon the death of the largest stockholder or investor as at the time of farming business succession (excluding the heir who has succeeded to the farming business) after the farming business succession is completed: <Amended by Presidential Decree No. 29533, Feb. 12, 2019> |
| 1. | Farming business governed by the Income Tax Act: Where all the following requirements are met: |
| (a) | The ancestor shall directly engage in farming continuously for two years before the date of commencement of inheritance (if the ancestor is unable to directly engage in farming for a certain period to take medical treatment for a disease during the period that begins retroactively on the first day of the two-year period from the date of commencement of inheritance and ends on the date of commencement of inheritance while having directly engaged in farming from two years before the date of commencement of inheritance, the ancestor shall be deemed to have directly engaged in farming even during such period); |
| (b) | The ancestor has resided in a Si (including an administrative Si under Article 10 (2) of the Special Act on the Establishment of Jeju Special Self-Governing Province and the Development of Free International City; hereinafter the same shall apply in this Article), Gun, or Gu (referring to an autonomous Gu; hereinafter the same shall apply in this Article) in which farmland, grassland, or forest (hereafter referred to as "farmland" in this Article) is located or a Si/Gun/Gu adjacent to the aforementioned Si/Gun/Gu or an area 30 kilometers away directly from the farmland (including an area that can be generally managed directly in cases of a forest) or in an area 30 kilometers away from the Si/Gun/Gu located along the nearest coast to the place of ship registration of the relevant fishing vessel or the relevant fishing ground or a Si/Gun/Gu adjacent to the aforementioned Si/Gun/Gu or in an area 30 kilometers away directly from the relevant place of ship registration or coast; |
| 2. | Farming business governed by the Corporate Tax Act: Where all the following requirements are met: |
| (a) | The ancestor shall operate the relevant enterprise continuously for two years before the date of commencement of inheritance (if the ancestor is unable to operate the relevant enterprise for a certain period to take medical treatment for a disease during the period that begins retroactively on the first day of the two-year period from the date of commencement of inheritance and ends on the date of commencement of inheritance while having operated the relevant enterprise from two years before the date of commencement of inheritance, the ancestor shall be deemed to have operated such enterprise even during such period); |
| (b) | The ancestor holds at least 50/100 of the total number of outstanding stocks, etc. of the relevant corporation continuously, as an aggregate of the stocks, etc. held by the principal and his/her specially related persons. |
| (3) | Farming business succession shall be applicable where the heir is at least 18 years of age as at the date of commencement of inheritance and meets the following requirements or where the heir is a successor to agriculture, fishery, or forestry, as prescribed by Ordinance of the Ministry of Strategy: <Amended by Presidential Decree No. 29533, Feb. 12, 2019> |
| 1. | Farming business to which the Income Tax applies: Where all the following requirements are met: |
| (a) | The heir shall directly engage in farming continuously for two years before the date of commencement of inheritance (if the heir is unable to directly engage in farming for a certain period for any reason prescribed in Article 15 (8) 2 (c) during the period that begins retroactively on the first day of the two-year period from the date of commencement of inheritance and ends on the date of commencement of inheritance while having directly engaged in farming from two years before the date of commencement of inheritance, the heir shall be deemed to have directly engaged in farming even during such period): Provided, That the foregoing shall not apply if the ancestor dies before reaching the age of 65 or due to any unavoidable cause, such as a natural or man-made disaster; |
| (b) | The heir resides in the area specified in paragraph (2) 1 (b); |
| 2. | Farming business to which the Corporate Tax Act applies: Where all the following requirements are met: |
| (a) | The heir has worked for the relevant enterprise continuously for two years before the date of commencement of inheritance (if the heir is unable to work for the relevant enterprise for a certain period for any reason prescribed in Article 15 (8) 2 (c) during the period that begins retroactively on the first day of the two-year period from the date of commencement of inheritance and ends on the date of commencement of inheritance while having worked for the relevant enterprise from two years before the date of commencement of inheritance, the heir shall be deemed to have worked for such enterprise even during such period): Provided, That the foregoing shall not apply if the ancestor dies before reaching the age of 65 or due to any unavoidable cause, such as a natural or man-made disaster; |
| (b) | The heir shall take office as an executive officer by a deadline for filing a tax return on inheritance tax and shall take office as a representative director within two years from a deadline for filing a tax return on inheritance tax. |
| (4) | "While having directly engaged in farming" in paragraphs (2) 1 (a) and (3) 1 (a) means any of the following cases: Provided, That if the sum of the business incomes defined in Article 19 (2) of the Income Tax Act (excluding the income from agriculture, forestry, and fishery, the income from a business of leasing real estate prescribed in Article 45 (2) of the Income Tax Act, and the supplemental income of a farm household prescribed in Article 9 of the Enforcement Decree of the same Act, and where the amount of incomes from such business is a negative number, the amount of such income shall be deemed zero) of the relevant ancestor or heir and the total amount of wages prescribed Article 20 (2) of the same Act for a certain taxable period is at least 37 million won, the ancestor or heir shall not be deemed to have engaged in the farming business during the relevant taxable period: <Amended by Presidential Decree No. 28638, Feb. 13, 2018> |
| 1. | Where the ancestor or heir engages in cultivating agricultural products or growing perennial plants on a regular basis by using his/her own farmland and other assets or performs at least 1/2 of farming works directly; |
| 2. | Where the ancestor or heir engages in breeding livestock as defined in subparagraph 1 of Article 2 of the Livestock Industry Act, regularly using his/her own grassland and other assets or performs at least 1/2 of works for breeding livestock directly; |
| 3. | Where the ancestor or heir engages in fishery regularly using his/her own fishing vessel, fishery right, and other assets with a permit issued under the Inland Water Fisheries Act or the Fisheries Act or performs at least 1/2 of fishing works directly; |
| (5) | "Value of the inherited property of farming business" in Article 18 (2) 2 of the Act means the value of the property that an heir who meets the requirements defined in paragraph (3) has inherited or will inherit according to the following classifications: |
| 1. | Farming business to which the Income Tax Act applies: The value of assets that the ancestor has used for farming business from two years before the date of commencement of inheritance, out of the inherited property specified in any of the following subparagraphs: |
| (c) | A forest newly created since at least five years elapsed according to a forest management plan authorized under Article 13 of the Creation and Management of Forest Resources Act or as a project in a special forest project zone defined in Article 28 of the same Act (including a designated development project in a designated development area defined in Article 2 of the Addenda to the previous Forestry Act in force before the amendment (Act No. 4206) entered into force, as a designated development area defined in the same Act; the same shall apply hereinafter) in a preserved mountainous district defined in Article 4 (1) 1 of the Mountainous Districts Management Act (including reserved forests, seed-gathering forests, conservation zones for forest gene resources, the same shall apply hereafter in this Article); |
| (f) | A warehouse, storage, workshop, compost depot, cattle shed, or fish farm installed for agriculture, forestry, livestock industry, or fishery or a building registered under the Registration of Real Estate Act for any similar purpose of use and the land appurtenant to such structure or building (limited to the area obtained by dividing the actual building area of the relevant building by the building-to-land ratio defined in Article 55 of the Building Act); |
| 2. | Farming business to which the Corporate Tax Act applies: The value of stocks, etc. of a corporation, out of inherited property. In such cases, Article 15 (5) 2 shall apply mutatis mutandis to the method of calculating the value of stocks, etc. of the corporation. |
| (6) | "Justifiable ground prescribed by Presidential Decree" in Article 18 (6) of the Act, with the exception of its subparagraphs, means any of the following cases: <Amended by Presidential Decree No. 28638, Feb. 13, 2018> |
| 1. | Where the heir who has succeeded to farming business dies; |
| 2. | Where the heir who has succeeded to farming business emigrates abroad under the Emigration Act; |
| 3. | Where the inherited property on farming business succession is expropriated or sold through a contract defined in the Act on Acquisition of and Compensation for Land for Public Works Projects or any other Act; |
| 4. | Where the inherited property on farming business succession is transferred or donated to the State or a local government; |
| 5. | Farmland is exchanged, merged after being subdivided, or substituted according to needs of farming business; |
| 6. | In any of the following cases where stocks, etc. defined in paragraph (5) 2 are disposed of: Provided, That this shall be limited to cases where the heir remains the largest stockholder or investor even after disposing of stocks, etc.: |
| (a) | Where the heir has paid the tax in kind with the stocks, etc. that he/she has inherited in accordance with Article 73 of the Act; |
| (b) | Where the heir falls under any item of Article 15 (8) 3; |
| 7. | Where any of the extenuating circumstances specified by Ordinance of the Ministry of Strategy and Finance occurs, among those similar to the cases specified in subparagraphs 1 through 6. |
| (7) | Where an heir gets a tax deduction for farming business succession pursuant to Article 18 (2) 2 of the Act, "amount equivalent to interest calculated pursuant to Presidential Decree" in the latter part of paragraph (6) of the aforesaid Article, with the exception of its subparagraphs, means an amount calculated by applying Article 15 (14) mutatis mutandis. In such cases, "inherited property on family business succession" shall be deemed "inherited property on farming business succession." <Newly Inserted by Presidential Decree No. 28638, Feb. 13, 2018> |
| (8) | A person who wishes to have a deduction for inheritance of farming business shall submit a statement of inherited property on farming business succession and the documents specified by Ordinance of the Ministry of Strategy and Finance that demonstrate the farming business succession to the head of the tax office having jurisdiction over the place of tax payment, along with a tax return on the inheritance tax base. <Amended by Presidential Decree No. 28638, Feb. 13, 2018> |
[This Article Wholly Amended by Presidential Decree No. 26960, Feb. 5, 2016]
| Article 17 (Value of Inherited Property for Spouses and Grounds for Non-Division) |
| (1) | "Value of inherited property prescribed by Presidential Decree" in the calculation formula prescribed in Article 19 (1) 1 of the Act, means the value obtained by subtracting the value of the following property from the total assets obtained from inheritance: <Newly Inserted by Presidential Decree No. 17828, Dec. 30, 2002; Presidential Decree No. 27835, Feb. 7, 2017> |
| 3. | Property contributed to public service corporations, etc., excluded from the taxable value of inherited property prescribed in the provisions of Article 16 of the Act; |
| 4. | Property trusted for public interest, excluded from the taxable value of inheritance prescribed in the provisions of Article 17 of the Act. |
| (2) | "Extenuating circumstance prescribed by Presidential Decree" in the main sentence of Article 19 (3) of the Act, means any of the following cases: <Amended by Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 25195, Feb. 21, 2014> |
| 1. | Where an heir, etc. brings an action claiming for recovery of succession to inheritance, or requests judgement on the division of inheritance; |
| 2. | Where the head of the competent tax office deems that inheritance is not divisible for the spouse because of an extenuating circumstance, etc. for which heirs are not determined. |
| (3) | A person who reports grounds for which inheritance is indivisible pursuant to the proviso to Article 19 (3) of the Act, shall report as prescribed by Ordinance of the Ministry of Strategy and Finance within the deadline for dividing the inheritance for the spouse prescribed in Article 19 (2) of the Act by attaching a document evidencing a ground falling under any of the subparagraphs of Article 19 (2) of the Act. <Amended by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 17828, Dec. 30, 2002; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 22579, Dec. 30, 2010> |
| Article 18 (Other Personal Deductions) |
| (1) | Family members residing together under the provisions of Article 20 (1) of the Act shall mean lineal ascendants (including a spouse's lineal ascendants), lineal descendants, brothers and sisters whose livelihood is actually supported by an ancestor as at the day inheritance commences. |
| (3) | Where a person falling under the provisions of paragraph (2), intends to be granted a deduction under the provisions of Article 20 (1) 4 of the Act, he/she shall submit a disabled person certificate prescribed by Ordinance of the Ministry of Strategy and Finance together with an inheritance tax base return to the head of a tax office having jurisdiction over the place for payment of tax. In such cases, a wounded person certificate prescribed by Act on the Honorable Treatment of and Support for Persons, etc. of Distinguished Service to the State or a disabled person registration card prescribed by the Act on Welfare of Persons with Disabilities may be submitted in lieu of the disabled person certificate. <Amended by Presidential Decree No. 15486, Sep. 30, 1997; Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 16682, Dec. 31, 1999; Presidential Decree No. 18989, Aug. 5, 2005; Presidential Decree No. 20720, Feb. 29, 2008> |
| Article 19 (Inheritance Tax Deductions for Financial Property) |
| (1) | "Financial property prescribed by Presidential Decree" in Article 22 (1) of the Act, with the exception of its subparagraphs, means money and securities, such as deposits, installment savings, premiums, fraternity dues, investments, trust property (limited to trust funds), insurance proceeds, mutual aid funds, stocks, bonds, beneficiary certificates, investment shares, bills, etc., handled by financial companies, etc., and other property prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 15604, Dec. 31, 1997; Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 18989, Aug. 5, 2005; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 26069, Feb. 3, 2015> |
| (2) | "Largest shareholder or largest investor prescribed by Presidential Decree" in Article 22 (2) of the Act means the whole of a said shareholder and persons specially related thereto in cases where the total number of stocks, etc. held by the shareholder and the persons specially related thereto is the most. <Amended by Presidential Decree No. 23591, Feb. 2, 2012> |
| (3) | A person who intends to be granted deductions pursuant to Article 22 (1) of the Act shall submit a return on deduction for inheritance tax on financial property prescribed by Ordinance of the Ministry of Strategy and Finance together with an inheritance tax base return, to the head of a tax office having jurisdiction over the place of payment of tax. <Amended by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 20720, Feb. 29, 2008> |
| (4) | "Financial debt prescribed by Presidential Decree" in the main sentence of Article 22 (1) of the Act, with the exception of its subparagraphs, means a debt owed to a financial company, etc. verified pursuant to Article 10 (1) 1. <Newly Inserted by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 26069, Feb. 3, 2015> |
| Article 20 (Scope, etc. of Disasters) |
| (1) | "Disaster prescribed by Presidential Decree" in the main sentence of Article 23 (1) of the Act means a disaster due to fire, collapse, explosion, environmental pollution incident, natural calamity, etc. <Amended by Presidential Decree No. 22042, Feb. 18, 2010> |
| (2) | The amount of loss to be deducted from the taxable value of inherited property pursuant to Article 23 (1) of the Act, means the amount of loss to the inherited property. |
| (3) | A person who intends to be granted disaster loss deductions under the provisions of Article 23 (1) of the Act shall submit a disaster loss report prescribed by Ordinance of the Ministry of Strategy and Finance accompanied by a document verifying the fact of disaster together with an inheritance tax base return to the head of a tax office having jurisdiction over the place for payment of tax. <Amended by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 20720, Feb. 29, 2008> |
| Article 20-2 (Scope of Acknowledging House as One Where Heir and Ancestor Have Resided Together) |
| (1) | "One house per household prescribed by Presidential Decree" in Article 23-2 (1) 2 of the Act means cases where a household defined in Article subparagraph 6 of Article 88 of the Income Tax Act owns a house (including a high-priced house defined in Article 89 (1) 3 of the Income Tax Act). In such cases, even where a household owns at least two houses as it falls under any of the following, the household shall be deemed to own one house: <Newly Inserted by Presidential Decree No. 22579, Dec. 30, 2010; Presidential Decree No. 23591, Feb. 2, 2012; Presidential Decree No. 24358, Feb. 15, 2013; Presidential Decree No. 25195, Feb. 21, 2014; Presidential Decree No. 27835, Feb. 7, 2017> |
| 1. | Where an ancestor temporarily owns two houses upon acquiring another house (including cases where he/she builds and acquires a house): Provided, That this shall apply only to cases where he/she transfers the former house to a third party from the date he/she acquires another house and moves to said other house; |
| 2. | Where an heir marries a person who owned a house before the day inheritance commences: Provided, That this shall apply only where the house owned by the heir's spouse is transferred to a third party within five years from the date of marriage; |
| 6. | Where a person who owns a house and constitutes a household temporarily owns two houses and thus corresponds to two houses for one household as he/she combines households to live together with lineal ascendants to care for them: Provided, That this shall apply only where a house owned by a person, other than the ancestor, is transferred to a third party within five years from the date households are combined; |
| 7. | Where an ancestor temporarily owns two houses as he/she marries a person who owns a house before the date inheritance commences: Provided, That this shall apply only where a house owned by the ancestor's spouse is transferred to a third party within five years from the date of marriage. |
| (2) | "Ground prescribed by Presidential Decree" in Article 23-2 (2) of the Act means any of the following cases: <Amended by Presidential Decree No. 22579, Dec. 30, 2010> |
| 2. | Grounds prescribed by Ordinance of the Ministry of Strategy and Finance, such as going to school, working conditions or recovering from illness; |
| 3. | Grounds prescribed by Ordinance of the Ministry of Strategy and Finance, which are similar to subparagraphs 1 and 2. |
| (3) | Where paragraph (1) 1 applies, a house in which an ancestor lives together with his/her heir on the date when inheritance takes place, shall be deemed a house where they live together. <Newly Inserted by Presidential Decree No. 27835, Feb. 7, 2017> |
[This Article Newly Inserted by Presidential Decree No. 21292, Feb. 4, 2009]
| Article 20-3 (Assessment Fee Credits) |
| (1) | "Appraisal and assessment fees for inherited property prescribed by Presidential Decree" in Article 25 (1) 2 of the Act, means fees required for appraising and assessing inherited property in order to file and pay inheritance tax, to which any of the following applies: <Amended by Presidential Decree No. 18989, Aug. 5, 2005; Presidential Decree No. 19333, Feb. 9, 2006; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 25195, Feb. 21, 2014; Presidential Decree No. 26069, Feb. 3, 2015; Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 27472, Aug. 31, 2016> |
| 3. | An appraisal fee for tangible property defined in Article 52 (2) 2. |
| (2) | The provisions of paragraph (1) 1 shall only apply to cases where inheritance tax is filed and paid, based on the price assessed according to the provisions of the same subparagraph. <Amended by Presidential Decree No. 19333, Feb. 9, 2006> |
| (3) | Where a fee defined in paragraph (1) 1 or 3 exceeds five million won, it shall be limited to five million won, and a fee defined in subparagraph 2 of the same paragraph shall be limited to ten million won for each corporation to be assessed and for each credit rating agency that requests appraisal. <Amended by Presidential Decree No. 19333, Feb. 9, 2006; Presidential Decree No. 25195, Feb. 21, 2014> |
| (4) | A person who intends to obtain deduction for a fee prescribed in the provisions of paragraphs (1) through (3) shall submit documents verifying payment of a fee, along with an inheritance tax base return, to the head of a tax office having jurisdiction over the place for payment of tax. |
[This Article Newly Inserted by Presidential Decree No. 18177, Dec. 30, 2003]
| Article 20-4 (Gift Tax Credits) |
"Tax base calculated, as prescribed by Presidential Decree" in the latter part of Article 28 (2) of the Act means an amount equivalent to inheritance tax base for each heir defined in Article 3 (1) 1. <Amended by Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 26960, Feb. 5, 2016> [This Article Newly Inserted by Presidential Decree 17052, Dec. 29, 2000]
| Article 21 (Foreign Tax Credits) |
| (1) | An amount calculated according to the following calculation formula shall be the amount of tax paid in a foreign country, deductable from taxable value of inherited property pursuant to Article 29 of the Act: Provided, That where the amount exceeds the amount of inheritance tax imposed according to foreign Acts and subordinate statutes, such amount of inheritance tax shall be the limit: <Amended by Presidential Decree No. 23591, Feb. 2, 2012> |
| Amount of inheritance tax calculated× Tax base on inherited property imposed under foreign statutes (referring to the inheritance tax base according to the Acts and subordinate statutes of the relevant foreign country / Inheritance tax base defined in Article 25 (1) of the Act |
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| (2) | A person who intends to obtain tax credit for taxes paid in a foreign country pursuant to paragraph (1) shall submit an application for tax credit for taxes paid in a foreign country prescribed by Ordinance of the Ministry of Strategy and Finance together with an inheritance tax base return to the head of a tax office having jurisdiction over the place for payment of tax. <Amended by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 20720, Feb. 29, 2008> |
| Article 22 (Calculation of Property to Be Re-inherited) |
The tax credit for short-term re-inheritance defined in Article 30 of the Act shall be calculated for each re-inherited property. <Amended by Presidential Decree No. 15971, Dec. 31, 1998>
CHAPTER III GIFT TAX BASE AND CALCULATION OF TAX
SECTION 1 Donated Property
| Article 23 (General Principles for Calculation of Value of Donated Property) |
| (1) | "Amount of increase in the value of property calculated according to the methods prescribed by Presidential Decree" in the main sentence of Article 31 (1) 3 of the Act means the amount calculated by subtracting the values defined in subparagraphs 2 through 4 from the value defined in subparagraph 1: |
| 1. | The value of the relevant property: The value as at the date on which the cause increasing the value of the property arises (referring to the value assessed under Chapter IV of the Act); |
| 2. | The acquisition value of the relevant property: The amount actually paid in order to acquire the relevant property (referring to the taxable value of gift tax in cases of donated property); |
| 3. | Ordinary increase in value: The amount deemed equivalent to a normal increase in value during the period for ownership of the relevant property, taking into account the profit from the actual increase of the value of the enterprise, the average annual rate of increase of land price, the average annual increase rate of housing price, the rate of inflation in national consumer price index, etc.; |
| 4. | Contribution to an increase in value: The amount paid by a donee in order to increase the value of the relevant property. |
| (2) | "Amount prescribed by Presidential Decree" in the proviso to Article 31 (1) 3 of the Act means the aggregate of the amounts defined in paragraph (1) 2 through 4. |
[This Article Wholly Amended by Presidential Decree No. 26960, Feb. 5, 2016]
| Article 24 (Timing for Acquisition of Inherited Property) |
| (1) | "Date prescribed by Presidential Decree, such as the date the property is transferred or the date the property is actually used" in Article 32 of the Act means any of the dates specified as follows: <Amended by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 18177, Dec. 30, 2003; Presidential Decree No. 18989, Aug. 5, 2005; Presidential Decree No. 23591, Feb. 2, 2012; Presidential Decree No. 24358, Feb. 15, 2013; Presidential Decree No. 26069, Feb. 3, 2015; Presidential Decree No. 26960, Feb. 5, 2016> |
| 1. | The date of registration or entry in a register for property for which registration or entry is required to transfer or exercise the right: Provided, That for the acquisition of real estate for which registration defined in Article 187 of the Civil Act is unnecessary, it shall be the date on which ownership of the real estate is actually acquired; |
| 2. | The date a written approval for use of a building is issued where any of the following applies. In such cases, where it is actually used or approval for temporary use is obtained before the use thereof is approved, the date of actual use or temporary use shall be the acquisition date; as for a building for which permission for construction is not obtained or for a building being constructed without making a report, the date of actual use shall be the acquisition date: |
| (a) | Where construction of a building is completed after obtaining permission for construction or making a report on construction in the name of a donee for the purpose of donating the building to the donee after construction; |
| (b) | Where, for the purpose of donation, the right to acquire a parcel of a building (hereinafter referred to as "right to acquire a parcel of a building") is acquired in the name of a donee from a construction business proprietor or the right to acquire a parcel of a building is bought in the name of a donee from a third party; |
| 3. | Where the value property increases through a third person's contribution, the following dates: |
| (a) | Implementation of a development project: The date on which the zone is designated and publicly notified as a development zone; |
| (b) | Change of form and quality: The date on which change of form and quality is permitted; |
| (c) | Division of common property: The date on which division of common property is registered; |
| (d) | Authorization or permission for projects, permission for development and use of groundwater, etc.: The date on which such authorization or permission is granted; |
| (e) | Listing of stocks, etc.. registration of unlisted stocks and corporate merger: The date stocks, etc. are listed, the date unlisted stocks are registered and the date merger of corporations is registered; |
| (f) | Payment of proceeds from a life insurance policy or a non-life insurance policy: The date an insured incident occurs; |
| (g) | Cases other than those falling under the provisions of items (a) through (f): The date grounds for increase in the value of property occur; |
| 4. | For property other than that listed in subparagraphs 1 through 3, the date it is transferred or is actually used. |
| (2) | In applying paragraph (1), where the property received as a donation is stocks, etc., a donee shall be deemed to acquire the socks, etc. on the date on which the fact that relevant stocks, etc. are transferred is objectively verified by receiving dividends, by exercising shareholder's right, etc.: Provided, That where the date on which such stocks, etc. are delivered to him/her is unknown, or where the acquirer's domicile, name, etc. defined in Article 337 or 557 of the Commercial Act, are inserted in the shareholder's register or employee list before he/she is delivered relevant stocks, etc., the date on which the name of holder is changed or the name is entered shall be the acquisition date. <Amended by Presidential Decree No. 18989, Aug. 5, 2005; Presidential Decree No. 24358, Feb. 15, 2013; Presidential Decree No. 26069, Feb. 3, 2015> |
| (3) | In applying paragraph (1), where the property received as a donation is unregistered bonds, such bonds shall be deemed acquired on the date on which the fact of acquisition is objectively verified by the fact of receiving, etc. interest on the bonds: Provided, That where the acquisition date is unclear, the date on which the acquirer requests the payment of interest on the bonds or requests redemption of the bonds shall be the acquisition date. <Amended by Presidential Decree No. 24358, Feb. 15, 2013> |
| Article 25 (Methods, etc. of Calculating Earnings from Trust) |
| (1) | "Date prescribed by Presidential Decree, such as the date on which principal and earnings are actually paid to the beneficiary" in Article 33 (1) of the Act, with the exception of its subparagraphs, means the date on which principal or earnings are actually paid to the beneficiary, except the following days: <Amended by Presidential Decree No. 16660, Dec. 31, 1999; Presidential Decree No. 18177, Dec. 30, 2003; Presidential Decree No. 26960, Feb. 5, 2016> |
| 1. | Where the trustor of the relevant trust property dies before the person designated as a beneficiary accrues the profits: The date of death of the trustor; |
| 2. | Where principal or earnings have not been paid to a beneficiary by the date on which it was agreed under a trust agreement to pay principal or profits to the beneficiary: The date on which it was agreed to pay principal or earnings; |
| 3. | Where principal or profits are paid in installments: The date on which the first installment of principal or profits are paid: Provided, That it shall be the date on which principal or profits are actually paid, if the amount of principal or profits are not finally fixed as at the date the trust deed is concluded. |
| (2) | For the purpose of applying Article 33 (1) of the Act, the profits from a trust shall be assessed by applying subparagraph 2 of Article 61 mutatis mutandis as at the time of donation defined in paragraph (1). <Newly Inserted by Presidential Decree No. 18177, Dec. 30, 2003; Presidential Decree No. 26960, Feb. 5, 2016> |
| Article 26 (Methods, etc. of Calculating Earnings from Acquisition at Low Price or Transfer at High Price) |
| (1) | "Property prescribed by Presidential Decree, such as convertible bonds" in Article 35 (1) of the Act means the following property: <Amended by Presidential Decree No. 15509, Nov. 10, 1997; Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 17039, Dec. 29, 2000; Presidential Decree No. 17828, Dec. 30, 2002; Presidential Decree No. 18177, Dec. 30, 2003; Presidential Decree No. 18989, Aug. 5, 2005; Presidential Decree No. 20621, Feb. 22, 2008; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 26069, Feb. 3, 2015; Presidential Decree No. 26960, Feb. 5, 2016> |
| (2) | "Standard amount prescribed by Presidential Decree" in Article 35 (1) of the Act means the smaller of the following amounts: <Amended by Presidential Decree No. 26960, Feb. 5, 2016> |
| 1. | The equivalence of 30/100 of the market value (referring to the price assessed under Articles 60 through 66 of the Act; hereafter referred to as "market value" in this Article); |
| (3) | "Standard amount prescribed by Presidential Decree" in Article 35 (2) of the Act means the amount equivalent to 30/100 of the market value of the property transferred or acquired. <Amended by Presidential Decree No. 26960, Feb. 5, 2016> |
| (4) | "Amount prescribed by Presidential Decree" in Article 35 (2) of the Act in the Act means 300 million won. <Amended by Presidential Decree No. 26960, Feb. 5, 2016> |
| (5) | The date of acquisition or transfer defined in Article 35 (1) or (2) of the Act shall be based on the date on which the payment of the price for the relevant property is cleared (referring to the date specified in any of Article 162 (1) 1 through 3 of the Enforcement Decree of the Income Tax Act in cases falling under Article 162 (1) 1 through 3; hereafter referred to as "date of clearance of payment" in this paragraph): Provided, That the date shall be based on the date of a sale and purchase agreement, if any of the causes and events specified by Ordinance of the Ministry of Strategy and Finance, such as a sudden change in exchange rates, arises after concluding the sale and purchase agreement. <Amended by Presidential Decree No. 26960, Feb. 5, 2016> |
| Article 26-2 (Timing for Donation of Earnings Resulting from Exemption from Financial Obligations, etc.) |
The date on which a person is exempted from a financial obligation defined in Article 36 (1) of the Act shall be determined as follows: | 1. | Where a person is exempted by a creditor from a financial obligation: The date on which the creditor manifests his/her intention to exempt the financial obligation; |
| 2. | Where a person assumes a financial obligation from a third party: The date on which an agreement is concluded between the third party and the creditor on the assumption of the financial obligation. |
[This Article Newly Inserted by Presidential Decree No. 26960, Feb. 5, 2016]
| Article 27 (Methods, etc. of Calculating Earnings from Gratuitous Use of Real Estate) |
| (1) | Article 37 (1) of the Act shall also apply where a person entitled to the gratuitous use of real estate uses only land or a building owned by a third party: <Amended by Presidential Decree No. 23591, Feb. 2, 2012; Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 29533, Feb. 12, 2019> |
| 1. | and 2. Deleted. <by Presidential Decree No. 29533, Feb. 12, 2019> |
| (2) | In applying Article 37 (1) of the Act, if the area of real estate actually used by each person is uncertain when several persons use the real estate gratuitously, such several persons shall be deemed to be using the same area, respectively. In this case, if there are two or more users of real estate who have a relationship prescribed in Article 2-2 (1) 1 with the owner of the real estate, a representative user prescribed by Ordinance of the Ministry of Strategy and Finance, taking into account their kinship with the owner, shall be deemed a gratuitous user, and each of such users of real estate shall be deemed a gratuitous user in other cases. <Newly Inserted by Presidential Decree No. 29533, Feb. 12, 2019> |
| (3) | The earnings from the gratuitous use of real estate defined in Article 37 (1) of the Act shall be calculated by converting the earnings from the gratuitous use of real estate as calculated by the following formula for each year according to the method prescribed by Ordinance of the Ministry of Strategy and Finance. In such cases, the period of gratuitous use of the relevant real estate shall be five years, but, if the period of gratuitous use exceeds five years, the period of gratuitous use of the relevant real estate shall be deemed renewed on the date immediately following the fifth anniversary of the date of commencement of gratuitous use: <Amended by Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 29533, Feb. 12, 2019> |
| Value of real estate (referring to the value assessed under Chapter IV of the Act x Rate specified by Ordinance of the Ministry of Strategy and Finance, based upon use charges for one year |
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| (4) | "Standard amount prescribed by Presidential Decree" in the proviso to Article 37 (1) of the Act means 100 million won. <Newly Inserted by Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 29533, Feb. 12, 2019> |
| (5) | The earnings from the borrowings of money, etc. on gratuitously used real estate collateralized under Article 37 (2) of the Act shall be calculated by subtracting the interest actually paid or payable as at the time of borrowing money, etc. from the amount calculated by multiplying the loans by the reasonable interest rate under the main sentence of Article 31-4 (1). In such cases, if there is no fixed term of loan, the term of loan shall be one year, but, if the term of loan exceeds one year, the period of use of the relevant real estate as collateral shall be deemed to be renewed on the date immediately following the first anniversary of the date of commencement of the use of the relevant real estate. <Newly Inserted by Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 29533, Feb. 12, 2019> |
| (6) | "Standard amount prescribed by Presidential Decree" in the proviso to Article 37 (2) of the Act means ten million won. <Newly Inserted by Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 29533, Feb. 12, 2019> |
| (7) | In applying Article 37 (1) of the Act, if a building for any other purpose, such as a store, is annexed to a residential house as part of it or another building for any other purpose is built on a building site with the same lot number, the whole of the relevant real estate shall be deemed a residential house defined in Article 37 (1) of the Act, only if the area of the house exceeds the area of the building other than the house. <Amended by Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 29533, Feb. 12, 2019> |
[This Article Wholly Amended by Presidential Decree No. 18177, Dec. 30, 2003]
| Article 28 (Methods, etc. of Calculating Earnings Resulting from Merger) |
| (1) | "Merger between corporations in a special relationship prescribed by Presidential Decree" in the main sentence of Article 38 (1) of the Act, means a merger between any of the following corporations during the period from the date of commencement of the business year immediately preceding the business year in which the merger is registered (referring to the earlier date of commencement, if a merger takes place between corporations with different dates of commencement of the business year) to the date of registration of the merger: Provided, That no merger between any of the following corporations shall be regarded as a merger between corporations in a special relationship, if a listed corporation prescribed in the Financial Investment Services and Capital Markets Act merges with another corporation in accordance with Article 165-4 of the same Act and Article 176-5 of the Enforcement Decree of the same Act: <Amended by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 17039, Dec. 29, 2000; Presidential Decree No. 17459, Dec. 31, 2001; Presidential Decree No. 17828, Dec. 30, 2002; Presidential Decree No. 18989, Aug. 5, 2005; Presidential Decree No. 20621, Feb. 22, 2008; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 23591, Feb. 2, 2012; Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 29533, Feb. 12, 2019> |
| 3. | Corporations in a relationship in which one and the same person is deemed to influence the management of each corporation subject to a merger (referring to the corporation dissolved or absorbed in the course of the merger or the corporation newly incorporated in the course of or surviving the merger; the same shall apply hereinafter) by exercising the power to appoint or dismiss executive officers or make decisions on business policies. |
| (2) | "Large shareholder, etc. prescribed by Presidential Decree" in the main sentence of Article 38 (1) of the Act means a shareholder who owns at least 1/100 of the total number of outstanding stocks, etc. of the relevant corporation or owns stocks, etc. amounting to at least 300 million won in par value (hereafter referred to as "large shareholder" in this Article and Article 29-2), if the shares held by the relevant shareholder and his/her specially related persons are aggregated. <Amended by Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 23591, Feb. 2, 2012; Presidential Decree No. 26960, Feb. 5, 2016> |
| (3) | The earnings defined in Article 38 (1) of the Act shall be calculated as follows: <Amended by Presidential Decree No. 26960, Feb. 5, 2016> |
| 1. | Where stocks, etc. are delivered as the consideration for a merger: The multiple of the amount calculated by subtracting the amount under item (a) from the amount under item (b) by the number of stocks, etc. of the newly established or surviving corporation, which are delivered to a large shareholder of a corporation subject to the merger whose stock price is overvalued: |
| (a) | The assessed value of each stock of the corporation newly incorporated in the course of or surviving the merger; |
| (b) | The assessed value of each stock of the corporation subject to the merger whose stock price is overvalued × (Number of stocks, etc. of the corporation subject to the merger whose stock price is overvalued prior to the merger/Number of stocks, etc. of the newly incorporated or surviving corporation, which are transferred to a shareholder of the corporation subject to the merger whose stock price is overvalued); |
| 2. | Where the price for a merge is paid in kind other than by stocks, etc. (limited to cases where the assessed value of each stock of a corporation subject to a merger is less than par value and the price paid exceeds the assessed value): The amount obtained by multiplying the amount calculated by subtracting the assessed value from the par value (referring to the relevant price for the merger, if the price for the merger is less than par value) from the assessed value by the number of stocks, etc. held by a large shareholder. |
| (4) | "Standard amount prescribed by Presidential Decree" in the proviso to Article 38 (1) of the Act means either of the following amounts: <Amended by Presidential Decree No. 26960, Feb. 5, 2016> |
| 1. | In cases falling under paragraph (3) 1: The smaller amount of the value equivalent to 30/100 of the assessed value of stocks, etc. of the corporation newly incorporated or surviving the merger or 300 million won; |
| 2. | In cases falling under paragraph (3) 2: 300 million won. |
| (5) | In applying paragraph (3) 1 (a), the assessed value of each stock of the corporation newly incorporated or surviving a merger shall be the smaller of the following values, if the corporation newly incorporated or surviving a merger is a listed corporation prescribed in the Financial Investment Services and Capital Markets Act, whose stocks are traded in the stock exchange under the same Act (hereinafter referred to as "listed corporation"), while the value defined in subparagraph 2 shall be the assessed value of each stock of any unlisted corporation: <Amended by Presidential Decree No. 17039, Dec. 29, 2000; Presidential Decree No. 18627, Dec. 31, 2004; Presidential Decree No. 18989, Aug. 5, 2005; Presidential Decree No. 20621, Feb. 22, 2008; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 27835, Feb. 7, 2017> |
| 2. | The value obtained by dividing the sum of the value of stocks, etc. of the corporation subject to a merger, whose stock price is overvalued, immediately before the merger and the value of stocks, etc. of the corporation subject to the merger, whose stock price is undervalued, immediately before the merger by the number of stocks, etc. of the corporation newly incorporated or surviving the merger. In such cases, the date of public announcement of the balance sheet defined in Article 522-2 of the Commercial Act or the date on which a registration statement on the merger defined in Article 119 of the Financial Investment Services and Capital Markets Act and Article 129 of the Enforcement Decree of the same Act is submitted, whichever is earlier (referring to the date of public announcement of the balance sheet defined in Article 522-2 of the Commercial Act, in cases of an unlisted corporation), shall be deemed the base date of assessment of the value of stocks, etc. immediately before the merger. |
| (6) | The assessed value of each stock defined in paragraph (3) 1 (b) and the value of stocks, etc. immediately before a merger defined in paragraph (5), shall be based on the values assessed pursuant to Articles 60 and 63 of the Act: Provided, That, in cases of a listed corporation, the value shall be assessed by the methods defined in Article 60 of the Act and Article 63 (1) 1 (b) of the Act, if the difference (referring to the difference calculated by the formula prescribed in paragraph (3) 1; hereafter the same shall apply in this paragraph) between the values assessed by the assessment methods defined in Articles 60 and 63 (1) 1 (b) of the Act, respectively, is less than the difference between the values assessed by the assessment methods prescribed in Articles 60 and 63 (1) 1 (a) of the Act, respectively. <Newly Inserted by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 16660, Dec. 31, 1999; Presidential Decree No. 18177, Dec. 30, 2003; Presidential Decree No. 18627, Dec. 31, 2004; Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 27835, Feb. 7, 2017> |
| (7) | In applying paragraph (6), the value of stocks, etc. of the divided business division of a corporation divided for a merger by division shall be based on the value of the divided business division as assessed by applying the method defined in Article 63 (1) 1 (b) of the Act. <Newly Inserted by Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 27835, Feb. 7, 2017> |
| Article 29 (Methods, etc. of Calculating Earnings Resulting from Capital Increase) |
| (1) | "Date prescribed by Presidential Decree, such as the date on which the price of stocks is paid, etc." in Article 39 (1) of the Act, with the exception of its subparagraphs, means either of the following days: <Newly Inserted by Presidential Decree No. 17828, Dec. 30, 2002; Presidential Decree No. 18177, Dec. 30, 2003; Presidential Decree No. 26069, Feb. 3, 2015; Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 27835, Feb. 7, 2017> |
| 2. | Where a corporation falls under Article 39 (1) 3 of the Act: Date on which the corporation converts convertible shares to other kinds of shares; |
| 3. | Cases other than those falling under subparagraphs 1 and 2: Date on which payment is made for stocks purchased (where a person allotted forfeited stocks before the date payment is made for purchased stocks, is issued a certificate of a preemptive right to new stocks, referring to the date issuance is made). |
| (2) | The profits defined in Article 39 (1) of the Act shall be calculated as follows: Provided, That, if the value of each stock before and after capital does not exceed zero, profits shall be deemed nil: <Amended by Presidential Decree No. 17828, Dec. 30, 2002; Presidential Decree No. 18177, Dec. 30, 2003; Presidential Decree No. 18627, Dec. 31, 2004; Presidential Decree No. 23591, Feb. 2, 2012; Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 27835, Feb. 7, 2017> |
| 1. | Profits defined in Article 39 (1) 1 (a), (c), and (d) of the Act: Multiple of the amount obtained by subtracting the value defined in item (b) from the value defined in item (a) by the number of forfeited stocks or new stocks defined in item (c): |
| (a) | Stock price calculated according to the following formula: Provided, That where, in cases of a listed corporation, etc., the assessed stock price after capital increase is smaller than the stock price calculated according to the following formula, such price shall apply: |
| [(Assessed stock price before capital increase × Total number of stocks issued before capital increase) + (Acquisition price per new stock × Number of stocks increased by capital increase)] ÷ (Total number of stocks issued before capital increase + Number of stocks increased by capital increase) |
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| (b) | Acquisition price per new stock; |
| (c) | Number of allotted forfeited stocks or new stocks (in cases of a person who is allotted in excess of the number of stocks to be allotted under equitable condition, the number of excessive stocks); |
| 2. | Profits prescribed in Article 39 (1) 1 (b) of the Act: Where the price obtained by subtracting the price defined in item (b) from the price calculated according to item (a) is at least 30/100 of the price calculated according to item (a), or the amount obtained by multiplying the aforementioned price by the number of forfeited stocks under item (c) is 300 million won or more, such amount: |
| (a) | Stock price calculated according to the following formula: Provided, That where, in cases of a listed corporation, etc., the assessed price of a stock after capital increase is smaller than the stock price calculated according to the following formula, such price: |
| [(Assessed stock price before capital increase × Total number of stocks issued before capital increase) + (Acquisition price per new stock × Number of increased stocks issued where increase is made equally in proportion to the equity share before capital increase)] ÷ (Total number of stocks issued before capital increase + Number of increased stocks where increase is made equally in proportion to the equity share before capital increase) |
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| (b) | Acquisition price of a new stock; |
| Number of forfeited stocks × Proportion of equity share of the acquirer of new stocks after capital increase × (Number of forfeited stocks of a person specially related to the acquirer of new stocks ÷ Total number of forfeited stocks) |
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| 3. | Profits prescribed in Article 39 (1) 2 (a) of the Act: The multiple of the amount obtained by subtracting the amount defined in item (b) from the amount defined in item (a), by the number of forfeited stocks defined in item (c): |
| (a) | Acquisition price of a new stock; |
| (b) | Stock price calculated according to the following calculation formula: Provided, That where, in the case of a listed corporation, etc., the assessed price of a stock after capital increase is greater than the stock price calculated according to the following calculation formula, such price: |
| [(Assessed stock price before capital increase × Total number of stocks issued before capital increase) + (Acquisition price per new stock × Number of increased stocks issued where increase is made equally in proportion to the equity share before capital increase)] ÷ (Total number of stocks issued before capital increase + Number of increased stocks where increase is made equally in proportion to the equity share before capital increase) |
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| Number of forfeited stocks of shareholders who renounced the right to acquire new stocks × (Number of forfeited stocks acquired by a person specially related to the shareholders who renounced the right to acquire new stocks ÷ Total number of forfeited stocks) |
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| 4. | Profits prescribed in Article 39 (1) 2 (b) of the Act: An amount obtained according to the following formula (limited to cases in which the amount is at least 300 million, or the price obtained by subtracting the price defined in subparagraph 3 (b) from the price defined in subparagraph 3 (a) is at least 30/100 of the price defined in subparagraph 3 (b)): |
| [(Price defined in subparagraph 3 (a)? Price defined in subparagraph 3 (b)) × Number of forfeited stocks of shareholders who renounced the right to acquire new stocks] × (Number of forfeited stocks acquired by persons specially related to the shareholders who renounced the right to acquire new stocks ÷ Number of increased stocks where increase is made equally in proportion to the equity share before capital increase) |
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| [(Price defined in subparagraph 3 (a)? Price defined in subparagraph 3 (b)) × Number of new stocks not allotted to a shareholder who is eligible to acquire new stocks but renounced the right to acquire new stocks or the number of new stocks obtained by subtracting the number of new stocks a shareholder is allotted below the number of stocks he/she is eligible under equal condition from the number of stocks he/she is eligible under equal condition] × [(Number of new stocks acquired by persons specially related to the shareholder not allotted new stocks or allotted new stocks below the number of new stocks he/she is eligible under equal condition ÷ Sum of new stocks allotted to non-shareholders and the number of new stocks acquired by shareholders of the corporation in excess of the new stocks to which such shareholders are eligible under equal condition)] |
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| 6. | Profits prescribed in Article 39 (1) 3 of the Act: Amount obtained by subtracting the value under item (b) from the value under item (a). In such cases, where the amount is not more than zero, no profit shall be deemed generated: |
| (a) | Profits calculated pursuant to the provisions of subparagraphs 1 through 5 by regarding shares issued as a result of the conversion of convertible shares to other kinds of shares as new shares; |
| (b) | Profits calculated pursuant to the provisions of subparagraphs 1 through 5 as at the time convertible shares are issued. |
| (4) | "Cases where a person underwrites or acquires securities through the method prescribed by Presidential Decree" in Articles 39 (1) 1 (c) and 40 (1) 1 (b), means cases where he/she underwrites or acquires securities from a person who has underwritten or acquired all or some of the securities for the purpose of requiring the third party to acquire securities, respectively. <Newly Inserted by Presidential Decree No. 27835, Feb. 7, 2017> |
| (5) | The term "minority shareholder" in Article 39 (2) of the Act, means a shareholder etc. who holds less than 1/100 of the total issued stocks, etc. of a corporation, the face value of which is less than 300 million won. <Amended by Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 27835, Feb. 7, 2017> |
[This Article Wholly Amended by Presidential Decree No. 17039, Dec. 29, 2000]
| Article 29-2 (Methods, etc. of Calculating Earnings Resulting from Capital Reduction) |
| (1) | The profits defined in Article 39-2 (1) of the Act shall be calculated as follows: <Amended by Presidential Decree No. 26960, Feb. 5, 2016> |
| 1. | Where stocks, etc. are retired at a price below market value (referring to the value assessed under Article 60 or 63; the same shall apply hereafter in this Article): |
| (Assessed value of each stock of stocks, etc. after capital reduction - Amount paid for each stock at retirement of stocks, etc.) x Number of stocks, etc. subject to capital reduction x large shareholders' share ratio after capital reduction x (Number of stocks, etc. of large shareholders and their specially related persons/Total number of stocks, etc. after capital reduction) |
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| 2. | If stocks, etc. are retired at a price above market value (limited to cases where the assessed value per stock of stocks, etc. is less than par value (referring to the relevant price, if the price is below par value; the same shall apply hereafter in this subparagraph)): |
| (Amount paid for each stock at the time of retirement of stocks, etc. - Assessed value per stock of stocks, etc. after capital reduction x Number of stocks, etc. held by relevant shareholders, etc. after capital reduction |
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| (2) | "Standard amount prescribed by Presidential Decree" in the proviso to Article 39-2 (1) of the Act, with the exception of its subparagraphs, means the lesser of the following amounts: <Newly Inserted by Presidential Decree No. 26960, Feb. 5, 2016> |
| 1. | The amount equivalent to 30/100 of the assessed value of stocks, etc. after capital reduction; |
| (3) | Deleted. <by Presidential Decree No. 26960, Feb. 5, 2016> |
[This Article Wholly Amended by Presidential Decree No. 17039, Dec. 29, 2000]
| Article 29-3 (Methods, etc. of Calculating Earnings From Investment in Kind) |
| (1) | The profits defined in Article 39-3 (1) of the Act shall be calculated as follows: Provided, That, if the value of each stock before and after investment in kind is not more than nil, profits shall be deemed nil: <Amended by Presidential Decree No. 23591, Feb. 2, 2012; Presidential Decree No. 24358, Feb. 15, 2013; Presidential Decree No. 24576, Jun. 11, 2013; Presidential Decree No. 26960, Feb. 5, 2016> |
| 1. | Profits defined in Article 39-3 (1) 1 of the Act: The amount obtained by multiplying the amount obtained by subtracting the amount defined in Article 29 (2) 1 (b) from the amount calculated by applying Article 29 (2) 1 (a) mutatis mutandis by the number of new stocks an investor who invests in kind is allotted (excluding cases in which a listed corporation prescribed by the Financial Investment Services and Capital Markets Act allots stocks according to the method of capital increase through public offering defined in Article 165-6 of the same Act (hereafter referred to as "capital increase through public offering" in this Article)). In such cases, "capital increase" in Article 29 (2) 1 (a) shall be deemed "investment in kind," respectively; |
| 2. | Profits defined in Article 39-3 (1) 2 of the Act: The multiple of the amount obtained by subtracting the amount calculated by applying Article 29 (2) 3 (b) mutatis mutandis from the amount defined in Article 29 (2) 3 (a) respectively by the number of new stocks an investor who invests in kind acquires (excluding stocks alloted according to capital increase through public offering) and by the share ratio of the shareholders, etc. (limited to cases in which the investors are specially related to the investor who invests in kind before investing in kind) other than the investor who makes investment in kind. In such cases, "capital increase" in Article 29 (2) 3 (b) shall be deemed "investment in kind," respectively. |
| (2) | For the purpose of paragraph (1), profits defined in subparagraph 2 of the same paragraph shall apply only where the amount obtained by subtracting the amount calculated by applying Article 29 (2) 3 (b) mutatis mutandis from the amount calculated by applying Article 29 (2) 3 (a) mutatis mutandis is at least 30/100 of the amount calculated by applying Article 29 (2) 3 (b) mutatis mutandis or is at least 300 million. <Amended by Presidential Decree No. 24358, Feb. 15, 2013; Presidential Decree No. 26960, Feb. 5, 2016> |
[This Article Newly Inserted by Presidential Decree No. 18177, Dec. 30, 2003]
| Article 30 (Methods, etc. of Calculating Earnings from Conversion, etc. of Convertible Bonds, etc. into Stocks) |
| (1) | The profits defined in Article 40 (1) of the Act shall be calculated as follows: <Amended by Presidential Decree No. 26960, Feb. 5, 2016> |
| 1. | Profits defined in the items of Article 40 (1) 1 of the Act: The amount calculated by subtracting the underwriting or acquisition price of convertible bonds defined in Article 40 (1) of the Act (hereafter referred to as "convertible bonds, etc." in his Article) from the market value of the convertible bonds, etc.; |
| 2. | Profits defined in Article 40 (1) 2 (a) through (c) of the Act: The amount calculated by subtracting the loss on interest calculated by the formula prescribed by Ordinance of the Ministry of Strategy and Finance and the profits defined in subparagraph 1 from the multiple of the amount obtained by subtracting the amount defined in item (b) from the amount defined in item (a) by the number of stocks defined in item (c): Provided, That such amount shall not exceed that calculated by the acquisition price from the transfer price of convertible bonds, etc., in cases where convertible bonds, etc. are transferred: |
| (a) | The value of the stocks issued under paragraph (5) 1 (referring to the value of stocks to be issued under paragraph (5) 2 where convertible bonds, etc., are transferred); |
| (b) | The conversion, exchange, or underwriting price of each stock (hereafter referred to as "conversion price" in this paragraph); |
| (c) | The number of stocks issued (referring to the number of stocks to be issued, if convertible bonds, etc. are transferred); |
| 3. | Profits defined in Article 40 (1) 2 (d) of the Act: The multiple of the amount obtained by subtracting the amount defined in item (b) from the amount defined in paragraph (a) by the number of stocks defined in paragraph (c): |
| (a) | The conversion price of each stock; |
| (b) | The value of the stocks issued under paragraph (5) 1; |
| (c) | The number of stocks increased by conversion, etc. × The share ratio held by persons specially related to the person to whom the relevant stocks are issued before conversion, etc.; |
| 4. | Profits defined in Article 40 (1) 3 of the Act: Profits calculated by subtracting the market value of convertible bonds, etc. from the transfer price of convertible bonds, etc. |
| (2) | "Standard amount prescribed by Presidential Decree" in the proviso to Article 40 (1) of the Act, with the exception of its subparagraphs, means any of the following amounts: <Newly Inserted by Presidential Decree No. 26960, Feb. 5, 2016> |
| 1. | In cases falling under paragraph (1) 1 and 4: The lesser of the following amounts: |
| (a) | The amount equivalent to 30/100 of the market value of convertible bonds, etc.; |
| 2. | In cases falling under paragraph (1) 2: 100 million won; |
| 3. | In cases falling under paragraph (1) 3: Nil. |
| (3) | "Largest shareholder" in Article 40 (1) 1 (b) and (c) and Article 40 (1) 2 (b) and (c) means the person who holds the greatest number of stocks, etc., such as the largest shareholder. <Amended by Presidential Decree No. 26960, Feb. 5, 2016> |
| (5) | "Value of stocks received or to be received" in Article 40 (1) 2 of the Act means the amount calculated as follows: <Amended by Presidential Decree No. 18627, Dec. 31, 2004; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 26960, Feb. 5, 2016> |
| 1. | Value of the stocks that have been received: Where convertible bonds, etc. were converted into stocks or were exchanged for stocks, or stocks were acquired (hereafter referred to as "conversion, etc."), the price of a share calculated according to the following formula. In such cases, where convertible bonds, etc. were converted into the stocks of a listed corporation, etc.; and where the assessed value of a stock after conversion, etc. is less than (referring to more than in the case of Article 40 (1) 2 (d)) the value of a stock calculated according to the following calculation formula, such value: |
| [(Assessed value of a stock before conversion, etc. × Total number of stocks issued before conversion, etc.) + (Conversion price, etc. of a stock × Increased number of stocks by conversion, etc.) ÷ (Total number of stocks issued before conversion, etc. + Number of stocks increased by conversion, etc.) |
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| 2. | Value of the stocks to be received: Where convertible bonds, etc. that can be converted, etc. into stocks as at the date of conversion are transferred, the price of a stock calculated according to the following formula if such convertible bonds, etc. are converted, etc. into stocks on the date of transfer. In such cases, where the assessed value of a stock of a listed corporation, etc. as at the date of transfer is less than the value of a stock calculated according to the following formula, such value: |
| [(Assessed value of a stock before conversion, etc. × Total number of stocks issued before transfer) + (Conversion price, etc. of a stock × Number of stocks to be increased if conversion, etc. is made)] ÷ (Total number of stocks issued before transfer + Number of stocks to be increased if conversion, etc. is made) |
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[This Article Wholly Amended by Presidential Decree No. 17039, Dec. 29, 2000]
| Article 31 Deleted. <by Presidential Decree No. 26960, Feb. 5, 2016> |
| Article 31-2 (Methods, etc. of Calculating Earnings from Excess Dividends) |
| (1) | "Largest shareholder or the largest investor in the corporation who is prescribed by Presidential Decree" in Article 41-2 (1) of the Act means the largest shareholder, etc. of the relevant corporation. |
| (2) | "Excess dividends" in Article 41-2 (1) of the Act shall be calculated by multiplying the amount defined in subparagraph (1) by the ratio defined in subparagraph 2 (hereafter referred to as "excess dividends" in this Article): |
| 1. | The amount calculated by subtracting the amount of dividends that a specially related person of the largest shareholder, etc. will receive in proportion to the stocks, etc. held by the person from the amount of dividends alloted or distributed (hereafter referred to as "dividends" in this paragraph); |
| 2. | The ratio of the amount of dividends distributed to the largest shareholder, etc. less than the normal dividends (hereafter referred to as "deficient dividends" in this paragraph), out of the amount distributed to shareholders, etc. to whom a smaller amount of dividends has been distributed in comparison with the stocks, etc. held by them, compared with cases where dividends are distributed in proportion to stocks, etc. held by them. |
| (3) | The amount equivalent to the income tax on the excess dividends defined in Article 41-2 (2) and (3) of the Act shall be calculated by multiplying the amount of excessive dividends by the rate specified by Ordinance of the Ministry of Strategy and Finance, in consideration of the amount of relevant excess dividends, the income tax rate, etc. |
[This Article Newly Inserted by Presidential Decree No. 26960, Feb. 5, 2016]
| Article 31-3 (Methods, etc. of Calculating Earnings From Listing, etc. of Stocks) |
| (1) | The profits defined in the main sentence of Article 41-3 (1) of the Act, with the exception of its subparagraphs, shall be calculated by multiplying the number of stocks, etc. that a person has received as a gift or has acquired in return for consideration by the amount obtained by subtracting the amounts defined in subparagraphs 2 and 3 from the amount defined in subparagraph 1: <Amended by Presidential Decree No. 26960, Feb. 5, 2016> |
| 1. | The assessed value (referring to the value assessed in accordance with Article 63 of the Act) of each stock as at the adjustment base date defined in Article 41-3 (3) of the Act (hereafter referred to as "adjustment base date" in this Article); |
| 2. | The taxable value of gift tax per stock as at the date on which a person receives stocks, etc. as a gift (or the acquisition value per stock as at the date of acquisition, in cases of acquisition); |
| 3. | Profit per stock from the actual increase of the enterprise value. |
| (2) | "Stock market prescribed by Presidential Decree" in the main sentence of Article 41-3 (1) of the Act, with the exception of its subparagraphs, means the securities market and KOSDAQ. <Newly Inserted by Presidential Decree No. 27835, Feb. 7, 2017> |
| (3) | "Standard amount prescribed by Presidential Decree" in the proviso to Article 41-3 (1), with the exception of its subparagraphs, means the lesser of the following: <Amended by Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 27835, Feb. 7, 2017> |
| 1. | The amount equivalent to 30/100 of the amount calculated by multiplying the sum of the amounts defined in paragraph (1) 2 and 3 by the number of stocks, etc. that a person has received as a gift or has acquired in return for consideration; |
| (4) | "Person prescribed by Presidential Decree, who owns at least 25/100" in Article 41-3 (1) 2 of the Act means the relevant shareholder in whose cases the stocks, etc. held by him/her and his/her specially related persons take at least 25/100 of the total number of stocks, etc. <Amended by Presidential Decree No. 18177, Dec. 30, 2003; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 23591, Feb. 2, 2012; Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 27835, Feb. 7, 2017> |
| (5) | The earnings from the actual increase in the enterprise value per stock defined in paragraph (1) 3 shall be calculated by multiplying the amount defined in subparagraph 1, which shall be verified with the documents specified by Ordinance of the Ministry of Strategy and Finance, including financial statements presented by the relevant taxpayer, by the number of months defined in subparagraph 2. If it is unreasonable to calculate relevant profits, based upon the net profit or loss per stock due to the incurrence of deficits, the relevant profits may be based upon the increase in the net asset value per stock as calculated in accordance with Article 55: <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 27835, Feb. 7, 2017> |
| 1. | An amount calculated by dividing the sum of net profit or loss per stock (referring to the sum of the net profit or loss per stock calculated for each business year, as prescribed by Ordinance of the Ministry of Strategy and Finance) for the period from the date of commencement of the business year in which a person has received the relevant stocks, etc. as a gift or has acquired the relevant stocks, etc. to the date immediately before the date of listing by the number of months of the period (the number of months shall be rounded up to one month, if the period is less than one month); |
| 2. | The number of months in the period from the date of donation or the date of acquisition of the relevant shares, etc. to the nearest base date (the number of months shall be deemed one month, if the period is less than one month). |
| (6) | "Where ... is equivalent to or above the standard prescribed by Presidential Decree" in the proviso to Article 41-3 (4) of the Act means cases where the amount calculated in accordance with paragraph (1) is at least the standard amount defined in paragraph (3). <Amended by Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 27835, Feb. 7, 2017; Presidential Decree No. 29533, Feb. 12, 2019> |
| (7) | In applying paragraphs (1) through (6), the number of outstanding stocks shall be determined in accordance with the proviso to Article 56 (3), if stock dividends without consideration have been distributed during the period from the date of donation or acquisition of the relevant stocks, etc. to the date immediately before the date of listing. <Amended by Presidential Decree No. 23040, Jul. 25, 2011; Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 27835, Feb. 7, 2017> |
[This Article Newly Inserted by Presidential Decree No. 16660, Dec. 31, 1999]
| Article 31-4 (Methods, etc. of Calculating Earnings from Gratuitous Loans, etc. of Money) |
| (1) | "Fair interest rate" in the main sentence of Article 41-4 (1) of the Act, with the exception of its subparagraphs, means the interest rate specified by the Minister of Strategy and Finance based upon the interest rate on overdraft: Provided, That, if a person borrows a loan from a corporation, the interest rate defined in Article 89 (3) of the Enforcement Decree of the Corporate Tax Act shall be deemed the fair interest rate. <Amended by Presidential Decree No. 25195, Feb. 21, 2014; Presidential Decree No. 26960, Feb. 5, 2016> |
| (2) | "Standard amount prescribed by Presidential Decree" in the proviso to Article 41-4 (1) of the Act, with the exception of its subparagraphs, means ten million won. <Newly Inserted by Presidential Decree No. 26960, Feb. 5, 2016> |
| (3) | The earnings defined in Article 41-4 (1) of the Act shall be calculated as at the date on which a person borrows money loan (referring to the date on which a person borrows each loan, if the person borrows a loan in installments). |
| (4) | Deleted. <by Presidential Decree No. 26960, Feb. 5, 2016> |
[This Article Wholly Amended by Presidential Decree No. 24358, Feb. 15, 2013]
| Article 31-5 (Methods, etc. of Calculating Earnings from Listing, etc. of Stocks, etc. Following Merger) |
| (1) | The profits defined in the main sentence of Article 41-5 (1) of the Act, with the exception of its subparagraphs, shall be calculated in accordance with Article 31-3 (1). <Amended by Presidential Decree No. 26960, Feb. 5, 2016> |
| (2) | "Standard amount prescribed by Presidential Decree" in the proviso to Article 41-5 (1) of the Act, with the exception of its subparagraphs, means the amount specified in Article 31-3 (3). <Amended by Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 27835, Feb. 7, 2017> |
| (3) | "Listed corporation having a special relationship" in Article 41-5 (1) of the Act means any of the following corporations during the period between the date of commencement of the business year (referring to the earlier date of commencement, if the dates of commencement of merged corporations are mutually different) immediately before the business year in which a merger is registered and the date when a merger is registered: <Amended by Presidential Decree No. 20621, Feb. 22, 2008; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 23591, Feb. 2, 2012; Presidential Decree No. 26069, Feb. 3, 2015; Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 27835, Feb. 7, 2017> |
| 1. | A corporation in which cases the person who acquires stocks, etc. of the relevant corporation or another corporation defined in Article 41-5 (1) or any of his/her specially related persons is the largest shareholder, etc. of a corporation whose shares are listed in the securities market or a KOSDAQ-listed corporation; |
| 2. | A corporation defined in Article 28 (1) 2 or 3. |
[This Article Newly Inserted by Presidential Decree No. 17828, Dec. 30, 2002]
| Article 32 (Methods, etc. of Calculating Earnings from Use of Property, Provision of Service, etc.) |
| (1) | The profits defined in the main sentence of Article 42 (1) of the Act, with the exception of its subparagraphs, shall be calculated as follows: <Amended by Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 23591, Feb. 2, 2012; Presidential Decree No. 26069, Feb. 3, 2015; Presidential Decree No. 26960, Feb. 5, 2016> |
| 1. | Where a person is provided with property for use or services, free of charge: An amount calculated as follows: |
| (a) | Where a person provided another person's property as a collateral, free of charge, and borrowed money, etc.: The amount obtained by subtracting the interest the person has actually paid or shall pay on the loan, etc. from the amount calculated by multiplying the borrowed amount by the fair interest rate defined in the main sentence of Article 31-4 (1); |
| (b) | Cases other than those under item (a): The equivalent of the market value that shall pay in return for use of property or the provision of services, free of charge; |
| 2. | Where a person pays below market value and is provided with property for use or services: The equivalence of the difference between the market value and the price; |
| 3. | Where a person pays a price higher than the market value and is provided with property for use or services: The equivalence of the difference between the market value and the price. |
4 and 5. Deleted. <by Presidential Decree No. 26960, Feb. 5, 2016>
| (2) | "Standard amount prescribed by Presidential Decree" in the proviso to Article 42 (1) of the Act, with the exception of its subparagraphs, means either of the following: <Amended by Presidential Decree No. 26960, Feb. 5, 2016> |
| 1. | In cases falling under paragraph (1) 1: Ten million won; |
| 2. | In cases falling under paragraph (1) 2 and 3: The amount equivalent to 30/100 of he market value. |
| (3) | For the purpose of paragraph (1), the market value of service shall be determined with the price ordinally paid between many unspecified persons in a situation similar to the relevant transaction: Provided, That the market value of service shall be calculated as follows, if it is uncertain: <Amended by Presidential Decree No. 26960, Feb. 5, 2016> |
| 1. | In cases of service of leasing real estate: The value of real estate (referring to the value assessed in accordance with Chapter IV of the Act) x The rate specified by Ordinance of the Ministry of Strategy and Finance in consideration of the annual rent for real estate; |
| (4) | through (9) Deleted. <by Presidential Decree No. 26960, Feb. 5, 2016> |
[This Article Newly Inserted by Presidential Decree No. 18177, Dec. 30, 2003]
| Article 32-2 (Methods, etc. of Calculating Earnings from Corporate Reorganization, etc.) |
| 1. | Where the equity share in ownership is changed: (Equity share after the change - Equity share before the change) x Value per stock after the change in equity share (referring to the value calculated by applying Article 28, 29, 29-2, or 29-3 mutatis mutandis); |
| 2. | Where the assessed value is changed: Value after the change - Value before the change. |
| (2) | "Standard amount prescribed by Presidential Decree" in the proviso to Article 42-2 (1) of the Act means the lesser of the following amounts: |
| 1. | The amount equivalent to 30/100 of the value of the relevant property before the change; |
[This Article Newly Inserted by Presidential Decree No. 26960, Feb. 5, 2016]
| Article 32-3 (Methods, etc. of Calculating Earnings from Increase in Value of Property after Aquisition of Property) |
| (1) | "Ground prescribed by Presidential Decree" in the main sentence of Article 42-3 (1) of the Act, with the exception of its subparagraphs, means any of the following causes and events: |
| 1. | Authorization or permission for the implementation of a development project; a change in the form or quality; the division of a jointly-owned asset; the right to develop and use underground water; or authorization or permission for any other project; |
| 3. | Any other cause or event that increases the value of property as similar to any of the causes and events referred to in subparagraphs 1 and 2. |
| (2) | "Standard amount prescribed by Presidential Decree" in the proviso to Article 42-3 (1) of the Act, with the exception of its subparagraphs, means the lesser of the following amounts: |
| 1. | The amount equivalent to 30/100 of the sum of the amounts defined in paragraph (3) 2 through 4; |
| (3) | "Amount calculated as prescribed by Presidential Decree" in the former part of Article 42-3 (2) of the Act, means the amount calculated by subtracting the amounts defined in subparagraphs 2 through 4 from the amount defined in subparagraph 1: <Amended by Presidential Decree No. 27835, Feb. 7, 2017> |
| 1. | The value of the relevant property: The value as at the day on which the cause or event that increased the value of property arose (referring to the value assessed under Chapter IV of the Act: Provided, That this refers to the value assessed in accordance with Article 50 (1) or (4), where it is found that the increase by the cause or event that increased the value of property has not been reflected in the relevant value, deeming that it is a case where an officially assessed individual land price, individual housing price, or collective housing price is not available); |
| 2. | The acquisition value of the relevant property: The amount actually paid for acquisition (referring to the taxable value of gift tax, in cases of donated property); |
| 3. | An ordinary increase in value: The amount deemed equivalent to a normal increase in the value of the relevant property during the period of owning the property, based on the earnings from the actual increase in the enterprise value defined in Article 31-3 (5), the annual average increase rate in land price, the annual average increase rate in housing price, the rate of inflation in the national consumer price index, etc.; |
| 4. | The contribution to an increase in value: The amount paid in order to increase the value of the relevant property, including capital expenditure for authorization, permission, etc. for the implementation of a development project, a change in the form or quality, or any other project. |
[This Article Newly Inserted by Presidential Decree No. 26960, Feb. 5, 2016]
| Article 32-4 (Methods of Calculating Earnings) |
Where any of the following earnings shall be calculated in accordance with Article 43 (2) of the Act, the standard for the amount shall be calculated by aggregating amounts for each category of profit: <Amended by Presidential Decree No. 24358, Feb. 15, 2013; Presidential Decree No. 26960, Feb. 5, 2016> | 9. | Earnings from the use of property, the provision of services, etc. defined in Article 42 (1) of the Act (referring to the earnings classified into each category of earnings from a transaction defined in any subparagraph of Article 42 (1) of the Act); |
[This Article Wholly Amended by Presidential Decree No. 22579, Dec. 30, 2010]
SECTION 2 Calculation, etc. of Value of Donated Property
| Article 33 (Presumption as to Donation of Property Transferred to Spouse, etc.) |
| (1) | Deleted. <by Presidential Decree No. 26960, Feb. 5, 2016> |
| (2) | "Cases prescribed by Presidential Decree" in the proviso to Article 44 (3) 4 of the Act means selling and buying securities on the extended-hours market prescribed by Ordinance of the Ministry of Strategy and Finance from among the selling and buying of securities on the securities exchange defined in Article 9 (13) of the Financial Investment Services and Capital Markets Act. <Amended by Presidential Decree No. 18627, Dec. 31, 2004; Presidential Decree No. 20621, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22042, Feb. 18, 2010> |
| (3) | "Cases prescribed by Presidential Decree" in Article 44 (3) 5 of the Act means any of the following cases: <Amended by Presidential Decree No. 22042, Feb. 18, 2010> |
| 1. | Where property which requires registration or entry in the register for the transfer or exercise of a right is exchanged each other; |
| 2. | Where a person is already taxed (including cases of non-taxation, or tax reduction or exemption) to acquire the relevant property, or the fact that a person has paid the price of the relevant property from his/her income for which a return was filed or with inherited property or donated property is verified; |
| 3. | Where the fact of having paid the price of the relevant property with money from the disposal of the property for the acquisition of the property is verified. |
[This Article Newly Inserted by Presidential Decree No. 18177, Dec. 30, 2003]
| Article 34 (Presumption as to Donation of Funds, etc. for Acquisition of Property) |
| (1) | "Cases prescribed by Presidential Decree" in Article 45 (1) and (2) of the Act means cases in which the sum of amounts verified pursuant to the following is short of the amount of acquired property or the amount of repaid debts: Provided, That where the unverified amount is short of the amount equivalent to 20/100 of the amount of acquired property or of the amount of repaid debts, or 200 million won, whichever is smaller, such case shall be excluded: <Amended by Presidential Decree No. 22042, Feb. 18, 2010> |
| 1. | Amount of income reported or taxed (including cases of non-taxation or tax reduction or exemption; hereafter the same shall apply in this Article); |
| 2. | Amount of inherited or donated property reported or taxed; |
| 3. | Amount of money, used directly for the acquisition of relevant property or for the repayment of relevant debts, that has been received as consideration for the sale of property or has been received as debts are borne. |
| (2) | "Amount prescribed by Presidential Decree" in Article 45 (3) of the Act means an amount, which is at least 50 million won as the sum of the funds for acquisition of relevant property or the funds for repayment of relevant debts within ten years before the date of acquisition of property or the date of repayment of debts, and is determined by the Commissioner of the National Tax Service in consideration of age, head of household, occupation, financial conditions, social and economic status, etc. <Amended by Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 25195, Feb. 21, 2014> |
[This Article Newly Inserted by Presidential Decree No. 18177, Dec. 30, 2003]
| Article 34-2 (Legal Fiction Deeming Donation of Earnings through Transactions with Specially Related Corporations) |
| (1) | The dominant shareholder defined in Article 45-3 (1) of the Act shall be any of the following persons (hereinafter referred to as "dominant shareholder" in this Article or Article 34-3 or 34-4), but if such persons are at least two, the person specified by Ordinance of the Ministry of Strategy and Finance as the person who holds the greater de facto control over the management of the beneficiary corporation defined in Article 45-3 (1) of the Act, which shall be limited to a domestic corporation defined in subparagraph 1 of Article 2 of the Corporate Tax Act (excluding a foreign-invested corporation defined in Article 2 (1) 6 of the Foreign Investment Promotion Act in which case foreigners defined in Article 2 (1) 1 of the same Act hold at least 50/100 of the total number of outstanding voting stocks or, of the total amount of investment, of the foreign invested corporation. In such case, a foreign corporation in which case residents or domestic corporations hold at least 30/100 (including those indirectly held as calculated under Article 116-2 (12) of the Enforcement Decree of the Restriction of Special Taxation Act) of the total number of outstanding voting stocks or, of the total amount of investment, of the foreign corporation shall not be deemed a foreigner); the same shall apply hereinafter in this Article), by exercising the authority to appoint or dismiss executive officers of the beneficiary corporation, making decisions on business policies, etc. shall be deemed the dominant shareholder: Provided, That, if the sum of the ratios of stocks, etc. held by the principal and his/her specially related persons (excluding employees; hereafter referred to as "principal's relatives, etc." in this paragraph), among the largest shareholder, etc. of the beneficiary corporation, exceeds the ratio of stocks held be employees, the dominant shareholder shall be designated from among the principal and his/her relatives, etc: <Amended by Presidential Decree No. 24358, Feb. 15, 2013; Presidential Decree No. 24576, Jun. 11, 2013; Presidential Decree No. 25195, Feb. 21, 2014; Presidential Decree No. 26069, Feb. 3, 2015; Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 29533, Feb. 12, 2019> |
| 1. | Where a person who has the highest direct shareholding percentage (referring to the rate obtained by dividing the shares, etc. of the corporation in possession by the total number of issued shares, etc. of the corporation (excluding treasury stock and treasury investment share of the corporation); hereinafter the same shall apply) of the beneficiary corporation from among the largest shareholder etc., of the beneficiary corporation is an individual, the individual; |
| 2. | Where a person who has the highest direct shareholding percentage in the beneficiary corporation from among the largest shareholders etc. of the beneficiary corporation is a corporation, the individual who has the highest percentage calculated by aggregating the direct shareholding percentage and the indirect shareholding percentage in the beneficiary corporation: Provided, That the following shall be excluded herefrom: |
| (a) | A shareholder etc. of the beneficiary corporation, but is not the largest shareholder etc.; |
| (b) | A shareholder etc. of a corporation whose direct shareholding percentage in the beneficiary corporation is the highest from among the largest shareholders, etc. of the beneficiary corporation, but is not the largest shareholder etc. |
| (2) | The indirect shareholding percentage in a beneficiary corporation defined in paragraph (1) 2 means the percentage obtained by multiplying all the direct shareholding percentage at each stage where at least one corporation (hereafter referred to as "corporation in which investment is made indirectly" in this Article) interposes between an individual and a beneficiary corporation (hereafter referred to as "indirect investment relationship" in this Article). In such cases, where at least two indirect investment relationships interpose between an individual and a beneficiary corporation, the individual's indirect shareholding ratio in the beneficiary corporation shall be obtained by aggregating all the rates calculated from respective indirect investment relationships. |
| (3) | "Corporation in a special relationship prescribed by Presidential Decree" (hereafter referred to as "specially related corporation" in this Article) in Article 45-3 (1) 1 (a) of the Act means a person in a relationship defined in Article 2-2 (1) 3 through 8 with the dominant shareholder defined in paragraph (1). <Amended by Presidential Decree No. 25195, Feb. 21, 2014; Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 28638, Feb. 13, 2018> |
| (5) | "Percentage prescribed by Presidential Decree" in Article 45-3 (1) 1 (a) of the Act means 30/100 (referring to 50/100 where a corporation falls under a small or medium enterprise or 40/100 where it falls under a backbone enterprise). <Amended by Presidential Decree No. 25195, Feb. 21, 2014; Presidential Decree No. 27835, Feb. 7, 2017; Presidential Decree No. 28638, Feb. 13, 2018> |
| (6) | "Relative of a dominant shareholder" in Article 45-3 (1) of the Act, with the exception of its subparagraphs, means the relative of a dominant shareholder defined in paragraph (1) whose shareholding percentage calculated by summing up the direct shareholding percentage and the indirect shareholding percentage (referring to the indirect shareholding percentage in cases where indirect investment in a beneficiary corporation is made through a corporation invested in indirectly that falls under any of the subparagraphs of paragraph (16); hereafter the same shall apply in this Article) in the beneficiary corporation as at the end of the business year of the beneficiary corporation exceeds the minimum shareholding percentage. <Amended by Presidential Decree No. 25195, Feb. 21, 2014; Presidential Decree No. 28638, Feb. 13, 2018; Presidential Decree No. 29533, Feb. 12, 2019> |
| (7) | "Shareholding percentage prescribed by Presidential Decree" in Article 45-3 (1) of the Act, with the exception of its subparagraphs, means 3/100 (referring to 10/100 where the beneficiary corporation is a small or medium enterprise or a middle-standing enterprise; hereafter referred to as "minimum shareholding percentage" in this Article). <Amended by Presidential Decree No. 25195, Feb. 21, 2014; Presidential Decree No. 28638, Feb. 13, 2018> |
| (8) | "Sales prescribed by Presidential Decree, such as sales arising from transactions between the beneficiary corporation that is a small or medium enterprise and the specially related corporation that is a small or medium enterprise" in Article 45-3 (4) of the Act means any of the following amounts (hereafter referred to as "sales excluded from taxation" in this Article). In such cases, where at least two of the following subparagraphs apply simultaneously, the larger amount shall be the amount: <Newly Inserted by Presidential Decree No. 25195, Feb. 21, 2014; Presidential Decree No. 26069, Feb. 3, 2015> |
| 1. | Sales from transactions between the beneficiary corporation that is a small or medium enterprise and the specially related corporation that is a small or medium enterprise; |
| 2. | Sales from transactions between the beneficiary corporation and a specially related corporation in which the beneficiary corporation holds at least 50/100 of its shares; |
| 3. | An amount obtained by multiplying sales between the beneficiary corporation and a specially related corporation in which the beneficiary corporation holds less than 50/100 of its shares by the shareholding percentage in the specially related corporation; |
| 5. | Sales of the beneficiary corporation from transactions with a specially related corporation (limited to a specially related corporation located overseas if the beneficiary corporation does not correspond to a small or medium enterprise or a middle-standing enterprise) with the purpose of exporting products and goods; |
| 6. | Sales of the beneficiary corporation with a specially related corporation from transactions mandated by other laws; |
| 7. | Sales of the beneficiary corporation, the main business of which is the operation of professional sports clubs among the sports club operation prescribed by the Korea Standard Industrial Classification. |
| (9) | In calculating the ratio of transactions with a specially related corporation defined in Article 45-3 (1) of the Act, the sales of each corporation shall be aggregated, if at least two specially related corporations are involved. <Amended by Presidential Decree No. 24358, Feb. 15, 2013; Presidential Decree No. 25195, Feb. 21, 2014; Presidential Decree No. 26960, Feb. 5, 2016> |
| (10) | "After-tax business profit of the beneficiary corporation" in the formulas under the items of Article 45-3 (1) 2 of the Act shall be an amount calculated by multiplying the amount obtained by subtracting the amount defined in subparagraph 2 from the amount prescribed in subparagraph 1 by the proportion of taxable sales: <Amended by Presidential Decree No. 24358, Feb. 15, 2013; Presidential Decree No. 25195, Feb. 21, 2014; Presidential Decree No. 28638, Feb. 13, 2018> |
| 2. | Amount calculated by multiplying the amount defined in (a) by the proportion defined in item (b): |
| (a) | Amount of tax calculated by subtracting the amount of tax to be reduced or exempted from the calculated amount of tax (excluding the amount of corporate tax on capital gains from the transfer of land, etc. defined in Article 55-2 of the Corporate Tax Act) of the beneficiary corporation defined in Article 55 of the same Act; |
| (b) | Proportion (to be one where it exceeds one) of the amount defined in subparagraph 1 among the amount of incomes for each business year defined in Article 14 of the Corporate Tax Act; |
| 3. | Proportion of taxable sales: |
| 1? (Sales excluded from taxation ÷ Sales for the business year in which sales excluded from taxation are included) |
|
| (11) | The profits deemed donated under Article 45-3 (1) of the Act shall be calculated by aggregating all the amounts calculated according to the classification of investment relationships (where the indirect shareholding percentage is less than 1/1000, relevant investment relationship shall be excluded) of the dominant shareholder under the aforesaid paragraph, with the exception of its subparagraphs, and his/her relatives (hereinafter referred to as "dominant shareholder, etc." in this Article) in the beneficiary corporation as at the end of business year. In such cases, where, in calculating "shareholding percentage in excess of the minimum shareholding percentage" or "shareholding percentage in excess of 50 percent of the minimum shareholding percentage" in the formulas provided for in Article 45-3 (1) 2 (a) and (b) of the Act, indirect shareholding percentage in the beneficiary corporation exists, each minimum shareholding percentage or 50 percent of the minimum shareholding percentage shall be subtracted first from the relevant indirect shareholding percentage, and where at least two indirect investment relationships exist, subtraction shall be made from the smaller one of the respective indirect shareholding percentage: <Amended by Presidential Decree No. 24358, Feb. 15, 2013; Presidential Decree No. 25195, Feb. 21, 2014; Presidential Decree No. 27835, Feb. 7, 2017; Presidential Decree No. 28638, Feb. 13, 2018> |
| 1. | and 2. Deleted. <by Presidential Decree No. 25195, Feb. 21, 2014> |
| (12) | Where, in calculating earnings deemed donated under paragraph (11), any of the subparagraphs of paragraph (8) does not apply, the earnings shall be calculated by including any of the following amounts in the sales excluded from taxation according to the investment relationships of a dominant shareholder etc. In such cases, where following subparagraphs apply simultaneously, the larger amount shall apply: <Newly Inserted by Presidential Decree No. 25195, Feb. 21, 2014; Presidential Decree No. 29533, Feb. 12, 2019> |
| 1. | Turnover from transactions of the beneficiary corporation with a specially related corporation that is an indirect investment corporation prescribed in paragraph (16); |
| 2. | An amount obtained by multiplying sales from transactions of a beneficiary corporation that is a subsidiary or a second-tier company of a holding company with a specially related corporation that is another subsidiary or another second-tier company of the holding company by the holding company's shareholding percentage in the specially related corporation: Provided, That this shall be limited to cases where the dominant shareholder etc. is in an indirect investment relationship with the beneficiary corporation and the specially related corporation through the holding company; |
| 3. | An amount obtained by multiplying sales of a beneficiary corporation from transactions with a specially related corporation by the shareholding percentage of dominant shareholder etc. in the specially related corporation. |
| (13) | In applying paragraph (11), where a dominant shareholder etc. has incomes from dividends distributed by a beneficiary corporation or an indirect investment corporation during the period from the end of the beneficiary corporation's business year to the deadline for filing the gift tax base defined in Article 68 (1) of the Act, the following amounts shall be subtracted from the earnings deemed donated from the relevant investment relationship: Provided, That where the amount after subtraction is a negative number, it shall be deemed zero: <Amended by Presidential Decree No. 25195, Feb. 21, 2014> |
| 1. | Dividend income distributed by a beneficiary corporation: An amount calculated according to the following formula. In such cases, the distributable earnings defined in Article 86-2 (1) of the Enforcement Decree of the Corporate Tax Act (hereafter referred to as "distributable profits" in this paragraph) shall be the earnings available for distribution: |
| Dividend income × [Earnings deemed donated from direct investment relationship calculated pursuant to paragraph (11) ÷ (Beneficiary corporation's distributable earnings at business year × Rate of direct ownership of dominant shareholder etc. in beneficiary corporation] |
|
| 2. | Dividend income obtained from an indirect investment corporation: An amount calculated according to the following formula: |
| Dividend income × {Earnings deemed donated from indirect investment relationship calculated pursuant to paragraph (11) ÷ [Indirect investment corporation's distributable earnings as at the end of business year + (Beneficiary corporation's distributable earnings at business year × Shareholding percentage of indirect investment corporation in beneficiary corporation)] × Rate of direct ownership of dominant shareholder etc. in corporation in which investment is made indirectly} |
|
| (16) | "Corporation prescribed by Presidential Decree" in Article 45-3 (2) of the Act means any of the following indirect investment corporations: <Amended by Presidential Decree No. 24358, Feb. 15, 2013; Presidential Decree No. 25195, Feb. 21, 2014; Presidential Decree No. 28638, Feb. 13, 2018> |
| 1. | A corporation, at least 30/100 of the total number of issued shares, etc. of which are invested by the dominant shareholder etc.; |
| 2. | A corporation, at least 50/100 of the total number of issued shares, etc. of which are invested by the dominant shareholder etc. and a corporation falling under subparagraph 1; |
| 3. | Where at least one corporation interposes between a corporation and a beneficiary corporation defined in subparagraphs 1 and 2 through possession of shares, etc., such corporations. |
| (17) | Even where at least two specially related corporations exist, profits shall be deemed to have been accrued from one corporation. <Amended by Presidential Decree No. 25195, Feb. 21, 2014; Presidential Decree No. 28638, Feb. 13, 2018> |
[This Article Newly Inserted by Presidential Decree No. 23591, Feb. 2, 2012]
| Article 34-3 (Legal Fiction Deeming Donation of Earnings from Business Opportunities Provided by Specially Related Corporations) |
| (1) | "Corporation prescribed by Presidential Decree as a corporation having a special relationship" in Article 45-4 (1) of the Act, means a person in a relationship referred to in Article 2-2 (1) 3 through 8 (hereafter referred to as "specially related corporation" in this Article) with the dominant shareholder. |
| (2) | "Where a corporation is provided with business opportunities by the method prescribed by Presidential Decree" in Article 45-4 (1) of the Act, means that a specially related corporation is provided with an opportunity to engage in a business activity in which the corporation has directly engaged or any other business entity has engaged by any of the methods specified by Ordinance of the Ministry of Strategy and Finance, such as a leasing contract or a tenancy contract. |
| (3) | For the purpose of Article 45-4 (1) and (3) of the Act, "earnings of the beneficiary corporation" means the amount determined by reflecting tax adjustments defined in Articles 23, 33, 34, 40, and 41 of the Corporate Tax Act and Articles 44-2 and 74 of the Enforcement Decree of the same Act, in the operating income of the relevant business division to whom a business opportunity has been provided (referring to the operating income determined by subtracting sales costs, selling expenses, and administrative expenses from the sales calculated in accordance with the Corporate Accounting Standards prescribed in Article 43 of the Corporate Tax Act; hereinafter the same shall apply in this paragraph): Provided, That where the relevant corporation is unable to calculate the operating profit of the relevant business division because it has failed to keep separate accounts of each business division, referring to the amount calculated in accordance with the method prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 27835, Feb. 7, 2017> |
| (4) | "Relevant amount out of the amount of corporate tax paid" in Article 45-4 (1) and (3) of the Act, means an amount calculated by multiplying the tax amount defined in subparagraph 1 by the ratio defined in subparagraph 2: <Amended by Presidential Decree No. 27835, Feb. 7, 2017> |
| 2. | The ratio of the amount defined in paragraph (3) to the amount of income for each business year defined in Article 14 of the Corporate Tax Act (if the ratio exceeds one, it shall be deemed one). |
| (5) | If the dominant shareholder, etc. prescribed in Article 45-4 (1) of the Act (hereafter referred to as "dominant shareholder, etc." in this Article and Article 34-4) has income distributed by the beneficiary corporation by the deadline for filing a tax return on the gift tax base defined in Article 68 (1) of the Act, the amount calculated by the following formula shall be deducted from the earnings deemed donated (if the amount after deduction is a negative figure, it shall be deemed nil): |
| (6) | Where a dominant shareholder, etc. has received dividend income from a beneficiary corporation from the end of the business year in which the beneficiary corporation commenced business prescribed in Article 45-4 (1) of the Act to the deadline for filing a tax base return prescribed in paragraph (5) of the aforesaid Article, the amount of money calculated in accordance with the following formula shall be deducted from the adjusted profits deemed gained from donations made under paragraph (3) of the aforesaid Article (where the amount of money after the deduction is a negative number, the amount shall be deemed zero): <Newly Inserted by Presidential Decree No. 28638, Feb.13, 2018> |
| (Total dividend income he/she has received from a beneficiary corporation from the end of the business year in which the beneficiary corporation commenced business pursuant to Article 45-4 (1) of the Act to the deadline for filing a tax base return prescribed in paragraph (5) of the aforesaid Article) × (Profits deemed gained from donations calculated pursuant to Article 45-4 (3) of the Act) ÷ [(Total of possible dividend income prescribed in Article 86-2 (1) of the Enforcement Decree of the Corporate Tax Act calculated for each business year as of the end of each business year during the period from the end of the business year in which the beneficiary corporation commenced business pursuant to Article 45-4 (1) of the Act to the end of the business year in which it makes adjustments prescribed in paragraph (3) of the aforesaid Article) × (Shareholding percentage of the dominant shareholder, etc. in the beneficiary corporation)] |
|
| (7) | "Small and medium enterprise prescribed by Presidential Decree" in Article 45-4 (1) of the Act means a small and medium enterprise prescribed in Article 5 (1) of the Regulation of Special Taxation Act. <Newly Inserted by Presidential Decree No. 27835, Feb. 7, 2017; Presidential Decree No. 28638, Feb. 13, 2018> |
| (8) | "Corporation prescribed by Presidential Decree" in Article 45-4 (1) of the Act means a corporation which owns at least 50/100 of shares of a beneficiary corporation. <Newly Inserted by Presidential Decree No. 27835, Feb. 7, 2017; Presidential Decree No. 28638, Feb. 13, 2018> |
[This Article Newly Inserted by Presidential Decree No. 26960, Feb. 5, 2016]
| Article 34-4 (Legal Fiction Deeming Donation of Earnings through Transactions with Specific Corporations) |
| (1) | "Shareholder, etc. prescribed by Presidential Decree" in Article 45-5 (1) of the Act, with the exception of its subparagraphs, means either of the following persons: |
| (2) | "Person in a special relationship prescribed by Presidential Decree" in Article 45-5 (1) of the Act, with the exception of its subparagraphs, means any of the following persons: |
| 1. | In cases of a specific corporation defined in Article 45-5 (1) 1 or 2 of the Act: A person specially related to the largest shareholder, etc. of the specific corporation; |
| 2. | In cases of a specific corporation defined in Article 45-5 (1) 3 of the Act: A person in any of the following relationships with the dominant shareholder, etc. of the specific corporation: |
| (a) | The spouse or a lineal ascendant or descendant; |
| (b) | The corporation of which a person referred to in item (a) is the largest shareholder, etc. |
| (4) | "Earnings of the specific corporation" in Article 45-5 (1) of the Act means an amount calculated by subtracting the amount defined in subparagraph 2 from the amount defined in subparagraph 1: |
| 1. | Either of the following amounts: |
| (a) | Where any property is donated or debts of the relevant corporation are exempted, assumed, or paid: The value of donated property or the amount equivalent to profits that the relevant corporation obtains as a consequence of the exemption, assumption, or payment; |
| (b) | In cases other than those of item (a): The amount equivalent to the difference between the market value defined in paragraph (7) and the price; |
| 2. | The amount calculated by multiplying the amount defined in item (a) by the ratio defined in item (b): |
| (b) | The ratio of the profits defined in subparagraph 1 to the income for each business year defined in Article 14 of the Corporate Tax Act (if the ratio exceeds one, it shall be deemed one). |
| (5) | The cases where shareholders, etc. of a specific corporation shall be deemed to have received a donation for the purpose of applying Article 45-5 (1) of the Act shall be limited to cases where the amount calculated by multiplying the earnings of the specific corporation defined in paragraph (4) by either of the following ratios is at least 100 million won: |
| 1. | In cases of a specific corporation defined in Article 45-5 (1) 1 or 2 of the Act: The ratio of stocks, etc. of the largest shareholder, etc. of the specific corporation; |
| 2. | In cases of a specific corporation defined in Article 45-5 (1) 3 of the Act: The ratio of stocks held by the dominant shareholder, etc. of the specific corporation. |
| 1. | Transactions for exemption, assumption, or payment of debts of the relevant corporation: Provided, That the cases where the relevant corporation is undergoing dissolution (excluding dissolution by a merger or division) and there is no residual property distributable to shareholders, etc. shall be excluded herefrom; |
| 2. | Transactions for investment in kind in the relevant corporation at below market value. |
| (7) | "Markedly low price" or "markedly high price" in Article 45-5 (2) 2 or 3 of the Act means the price where the difference between the market price and the price for the relevant property or service (referring to the sum of par values of stocks, etc. issued in return for the invested property in cases falling under paragraph (6) 2) is at least 30/100 of the market price or at least 300 million won. In such cases, where money is lent or borrowed, earnings shall be calculated by applying Article 41-4 of the Act mutatis muntandis. |
[This Article Newly Inserted by Presidential Decree No. 26960, Feb. 5, 2016]
SECTION 3 Taxable Value of Donated Property
| Article 35 (Scope of Donated Property Not Subject to Taxation) |
| (1) | "Employee stock ownership association prescribed by Presidential Decree" in subparagraph 2 Article 46 of the Act means an employee stock ownership association prescribed by the Framework Act on Labor Welfare or the Financial Investment Services and Capital Markets Act. <Amended by Presidential Decree No. 15509, Nov. 10, 1997; Presidential Decree No. 17459, Dec. 31, 2001; Presidential Decree No. 18989, Aug. 5, 2005; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 22516, Dec. 7, 2010> |
| (2) | "Minority shareholder prescribed by Presidential Decree" in subparagraph 2 Article 46 of the Act means the shareholder etc. defined in Article 29 (5). <Amended by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 17459, Dec. 31, 2001; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 27835, Feb. 7, 2017> |
| (3) | "Association prescribed by Presidential Decree" in subparagraph 4 Article 46 of the Act means an employee stock ownership associations, a joint labor welfare fund, and the Workers' Welfare Promotion Fund established under the Framework Act on Labor Welfare. <Amended by Presidential Decree No. 17459, Dec. 31, 2001; Presidential Decree No. 18989, Aug. 5, 2005; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 22516, Dec. 7, 2010; Presidential Decree No. 29533, Feb. 12, 2019> |
| (4) | "Others prescribed by Presidential Decree" in subparagraph 5 Article 46 of the Act means any of the following, disbursed directly for relevant uses: <Amended by Presidential Decree No. 18177, Dec. 30, 2003; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 29533, Feb. 12, 2019> |
| 1. | Deleted; <by Presidential Decree No. 18177, Dec. 30, 2003> |
| 2. | Education expenses, scholarships, or other money and things similar thereto; |
| 3. | Souvenirs, congratulatory money, condolence money and other similar money and things that are usually deemed necessary; |
| 4. | Wedding supplies that are usually deemed necessary; |
| 5. | Things donated by others and brought into Korea from abroad, the tariff on which is less than one million won; |
| 6. | A house purchase subsidy that is 5/100 or less than the acquisition price or a house rental subsidy that is 10/100 or less than the key money deposit, from among house purchase subsidies or house rental subsidies donated by an intra-company labor welfare fund defined in subparagraph 4 of Article 46 of the Act and a joint labor welfare fund, which is paid to a worker who has no house to live in to purchase or lease a house (including land appurtenant to the house, with a floor area not more than five times that of the house) with a gross floor area of 85 square meters or less; |
| 7. | Money and things donated to the underprivileged through media agencies to help them. |
| (5) | "Associations prescribed by Presidential Decree" in subparagraph 6 of Article 46 of the Act means any of the following organizations: <Newly Inserted by Presidential Decree No. 15604, Dec. 31, 1997; Presidential Decree No. 17791, Dec. 5, 2002; Presidential Decree No. 18989, Aug. 5, 2005; Presidential Decree No. 19899, Feb. 28, 2007; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 23040, Jul. 25, 2011; Presidential Decree No. 27205, May 31, 2016> |
| (6) | "Insurance proceeds of an insurance policy prescribed by Presidential Decree" in the subparagraph 8 of Article 46 of the Act, means the proceeds of an insurance policy in which the person referred to in any subparagraph of Article 107 (1) of the Enforcement Decree of the Income Tax Act is the beneficiary. In such cases, the insurance proceeds not subject to taxation shall be limited to 40 million won per year. <Newly Inserted by Presidential Decree No. 17039, Dec. 29, 2000; Presidential Decree No. 18989, Aug. 5, 2005; Presidential Decree No. 20323, Oct. 15, 2007; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 26960, Feb. 5, 2016> |
| Article 36 (Debts Deducted from Taxable Value of Gift) |
| (1) | "Debts prescribed by Presidential Decree, such as debts related to the donated property, etc." in Article 47 (1) of the Act means the security deposit where a donor leases relevant property to a third person. <Amended by Presidential Decree No. 22042, Feb. 18, 2010> |
| (2) | "Where the amount of debts is objectively recognized, as prescribed by Presidential Decree, such as debts, etc. to the State or a local government" in the proviso to Article 47 (3) of the Act means cases verified by any of the subparagraphs of Article 10 (1). <Amended by Presidential Decree No. 22042, Feb. 18, 2010> |
[This Article Wholly Amended by Presidential Decree No. 17828, Dec. 30, 2002]
SECTION 4 Exclusion from Taxable Value of Property Contributed for Public Good
| Article 37 (Methods, etc. for Calculating Shares, etc. in Domestic Corporations Possessed Excessively) |
| (1) | The excessive shares, etc. prescribed in the proviso to Article 48 (1) of the Act, with the exception of its subparagraphs, and the main sentence of paragraph (2) 2 of the same Article, shall be calculated as at the following relevant date: <Amended by Presidential Decree No. 17828, Dec. 30, 2002; Presidential Decree No. 18989, Aug. 5, 2005; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 24358, Feb. 15, 2013> |
| 1. | Where a public service corporation, etc. acquires shares, etc. by transactions or contribution, the date of acquisition; |
| 2. | Where a public service corporation, etc. acquires new shares allotted thereto at a cost from among the shares that are issued to increase the capital or investments of a domestic corporation that issued the shares, etc., which are held by the public service corporation, etc., the book closure date or the record date (in cases of a company, other than a stock company, referring to the end of a taxable period or the end of a business year) prescribed in Article 354 of the Commercial Act; |
| 3. | Where a domestic corporation, the shares, etc. of which are held by a public service corporation, etc. decreases its capital or investments, the book closure date (in cases of a non-stock company, referring to the end of the taxable period or business year) of the business year to which the date when a resolution is passed to decrease capital at a shareholders' general meeting belongs. |
| (2) | "Contributor in a special relationship with the relevant domestic corporation" in Article 48 (2) 2 (b) and (c) of the Act, means the contributor, in cases where the contributor has a relationship referred to in any subparagraph of Article 2-2 (3) with the relevant domestic corporation. <Amended by Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 22579, Dec. 30, 2010; Presidential Decree No. 23591, Feb. 2, 2012; Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 27835, Feb. 7, 2017> |
| (3) | "Exemplary public service corporation, etc. which does not have a special relationship with a conglomerate restricted from mutual investment" in the proviso to Article 48 (1) of the Act, with the exception of its subparagraphs, and the main sentence of Article 48 (2) 2 of the Act, with the exception of its items, means a public service corporation, etc. which does not have a relationship in the same relevant person prescribed in subparagraph 1 of Article 3 of the Monopoly Regulation and Fair Trade Act with a corporation which belongs to a conglomerate restricted from mutual investment, respectively. <Amended by Presidential Decree No. 17828, Dec. 30, 2002; Presidential Decree No. 18989, Aug. 5, 2005; Presidential Decree No. 23040, Jul. 25, 2011; Presidential Decree No. 24358, Feb. 15, 2013; Presidential Decree No. 27835, Feb. 7, 2017> |
| (4) | and (5) Deleted. <by Presidential Decree No. 27835, Feb. 7, 2017> |
| (6) | "Cases where a public service corporation, etc. meets requirements prescribed by Presidential Decree" in the proviso to Article 48 (2) 2 of the Act, with the exception of its items, means cases where the public service corporation, etc. meets all of the following requirements: <Newly Inserted by Presidential Decree No. 20621, Feb. 22, 2008; Presidential Decree No. 23527, Jan. 25, 2012; Presidential Decree No. 27835, Feb. 7, 2017; Presidential Decree No. 28638, Feb. 13, 2018> |
| 2. | The shares, etc. acquired as investments made by an industry-academic cooperation foundation, must be at least 50/100 of the total number of issued shares in cases of a technology holding company (where industry-academia cooperation groups jointly establish a technology holding company pursuant to Article 36-2 (1) of the Industrial Education Enhancement and Industry-Academia-Research Cooperation Promotion Act, referring to cases where the total shares, etc. acquired by each industry-academia cooperation group by making investments are at least 50/100 of the total number of issued shares) and at least 30/100, in cases of a company specializing in the start-up of new technology-based businesses; |
| 3. | A technology holding company or a company specializing in the start-up of new technology-based businesses must not hold shares, etc. of a company, other than a subsidiary. |
| (7) | Deleted. <by Presidential Decree No. 27835, Feb. 7, 2017> |
| Article 38 (Ex Post Facto Management of Property that Public Service Corporations, etc. Received as Contribution) |
| (1) | "Property prescribed by Presidential Decree" in the proviso to Article 48 (2) of the Act, with the exception of its subparagraphs, means cash (excluding cases of contribution with real estate, shares, etc.) contributed to a religious project defined in subparagraph 1 of Article 12. <Amended by Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 26069, Feb. 3, 2015> |
| (2) | Those used for a direct public-interest project defined in Article 48 (2) 1 and 7 of the Act shall be deemed used for a specific purpose project in the articles of incorporation of a public service corporation, etc.: Provided, That where the property received as a contribution is contributed to another public service corporation, etc. to efficiently use the property for a direct public-interest project with permission from the relevant administrative agency, such case shall be included: <Amended by Presidential Decree No. 16660, Dec. 31, 1999; Presidential Decree No. 17039, Dec. 29, 2000; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 23591, Feb. 2, 2012; Presidential Decree No. 24358, Feb. 15, 2013; Presidential Decree No. 27835, Feb. 7, 2017> |
| 2. | Management expenses, excluding the management expenses, such as repairing expenses, electric power expenses, telephone expenses, etc., which are required for the facilities used directly for a specific purpose project in the articles of incorporation of the relevant public service corporation, etc. |
| (3) | "Extenuating circumstances prescribed by Presidential Decree, such as taking a long time for the public service corporation, etc. to use it for direct public-interest projects, etc." in the proviso to Article 48 (2) 1 of the Act means cases where it is impracticable to use all of the contributed property for direct public-interest projects within three years, on extenuating legal or administrative grounds, etc., which are acknowledged by the relevant Minister (including a person entrusted with the authority). <Amended by Presidential Decree No. 22042, Feb. 18, 2010> |
| (4) | "Where ... fails to use ... as prescribed by Presidential Decree" in Article 48 (2) 4 of the Act means where the results (including where property for direct public-interest projects or profit-making projects are acquired with proceeds from sale, but excluding where a public interest corporation that is affiliated, as prescribed in subparagraph 1 of Article 3 of the Enforcement Decree of the Monopoly Regulation and Fair Trade Act, to a corporation that belongs to a business group subject to disclosure under Article 14 of the Monopoly Regulation and Fair Trade Act acquires voting stocks, etc. of any corporation that belongs to that business group with proceeds from sale; hereafter the same shall apply in this paragraph and paragraph (7)) of use thereof for direct public-interest projects or profit-making projects from among the proceeds from sale fall short of 90/100 of the proceeds from sale within three years from the end of the taxable period or business year in which the date of sale falls. In such cases, where the acquisition price of property for direct public-interest projects or profit-making projects (excluding the property acquired temporarily to acquire property for public interest projects or profit-making projects; hereafter the same shall apply in this paragraph and paragraph (7)) from among the proceeds from sale falls short of the amount equivalent to the standard for use of the proceeds from sale, this shall apply to the difference. <Newly Inserted by Presidential Decree No. 17039, Dec. 29, 2000; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 27835, Feb. 7, 2017; Presidential Decree No. 28638, Feb. 13, 2018; Presidential Decree No. 29533, Feb. 12, 2019> |
| (5) | "Standard amount prescribed by Presidential Decree" related to the operating income defined in Article 48 (2) 5 of the Act means an amount (hereafter referred to as "standard amount of use" in this paragraph) equivalent to 70/100 of the amount (hereafter referred to as "operating income" in this paragraph) obtained by subtracting the amount defined in subparagraph 2 from the amount calculated pursuant to subparagraph 1. In such cases, where the operating income accrued in the immediately previous taxable period or business year has been used less than the standard amount of use, the amount (referring to the amount obtained by subtracting the additional tax defined in Article 78 (9) of the Act) that has been used less than the standard amount for use shall be added to the operating income: <Amended by Presidential Decree No. 17039, Dec. 29, 2000; Presidential Decree No. 18989, Aug. 5, 2005; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 23591, Feb. 2, 2012; Presidential Decree No. 24358, Feb. 15, 2013> |
| 1. | The sum of an income accruing from a profit-making project (excluding an income accruing from a profit-making project not related to contributed property and the proceeds from sale of contributed property defined in Article 48 (2) 4 of the Act, but including reserve funds for proper-purpose projects defined in the provisions of Article 29 (1) of the Corporate Tax Act or an amount disbursed as expenses for proper- purpose projects during the relevant taxable year or business year, which is included in deductible expenses) and an income accrued by using the contributed property as the source of revenues; |
| 2. | Corporate tax, income tax, special rural development tax, resident tax on the relevant income and deficits carried over. |
| (6) | The use of an operating income defined in Article 48 (2) 5 of the Act shall refer to the results (including the amount disbursed for proper- purpose projects during the relevant taxable period or business year pursuant to paragraph (5) 1, which is included in deductible expenses) of use for direct public-interest projects within one year from the end of the taxable period or business year in which the income accrues. In such cases, the results and standard amount may be calculated on the basis of average amount for five years during the relevant taxable period or business year and the immediately previous four taxable periods or business years, and where five years have not passed since business commenced, it shall be calculated as at the time five years pass. <Amended by Presidential Decree No. 17039, Dec. 29, 2000; Presidential Decree No. 22042, Feb. 18, 2010> |
| (7) | "Where ... uses the proceeds from sale short of the standard amount prescribed by Presidential Decree, by the date on which three years have elapsed from the date of sale" in Article 48 (2) 5 of the Act means where the results of use for direct public-interest projects fall short of 30/100 of the amount of sale within one year from the end of the taxable period or business year of sale or short of 60/100 within two years therefrom. In such cases, where the amount of property used to acquire property for direct public-interest projects or profit-making projects from among the amount of sale falls short of the standard for annual use of the amount of sale, this shall apply to the difference. <Amended by Presidential Decree No. 17039, Dec. 29, 2000; Presidential Decree No. 22042, Feb. 18, 2010> |
| (8) | "Where ... fails to operate the donated property ... as prescribed by Presidential Decree" in Article 48 (2) 8 of the Act means any of the following cases: <Amended by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 24358, Feb. 15, 2013; Presidential Decree No. 28638, Feb. 13, 2018; Presidential Decree No. 29533, Feb. 12, 2019> |
| 1. | Where the public service corporation, etc. fails to deliver remaining property after completion of a project to the State, local government, public service corporation, etc. the same as such public service corporation, etc. or recognized by the competent Minister as similar to such public service corporation, etc.; |
| 2. | Where using the property for direct public-interest projects is as good as according privileges to some people on the basis of social status, occupation, place of work, place of birth, etc.: Provided, That where the competent Minister consults with the Minister of Strategy and Finance (where the authority to permit, etc. the incorporation of a public service corporation, etc. is delegated pursuant to Article 3 (1) of the Regulations on Devolution and Entrustment of Administrative Competence, referring to the consultations between the relevant administrative agency delegated with the relevant authority and the head of a tax office having jurisdiction over the relevant public service corporation, etc.) and determines a separate scope of beneficiaries, making it any of the following conditions, such case shall be excluded herefrom: |
| (a) | Where it is attached as a condition to permission for incorporation of the relevant public service corporation, etc.; |
| (b) | Where it is attached as a condition to permission for changes of the articles of incorporation where permission therefor is obtained to efficiently perform object projects in the articles of incorporation or to add new projects as object projects in the articles of incorporation. |
| (9) | In applying Article 48 (2) 1, 3 through 5, 7 and 8, the gift tax shall be based on the amount calculated by subtracting the amount of part of the contributed property, operating income, the sale price for the contributed property, and the residual property defined in paragraph (8) 1 (hereafter referred to as "contributed property, etc." in this paragraph) from the value of the contributed property, etc., if the part of the contributed property, etc. cannot be used directly for a public interest project or cannot be vested in the State, a local government, a public service corporation, etc. defined in paragraph (8) 1 due to any of the following causes and events: <Newly Inserted by Presidential Decree No. 18177, Dec. 30, 2003; Presidential Decree No. 21292, Feb. 4, 2009; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 24576, Jun. 11, 2013; Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 27835, Feb. 7, 2017; Presidential Decree No. 28638, Feb. 13, 2018> |
| 1. | Where the contributed property, etc. has depreciated due to illegal acts by directors or employees of the public service corporation, etc.: Provided, That this shall exclude cases where the depreciation is caused due to any illegal act by the contributor or a person in a relationship defined in Article 2-2 (1) 1 with the contributor; |
| 2. | Where the contributed property, etc. has been lost or stolen. |
| (10) | "Contributor" in Article 48 (8) of the Act means a person who contributes the equivalent of 1/100 of the total amount of contributed property of relevant public service corporation, etc. or 20 million won, whichever is lesser, as at the date of contribution of property. <Amended by Presidential Decree No. 23591, Feb. 2, 2012> |
| (11) | "Public service corporation, etc. prescribed by Presidential Decree" in Article 48 (8) of the Act shall refer to a corporation (excluding a public service corporation falling under subparagraph 4 of Article 12) in the following subparagraphs: <Newly Inserted by Presidential Decree No. 16660, Dec. 31, 1999; Presidential Decree No. 17039, Dec. 29, 2000; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 23591, Feb. 2, 2012; Presidential Decree No. 26960, Feb. 5, 2016> |
| 1. | A non-profit corporation in which persons in a relationship defined in Article 2-2 (1) 3 with the contributor comprise a majority of directors, or which is incorporated by way of such persons contributing property; |
| 2. | A non-profit corporation incorporated by persons in a relationship defined in Article 2-2 (1) 4 with the contributor by way of such persons contributing property; |
| 3. | A non-profit corporation in a relationship defined in Article 2-2 (1) 5 or 8 with the contributor. |
| (12) | "Extenuating ground prescribed by Presidential Decree, such as death" in the proviso to Article 48 (8) of the Act means any of the following events: <Newly Inserted by Presidential Decree No. 26960, Feb. 5, 2016> |
| 1. | Death or resignation of a director; |
| 2. | Where a director who was not a specially related person becomes a specially related person. |
| (13) | "Domestic corporation in a special relationship" in the main sentence of Article 48 (9) of the Act and the main sentence of paragraph (10) of the same Article, means an enterprise (including another enterprise belonging to a person falling under subparagraph 1 along with the aforementioned enterprise) falling under subparagraph 1, the shares, etc. of which are contributed or held by any of the following persons: <Newly Inserted by Presidential Decree No. 16660, Dec. 31, 1999; Presidential Decree No. 17039, Dec. 29, 2000; Presidential Decree No. 23591, Feb. 2, 2012; Presidential Decree No. 24358, Feb. 15, 2013; Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 29533, Feb. 12, 2019> |
| 1. | A person in any of the following relationships with an enterprise (including executive officers and retired executive officers of the enterprise) affiliated with a business group prescribed by Ordinance of the Ministry of Strategy and Finance or a person deemed to be exercising actual influence on the management of the enterprise through the exercise of the authority on the appointment or dismissal of executive officers, determination of business principles, etc.: |
| (a) | Another enterprise affiliated with the business group; |
| (b) | A person who actually controls the business group; |
| (c) | A person in a relationship defined in Article 2-2 (1) 1 with a person in item (b); |
| 2. | A non-profit corporation, the president of which is an executive officer or retired executive officer of an affiliated enterprise prescribed in subparagraph 1, with the exception of its items, or an executive officer prescribed in subparagraph 1 (a); |
| 3. | A non-profit corporation in which a majority of directorship is held by persons falling under subparagraphs 1 and 2, or which is incorporated with the property contributed by such persons. |
| (14) | "Value of such excess stocks, etc. of the domestic corporation" in the latter part of Article 48 (9) of the Act, means the value calculated by subtracting an amount equivalent to 30/100 (referring to 50/100 if it corresponds to a public service corporation, etc. that undergoes an external audit defined in Article 50 (3) of the Act, opens and uses an exclusive account defined in Article 50-2 of the Act and publishes annual reports, etc. defined in Article 50-3 of the Act) of the value defined in subparagraph 2 from the value defined in subparagraph 1 as at the end of each business year: <Newly Inserted by Presidential Decree No. 17039, Dec. 29, 2000; Presidential Decree No. 18989, Aug. 5, 2005; Presidential Decree No. 20621, Feb. 22, 2008; Presidential Decree No. 24358, Feb. 15, 2013; Presidential Decree No. 26960, Feb. 5, 2016> |
| 2. | An amount obtained by adding the amount defined in subparagraph 1 to the value of total property (excluding shares, etc. in the relevant domestic corporation) of the public service corporation, etc. on the balance sheet. |
| (15) | The advertisements and publicity on which additional tax is imposed pursuant to Article 48 (10) of the Act shall refer to any of the following acts: <Newly Inserted by Presidential Decree No. 16660, Dec. 31, 1999; Presidential Decree No. 18627, Dec. 31, 2004; Presidential Decree No. 24358, Feb. 15, 2013; Presidential Decree No. 26960, Feb. 5, 2016> |
| 1. | Publicizing a domestic corporation in newspapers, magazines, television, radio, Internet websites, or electronic advertisement boards, etc., or providing information on the specific product of a domestic corporation: Provided, That this shall exclude the publicity using only the name of a domestic corporation; |
| 2. | Any information on the specific product of a domestic corporation on pamphlets, tickets, etc.: Provided, That this shall exclude the publicity using only the name of a domestic corporation; |
| 3. | Deleted. <by Presidential Decree No. 18627, Dec. 31, 2004> |
| (16) | Where, in applying this Article, the relevant Minister or relevant administrative agency is unknown, the head of a competent tax office shall be deemed the relevant Minister or the relevant administrative agency. <Newly Inserted by Presidential Decree No. 24358, Feb. 15, 2013; Presidential Decree No. 26960, Feb. 5, 2016> |
| (17) | “Utility bills, etc. prescribed by Presidential Decree" in the main sentence of Article 48 (2) 2 of the Act, with the exception of its items, means national taxes and local taxes to be paid as a result of the sale of donated property. <Newly Inserted by Presidential Decree No. 27835, Feb. 7, 2017> |
| (18) | "Value of donated property prescribed by Presidential Decree" in Article 48 (2) 7 of the Act means the value of donated property to be directly used for a public service project, calculated in accordance with the following calculation formula based on a statement of financial position and statement of comprehensive incomes as of the date on which the period for which a tax is imposed, the period for which a tax is imposed immediately preceding the business year or the business year ends: Provided, That where the value in the statement of financial position is not more than 70/100 of the value assessed pursuant to Chapter IV of the Act, referring to the value assessed pursuant to Chapter IV of the Act: <Newly Inserted by Presidential Decree No. 27835, Feb. 7, 2017> |
| [Value of total assets-(value of debts+net profits for the term)] of property operated for profits or profit-making business |
|
| (19) | "Percentage prescribed by Presidential Decree" in Article 48 (2) 7 of the Act means 1/100: Provided, That where a conscientious public service corporation, etc. falling under Article 16 (2) 2 (a) of the Act holds shares in excess of 10/100 of the total number of issued shares, etc., referring to 3/100. <Newly Inserted by Presidential Decree No. 27835, Feb. 7, 2017; Presidential Decree No. 28638, Feb. 13, 2018> |
| Article 39 (Imposition of Gift Tax on Internal Transactions within Public Service Corporation, etc.) |
| (1) | "Persons prescribed by Presidential Decree as the specially related parties" in Article 48 (3) 3 of the Act means a person in any of the following relationships, which includes a person in a relationship defined in Article 2-2 (1) 1 for a contributor defined in subparagraphs 2 through 5: <Amended by Presidential Decree No. 17828, Dec. 30, 2002; Presidential Decree No. 18989, Aug. 5, 2005; Presidential Decree No. 20621, Feb. 22, 2008; Presidential Decree No. 21292, Feb. 4, 2009; Presidential Decree No. 22579, Dec. 30, 2010; Presidential Decree No. 23591, Feb. 2, 2012; Presidential Decree No. 24358, Feb. 15, 2013; Presidential Decree No. 26960, Feb. 5, 2016> |
| 1. | Where the contributor is a corporation incorporated pursuant to Article 32 of the Civil Act, a contributor to the corporation and a person in a relationship defined in Article 2-2 (1) 1 with the contributor; |
| 2. | Where the contributor is a corporation, other than the corporation defined in subparagraph 1, a person controlling such corporation through investment and another person in a relationship defined in Article 2-2 (1) 1 with the aforementioned person; |
| 3. | An employee of the contributor; |
| 4. | Executive officers of another public service corporation, etc. to which the contributor contributes property; |
| 5. | A corporation controlled by the contributor through investment; |
| 6. | A person in a relationship defined in Article 28 (1) 2 and 3. |
| (2) | "Cases prescribed by Presidential Decree where the public service corporation, etc. is provided with services in connection with direct public-interest projects and pays normal prices therefor, etc." in the proviso to Article 48 (3) of the Act, with the exception of its subparagraphs, means any of the following cases: <Amended by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 24358, Feb. 15, 2013; Presidential Decree No. 28638, Feb. 13, 2018; Presidential Decree No. 29533, Feb. 12, 2019> |
| 1. | Where a person falling under any of the subparagraphs of Article 48 (3) of the Act uses contributed property within three months from the date such contribution is received; |
| 1-2. | Where a person falling under any of the subparagraphs of Article 48 (3) of the Act pays the amount of money equivalent to any of the following and uses real estate contributed to the public service corporation, etc.: |
| (b) | Amount of money to the extent to which the denial of the calculation of an unfair practice prescribed in Article 52 (1) of the Corporate Tax Act does not apply, which is the market price prescribed in paragraph (2) of the aforesaid Article; |
| 2. | Where an educational institution that conducts educational business defined in subparagraph 2 of Article 12 is provided with a building, facility, etc. for research and experiment prescribed by Ordinance of the Ministry of Strategy and Finance, and the relevant public service corporation, etc. uses them in conjunction with the contributor; |
| 3. | Where the relevant public corporation, etc., pays a price for research services, etc. that they requested or pays expenses, etc. incurred in relation to the implementation of direct public-interest projects. |
| (3) | "Value prescribed by Presidential Decree" in the main sentence of Article 48 (3) of the Act, with the exception of its subparagraphs, means the value of relevant contributed property where a person falling under any of the subparagraphs of the same paragraph is allowed to use the property or to profit therefrom gratuitously, and where such person is allowed to use the property or to profit therefrom at the price lower than the smaller amount of the following amounts, it means the value of contributed property corresponding to the difference: <Amended by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 24358, Feb. 15, 2013; Presidential Decree No. 24710, Sep. 9, 2013; Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 28638, Feb. 13, 2018> |
| Article 40 (Calculation, etc. of Taxable Value on Which Gift Tax Is Payable by Public Service Corporations, etc.) |
| (1) | "Value prescribed by Presidential Decree" in the main sentence of Article 48 (2) of the Act, with the exception of its subparagraphs, means any of the following amounts: <Amended by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 16660, Dec. 31, 1999; Presidential Decree No. 17039, Dec. 29, 2000; Presidential Decree No. 18177, Dec. 30, 2003; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 28638, Feb. 13, 2018> |
| (a) | Where the property is used for purposes, other than a direct public-interest project, etc., the value of property used; |
| (b) | Where the property is not used for a direct public-interest project, etc. within three years or use of it falls short of the purpose of a direct public-interest project, etc., the value of property that is not used or the value of shortfall; |
| 2-2. | Where Article 48 (2) 3 applies, the value of property calculated according to the following formula: |
| Assessed price of contributed property (excluding the portion used for direct public interest projects) prescribed by Ordinance of the Ministry of Strategy and Finance × [Amount used for a purpose other than public interest projects ÷ Operating income defined in Article 38 (5)] |
|
| (a) | Portion used for purposes, other than public interest projects: |
| Amount equivalent to standard for use under Article 38 (4) × [Amount used for a purpose other than public interest projects ÷ Amount of sale defined in Article 38 (4)] |
|
| (b) | Portion used less than the standard amount of use defined in Article 38 (4): The amount used less than the standard amount of use; |
| 3-2. | Where a public service corporation falls under Article 48 (2) 6 of the Act, the value of shares, etc. the relevant public service corporation holds in excess of 10/100 of the total number of issued shares, etc. on the date it exercises the voting right of shares, etc. contributed to it; |
| 4. | Where Article 38 (8) 1 applies, the value of property that is not delivered to the State, a local government, or a public service corporation, etc. that is at least similar to the relevant public service corporation, etc.; |
| 5. | Where the main sentence of Article 38 (8) 2 applies, the value of property provided to some of the privileged or the value equivalent to economic profits. |
| (2) | Where an amount is to be included in the taxable value of inherited property or donated property, or gift tax is to be promptly levied pursuant to Article 48 (11) of the Act, such shall be based on the value of shares, etc. held in excess by the relevant public service corporation, etc. as at the date on which grounds for inclusion in the taxable value or for imposition of gift tax occur. In such cases, "date on which grounds for imposition of gift tax occur" shall be construed as any of the following dates: <Newly Inserted by Presidential Decree No. 17039, Dec. 29, 2000; Presidential Decree No. 20621, Feb. 22, 2008> |
| 1. | Where a public service corporation, etc. becomes not eligible for a conscientious public service corporation, etc. pursuant to Article 48 (11) 1 of the Act and subparagraph 2 of the same paragraph, the end of a taxable period or business year during which the public service corporation, etc. is not eligible for a conscientious public service corporation, etc.; |
| 2. | The date on which a public service corporation, etc. holds in excess of 5/100 of the total number of issued shares, etc. in the relevant corporation pursuant to Article 48 (11) 2 of the Act. |
| Article 41 (Reports, etc. on Details of Contributed Property) |
| (1) | Pursuant to Article 48 (5) of the Act, a public service corporation, etc. in receipt of a contribution of property shall submit documents for statement of accounts (limited to a balance sheet and income statement (including a statement of receipts and disbursements corresponding to an income statement) that a public service corporation, etc., submits to the relevant administrative agency pursuant to the Act on the Establishment and Operation of Public Interest Corporations and other Acts and subordinate statutes) and the following documents prescribed by Ordinance of the Ministry of Strategy and Finance to the head of a tax office having jurisdiction over the place for payment of tax within three months from the end of the business year: <Amended by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 17039, Dec. 29, 2000; Presidential Decree No. 19899, Feb. 28, 2007; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21214, Dec. 31, 2008; Presidential Decree No. 22042, Feb. 18, 2010> |
| 1. | Details of property contributions received; |
| 2. | Plans for use of contributed property (including the operating income from the contributed property) and state of progress; |
| 4. | Details of use of the operating income for direct public-interest projects; |
| 5. | Other necessary documents prescribed by Ordinance of the Ministry of Strategy and Finance. |
| (2) | The notification to the relevant administrative agency defined in Article 48 (6) of the Act shall be made by the end of the month following the month in which inheritance tax or gift tax is imposed by a notice prescribed by Ordinance of the Ministry of Strategy and Finance falls. <Amended by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 20720, Feb. 29, 2008> |
| (3) | The relevant administrative agency intending to make notification pursuant to Article 48 (7) of the Act shall make notification by the end of the month following the month in which the date when permission, etc. for establishment is given by a notice prescribed by Ordinance of the Ministry of Strategy and Finance falls. <Amended by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 20720, Feb. 29, 2008> |
| Article 42 (Public Service Corporations, etc. Excluded from Application of Limits on Ownership of Shares, etc.) |
| (1) | "Public service corporations, etc. prescribed by Presidential Decree" in the proviso to Article 49 (1) of the Act, with the exception of its subparagraphs, means conscientious public service corporations, etc. <Amended by Presidential Decree No. 22042, Feb. 18, 2010> |
| (2) | "Public service corporations, etc. prescribed by Presidential Decree" in the former part of Article 48 (9) of the Act and "public service corporations, etc. prescribed by Presidential Decree" in the proviso to Article 49 (1) of the Act, with the exception of its subparagraphs, shall refer to any of the following: <Amended by Presidential Decree No. 18989, Aug. 5, 2005; Presidential Decree No. 20621, Feb. 22, 2008; Presidential Decree No. 22042, Feb. 18, 2010> |
| 1. | Public service corporations, etc. incorporated with the property contributed by public service corporations, etc. incorporated with the property contributed by the State or local governments; |
| 3. | Public service corporations, etc. incorporated with the property contributed by the public service corporations, etc. defined in subparagraph 2. |
| (3) | and (4) Deleted. <by Presidential Decree No. 20621, Feb. 22, 2008> |
| (5) | Criteria concerning the donation and acquisition of shares prescribed in the proviso to Article 48 (1) of the Act, with the exception of its subparagraphs, and paragraph (2) 2 of the aforesaid Article shall apply mutatis mutandis to the calculation of criteria for ownership of shares, etc. prescribed in Article 49 (1) of the Act. <Amended by Presidential Decree No. 27835, Feb. 7, 2017> |
| Article 43 (Tax Accounting, etc. of Public Service Corporations, etc. by Outside Experts) |
| (1) | "Standards prescribed by Presidential Decree" in the main sentence of Article 50 (1) of the Act, means cases not falling under any of the following: <Amended by Presidential Decree No. 23040, Jul. 25, 2011; Presidential Decree No. 23591, Feb. 2, 2012; Presidential Decree No. 24358, Feb. 15, 2013; Presidential Decree No. 26069, Feb. 3, 2015; Presidential Decree No. 26960, Feb. 5, 2016> |
| 1. | Where he/she is the contributor (excluding a person who contributes no more than the amount equivalent to 1/100 of the total amount of contribution to the relevant public service corporation, etc. or 20 million won, whichever is lesser) to the relevant public service corporation, etc., or the founder (hereafter referred to as "contributor etc." in this paragraph), an executive officer or an employee (including a person for whom five years have not passed since he/she retired) of the relevant public service corporation, etc.; |
| 2. | Where he/she is in a relationship defined in Article 2-2 (1) 1 or 2 with the contributor etc.; |
| 3. | Where he/she has dealings, such as representing litigation, audit, tax representation, counselling, etc., with the contributor etc. or a company (referring to a company in which the contributor etc., is the largest shareholder etc., if such company is a corporation) operated by the contributor etc.; |
| 4. | Where he/she is a creditor or debtor of the relevant public service corporation, etc.; |
| 5. | Where he/she is unlikely to perform duties impartially as he/she has a stake in the relevant public service corporation, etc. in addition to the grounds listed in subparagraphs 1 through 4; |
| 6. | Where he/she is affiliated with a corporation in a relationship prescribed in subparagraphs 1 (excluding an executive officer or an employee) and 3 through 5. |
| (2) | "Public service corporations, etc. prescribed by Presidential Decree" in the proviso to Article 50 (1) of the Act, means any of the following public service corporations: <Amended by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 16660, Dec. 31, 1999; Presidential Decree No. 17039, Dec. 29, 2000; Presidential Decree No. 18989, Aug. 5, 2005; Presidential Decree No. 20621, Feb. 22, 2008; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 23040, Jul. 25, 2011; Presidential Decree No. 23591, Feb. 2, 2012; Presidential Decree No. 24358, Feb. 15, 2013; Presidential Decree No. 25195, Feb. 21, 2014; Presidential Decree No. 27835, Feb. 7, 2017> |
| 1. | A public service corporation, etc., the total amount (referring to the assessed price where the price assessed pursuant to Articles 60, 61 and 66 of the Act is higher than that in the balance sheet in cases of real estate) of asset of which in the balance sheet is less than 500 million won as at the end of a taxable period or business year for which tax accounting by outside experts is required pursuant to Article 50 (1) of the Act: Provided, That the foregoing shall not apply to a public service corporation, etc. in which case the sum of revenue (referring to the amount of revenue prescribed in the Income Tax Act related to the relevant public service project or the amount of revenue related to a profit-making business subject to the imposition of corporate tax pursuant to the Corporate Tax Act; hereinafter the same shall apply in this paragraph and the proviso to Article 43-3 (1) 1) during the relevant taxable period or the relevant business year and the value of property donated during the taxable period and the business year is at least 300 million won; |
| 2. | A public service corporation, etc., that has received contributions of property from several unspecified persons (limited to cases in which the total amount of property contributed by a contributor and his/her specially related person is less than 5/100 of the total amount of property that the public service corporation, etc., has received as contributions); |
| 3. | A public service corporation, etc. (limited to the year in which it is audited) incorporated with the property contributed by the State or a local government, which undergoes an audit from the Board of Audit and Inspection pursuant to the Board of Audit and Inspection Act or relevant Acts and subordinate statutes. |
| (3) | "Public service corporation, etc. with the scale of property less than that prescribed by Presidential Decree" in Article 50 (3) 1 of the Act, shall refer to a public service corporation, etc., the sum of the value of total asset of which (referring to the assessed value if the value assessed pursuant to Articles 60, 61, and 66 of the Act exceeds the value in the balance sheet in cases of real estate) on the balance sheet as at the end of the taxable period or business year immediately before the taxable period or business year it is to be audited is less than ten billion won. <Newly Inserted by Presidential Decree No. 20621, Feb. 22, 2008; Presidential Decree No. 24358, Feb. 15, 2013> |
| (4) | "Public service corporation, etc. prescribed by Presidential Decree" in Article 50 (3) 2 of the Act, shall refer to a public service corporation, etc. operating the businesses listed in the subparagraphs 1 and 2 of Article 12. <Newly Inserted by Presidential Decree No. 20621, Feb. 22, 2008> |
| (5) | The items for tax accounting by outside experts defined in Article 50 (4) of the Act shall be listed as follows:: <Amended by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 17039, Dec. 29, 2000; Presidential Decree No. 20621, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 24358, Feb. 15, 2013> |
| 1. | Whether property received as a contribution is used for public interest purposes; |
| 3. | Deleted; <by Presidential Decree No. 17039, Dec. 29, 2000> |
| 4. | Other matters prescribed by Ordinance of the Ministry of Strategy and Finance for the operation, etc. of public interest projects. |
| (6) | A public service corporation, etc. that has undergone tax accounting from an outside expert shall submit the result in a report prescribed by Ordinance of the Ministry of Strategy and Finance to the head of a competent tax office within three months from the end of the taxable period or business year of the public service corporation, etc. in which tax accounting is performed. <Amended by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 17039, Dec. 29, 2000; Presidential Decree No. 20621, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 23591, Feb. 2, 2012; Presidential Decree No. 24358, Feb. 15, 2013> |
| (7) | A public service corporation, etc., which has undergone an audit pursuant to Article 50 (3) of the Act shall submit an audit report prepared by an auditor, to the head of a competent tax office within three months from the end of the taxable period or business year of the relevant public service corporation, etc. In such cases, the head of the competent tax office in receipt of the report shall have it inspected by the general public. <Newly Inserted by Presidential Decree No. 20621, Feb. 22, 2008; Presidential Decree No. 22579, Dec. 30, 2010> |
| (8) | Detailed matters necessary for tax accounting by outside experts and external audit by auditors, such as tax accounting procedures and methods, appointment and restrictions on appointment of outside experts and auditors, duties of outside experts, tax accounting reports, period of tax accounting, etc. defined in Article 50 (4) of the Act shall be prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 17828, Dec. 30, 2002; Presidential Decree No. 20621, Feb. 22, 2008; Presidential Decree No. 23591, Feb. 2, 2012> |
| Article 43-2 (Duty to Open and Use Exclusive Account by Public Service Corporations, etc.) |
| (1) | "Public service corporation, etc. prescribed by Presidential Decree" in Article 50-2 (1) of the Act, with the exception of its subparagraphs, shall refer to a public service corporation, etc. implementing the projects defined in subparagraph 1 of Article 12. |
| (2) | "Exclusive account for the direct public-interest project prescribed by Presidential Decree" in Article 50-2 (1) of the Act, with the exception of its subparagraphs, means the one meeting all of the following requirements: <Amended by Presidential Decree No. 26069, Feb. 3, 2015> |
| 1. | That it shall be an account opened at a finance company, etc.; |
| 2. | That it shall not be used for a purpose other than public interest projects of a public service corporation, etc. |
| (3) | At least two exclusive accounts (hereinafter referred to as "exclusive account") under Article 50-2 (1) of the Act, with the exception of its subparagraphs, may be opened for respective public service corporation, etc. |
| (4) | The scope of transactions for which exclusive accounts are to be used pursuant to Article 50-2 (1) 1 of the Act shall include cases in which payment is made by any of the following methods through mediation by finance companies, etc., or entrustment to finance companies, etc.: <Amended by Presidential Decree No. 26069, Feb. 3, 2015> |
| 1. | Remittance and money transfer between accounts; |
| (5) | "Cases prescribed by Presidential Decree" in the proviso to Article 50-2 (1) 2 of the Act shall mean cases of deposit in an exclusive account within five days (the following day where the fifth day falls on a holiday, Saturday or a Workers' Day prescribed by the Designation of Workers' Day Act) from the date donations, contributions, or membership fees are received directly in cash. In such cases, details of cash revenue of donations, contributions or membership fees shall be prepared and kept. |
| (6) | "Where expenses for a direct public-interest project prescribed by Presidential Decree are paid" in the main sentence of Article 50-2 (1) 4 of the Act shall mean cases of paying donations, scholarships, research expense, living expenses, etc. related to public interest projects. |
| (7) | In the case of a transaction not falling under any of the subparagraphs of Article 50-2 (1) of the Act, a public service corporation, etc. shall prepare a transactional record excluding exclusive accounts (hereinafter referred to as "transactional record excluding exclusive accounts") prescribed by Ordinance of the Ministry of Strategy and Finance in which the date of transaction, the other party to a transaction (limited to cases in which the other party is verifiable), consideration for transaction, etc. are entered pursuant to paragraph (2) of the same Article and keep the record. In such cases, if the data is in a form in which the data can be output immediately as it is recorded and kept on computerized tapes, disks, etc., a transactional record excluding exclusive accounts shall be deemed to have been prepared and kept. |
| (8) | "Revenue and expenditure prescribed by Presidential Decree" in the proviso to Article 50-2 (2) of the Act shall mean any of the following revenues and expenditures: <Amended by Presidential Decree No. 20720, Feb. 29, 2008> |
| 2. | Revenue and expenditure, the amount of which per transaction (including value-added tax) is 10,000 won (30,000 won until December 31, 2008) or less; |
| 3. | Revenue and expenditure of a transaction, etc. prescribed by Ordinance of the Ministry of Strategy and Finance, documentary evidence of which is impracticable to obtain. |
| (9) | A public service corporation, etc. shall record and manage revenue and expenditure that need exclusive accounts, amounts actually used and amounts not used by relevant taxable period or business year by classifying them. |
| (10) | Pursuant to Article 50-2 (3) of the Act, a public service corporation, etc. shall submit a report on the establishment (change or addition) of exclusive accounts prescribed by Ordinance of the Ministry of Strategy and Finance within the relevant period to the head of a tax office having jurisdiction over the place for payment of tax. In such cases, where exclusive accounts are changed or added, a report shall be submitted to the head of a tax office having jurisdiction over the place for payment of tax within one month from the date when reasons therefor occur. <Amended by Presidential Decree No. 20720, Feb. 29, 2008> |
| (11) | The Commissioner of the National Tax Service may determine detailed matters necessary for the establishment of exclusive accounts, reports, preparation of detailed reports, etc. within the scope necessary for the management of taxation. |
[This Article Newly Inserted by Presidential Decree No. 20621, Feb. 22, 2008]
| Article 43-3 (Duties of Public Service Corporations, etc. to Make Public Announcement of Statements of Accounts, etc.) |
| (1) | "Public service corporation, etc. prescribed by Presidential Decree" in Article 50-3 (1) of the Act, with the exception of its subparagraphs, means any of the following public service corporations: <Amended by Presidential Decree No. 27835, Feb. 7, 2017> |
| 1. | A public service corporation, etc. in which the sum of total assets (in cases of real estate, where the value assessed pursuant to Articles 60, 61, and 66 of the Act is larger than the value in the statement of financial position, referring to the value assessed) in the statement of financial position as of the date on which the taxable period or business year subject to public announcement of financial statements, etc. (hereafter referred to as "financial statements, etc." in this Article) under Article 50-3 (1) of the Act ends, is less than 500 million won: Provided, That the foregoing shall not apply to a public service corporation, etc. in which the sum of revenue during the relevant taxable period or business year and the value of property donated during the taxable period or business year is at least 300 million; |
| 2. | A public service corporation, etc. which conducts business prescribed in subparagraph 1 of Article 12. |
| (2) | Deleted. <by Presidential Decree No. 27835, Feb. 7, 2017> |
| (3) | "Matters prescribed by Presidential Decree" in Article 50-3 (1) 7 of the Act means the following: <Amended by Presidential Decree No. 24358, Feb. 15, 2013; Presidential Decree No. 27835, Feb. 7, 2017; Presidential Decree No. 29533, Feb. 12, 2019> |
| 1. | Contribution, acquisition, retention, and disposal of shares, etc. by a public service corporation, etc.; |
| 2. | Relationship between a person who contributes shares, etc. to a public service corporation, etc. and the corporation that has issued such shares, etc.; |
| 3. | The current status of dividends according to shares, etc., the current status of revenues from the disposal of shares, etc. in possession, etc.; |
| 4. | In cases of an exemplary public service corporation, etc. which owns shares, etc. with voting rights of a domestic corporation in excess of 5/100 of the total number of issued shares, etc. of the domestic corporation pursuant to Articles 16 (2), 48 (1), and 48 (2) 2 of the Act, the result of the exercise of voting rights on shares it owns; |
| 5. | In cases of a public service corporation, etc. that undergoes an external audit defined in Article 50 (3) of the Act, the current status of use of property received as a contribution for public interest purpose. |
| (4) | A public service corporation, etc. defined in Article 50-3 (1) of the Act shall access the website of the National Tax Service and make public announcement of statements of accounts, etc. prepared according to the standard form prescribed by Ordinance of the Ministry of Strategy and Finance; and another public service corporation, etc. may prepare a statement of accounts, etc. according to the suggested form prescribed by Ordinance of the Ministry of Strategy and Finance and make public announcements in the same manner. <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 25195, Feb. 21, 2014> |
| (5) | Where the Commissioner of the National Tax Service requests a public service corporation, etc. to make public announcement or to correct errors pursuant to Article 50-3 (2) of the Act, he/she shall make such request in writing; he/she shall impose additional tax pursuant to Article 78 (11) of the Act on the public service corporation, etc. that fails to comply with the request and notify such fact to the Minister having jurisdiction over such public service corporation, etc. |
| (6) | "Person prescribed by Presidential Decree" in Article 50-3 (3) of the Act means any of the following persons that request a statement of accounts, etc.: <Amended by Presidential Decree No. 29533, Feb. 12, 2019> |
| 1. | A research institute established under Article 8 (1) of the Act on the Establishment, Operation and Fostering of Government-Funded Research Institutes or Article 8 (1) of the Act on the Establishment, Operation and Fostering of Government-Funded Science and Technology Research Institutes; |
| 2. | A public interest corporation, etc. that has fulfilled the duty of public announcement under Article 50-3 of the Act. |
| (7) | The Commissioner of the National Tax Service may determine detailed matters necessary for public announcement of statements of accounts, etc. of public service corporations, etc., such as methods of making public announcement on the website of the National Tax Service, methods of preparing the standard form and voluntary form defined in paragraph (4), handling of cases in which no public announcement is made or fraudulent public announcement is made, etc. <Amended by Presidential Decree No. 23591, Feb. 2, 2012; Presidential Decree No. 25195, Feb. 21, 2014> |
[This Article Newly Inserted by Presidential Decree No. 20621, Feb. 22, 2008]
| Article 43-4 (Accounting Standards Applied to Public Service Corporations, etc.) |
| (1) | The Minister of Strategy and Finance shall prescribe accounting standards applied to public service corporations, etc. prescribed in Article 50-4 of the Act and other matters necessary for the operation of the accounting system, procedures therefor, etc. following deliberation by the Public Service Corporation Accounting Standards Deliberative Committee prescribed in Article 43-5 pursuant to Article 50-4 of the Act. |
| (2) | "Public service corporations, etc. prescribed by Presidential Decree" in Article 50-4 (1) of the Act, means public service corporations, etc. prescribed by Ordinance of the Ministry of Strategy and Finance, which are medical corporations prescribed in the Medical Service Act, school corporations prescribed in the Private School Act or other public service corporations similar thereto. |
[This Article Newly Inserted by Presidential Decree No. 27835, Feb. 7, 2017]
| Article 43-5 (Public Service Corporation Accounting Standards Deliberative Committee) |
| (1) | The Public Service Corporation Accounting Standards Deliberative Committee (hereafter referred to as the "Committee" in this Article) shall be established under the jurisdiction of the Minister of Strategy and Finance to deliberate on matters prescribed in Article 43-4 (1). |
| (2) | The Committee shall be comprised of not more than 15 members including one chairperson. |
| (3) | A person appointed by the Minister of Strategy and Finance from among Vice Ministers of Strategy and Finance shall serve as the chairperson of the Committee (hereafter referred to as the "Chairperson" in this Article), and persons appointed or commissioned by the Minister of Strategy and Finance from among the following persons shall serve as members of the Committee: |
| 1. | Public officials in Class III of the relevant government agencies, such as the Ministry of Strategy and Finance, and the National Tax Service, or public officials in general service of the Senior Executive Service; |
| 2. | Persons who have extensive knowledge of and experience in accounting. |
| (4) | The Chairperson shall represent the Committee and preside over duties of the Committee. |
| (5) | Where a member of the Committee falls under any of the following, the Minister of Strategy and Finance may dismiss or discharge the relevant member: |
| 1. | Where he/she becomes unable to perform his/her duties due to his/her mental or physical disability; |
| 2. | Where he/she commits irregularities in relation to his/her duties; |
| 3. | Where he/she is deemed unfit to be a member due to dereliction of his/her duties, injury to dignity, or for other grounds; |
| 4. | Where he/she makes it clear that it is impracticable for him/her to perform his/her duties. |
| (6) | In addition to matters provided for in paragraphs (1) through (5), matters necessary for the formation, operation, etc. of the Committee shall be prescribed by Ordinance of the Ministry of Strategy and Finance. |
[This Article Newly Inserted by Presidential Decree No. 27835, Feb. 7, 2017]
| Article 44 (Preparing and Keeping Books and Records) |
| (1) | The book defined in Article 51 (1) of the Act shall be kept in a form in which the condition and operation of the property received as contribution and changes in the revenues and expenditures from a profit-making business are recorded in the double-entry system without omission and calculations thereon; and significant evidentiary documents defined in the same paragraph shall include details of payments to beneficiaries. <Amended by Presidential Decree No. 17039, Dec. 29, 2000; Presidential Decree No. 18177, Dec. 30, 2003> |
| (2) | Where any of the following applies, a book defined in paragraph (1) shall be deemed to have been prepared and kept: <Amended by Presidential Decree No. 18989, Aug. 5, 2005> |
| 1. | Where the condition and operation of property and changes in the revenues and expenditures defined in paragraph (1) are recorded without omission as slips in which transactions are recorded by double-entry method and relevant evidentiary documents are ready; |
| 2. | Where invoices of relevant revenues and expenditures (including tax invoices prescribed by the Value-Added Tax Act), receipts, etc. are kept without omission, in which the condition and operation of the property and changes in revenue and expenditure defined in paragraph (1) are recorded. |
| Article 45 (Provisions to Be Applied Mutatis Mutandis) |
The provisions of Article 14 shall apply mutatis mutandis to gift tax.
| Article 45-2 (Non-Inclusion of Taxable Value of Property Donated to Disabled Persons) |
| (2) | Deleted. <by Presidential Decree No. 27835, Feb. 7, 2017> |
| (3) | "That prescribed by Presidential Decree" in Article 52-2 (1) of the Act, with the exception of its subparagraphs, means any of the following: <Amended by Presidential Decree No. 22042, Feb. 18, 2010> |
| (4) | "Date prescribed by Presidential Decree" in Article 52-2 (2) of the Act, with the exception of its subparagraphs, means the following dates: <Amended by Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 23040, Jul. 25, 2011> |
| 2. | Where the beneficiary of the trust is changed, the date when the beneficiary is changed; |
| 3. | Where the value of donated property is decreased, the date when trust property is withdrawn or disposed of; |
| 4. | Where all or part of earnings from the trust are verified to be delivered to a person other than a disabled person, the date of verification. |
| (5) | The scope of disabled persons on whom no gift tax is imposed pursuant to the proviso to Article 52-2 (2) of the Act, with the exception of its subparagraphs, shall be as follows: <Newly Inserted by Presidential Decree No. 28638, Feb. 13, 2018> |
| 1. | A person judged to be at least Grade 3 of disability ratings pursuant to the Act on Compensation to Persons Associated with the May 18 Democratization Movement; |
| 2. | A person to whom a disability rating was granted, who is a patient suffering from aftereffects of defoliants prescribed in the Act on Assistance to Patients Suffering from Actual or Potential Aftereffects of Defoliants and Establishment of Related Organizations; |
| (6) | "Purposes prescribed by Presidential Decree, such as the purpose of paying his/her medical expenses" in the proviso to Article 52-2 (2) of the Act, with the exception of its subparagraphs, means purposes for any of the following expenses: <Newly Inserted by Presidential Decree No. 28638, Feb. 13, 2018> |
| (7) | A disabled person who withdraws trust property for the uses, such as medical expenses incurred by himself/herself, pursuant to the proviso to Article 52-2 (2) of the Act, with the exception of its subparagraphs, shall submit an application for withdrawal of the principal of the trust for the disabled prescribed by Ordinance of the Ministry of Finance and Strategy and related evidentiary documents to a trust business operator within the period from three months before the date of withdrawal to three months after the date of withdrawal. <Newly Inserted by Presidential Decree No. 28638, Feb. 13, 2018> |
| (8) | A trust business operator shall keep documents submitted to him/her pursuant to paragraph (7) for five years from the date of withdrawal of the relevant medical expenses, etc., and submit the detailed statement of withdrawal of the principal of the trust for the disabled prescribed by Ordinance of the Ministry of Finance and Strategy to the head of the competent tax office within three months from the end of the year to which the date of withdrawal belongs. <Newly Inserted by Presidential Decree No. 28638, Feb. 13, 2018> |
| (9) | "Under extenuating circumstance prescribed by Presidential Decree" in the proviso to Article 52-2 (2) of the Act, with the exception of its subparagraphs, means any of the following timing: <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 27835, Feb. 7, 2017; Presidential Decree No. 28638, Feb. 13, 2018; Presidential Decree No. 29533, Feb. 12, 2019> |
| 1. | When a trust company terminates a trust ahead of the agreed date due to suspension of business, closure of business, revocation of permission granted under relevant Acts and subordinate statutes, or due to instructions, orders, etc. of a supervisory agency, or for grounds prescribed by Ordinance of the Ministry of Strategy and Finance, and a disabled person joins the trust again within two months from the date of termination of the trust; |
| 2. | When the value of contributed property decreases while a trust company operates it after being entrusted therewith; |
| (10) | In applying Article 52-2 (2) 1 of the Act, where a person joins a trust again within one month from the date of termination of a trust or the expiration date of a trust, the trust period shall be deemed extended. <Amended by Presidential Decree No. 17459, Dec. 31, 2001; Presidential Decree No. 17828, Dec. 30, 2002; Presidential Decree No. 27835, Feb. 7, 2017; Presidential Decree No. 28638, Feb. 13, 2018> |
| (11) | The gift tax defined in Article 52-2 (2) of the Act and paragraph (4) of the same Article shall be calculated by multiplying the following value assessed pursuant to the provisions of Chapter IV of the Act as at the date prescribed in the subparagraphs of paragraph (4) by the tax rate defined in Article 56 of the Act: <Amended by Presidential Decree No. 28638, Feb. 13, 2018> |
| Amount of trust property × Trust profit that is verified as having been delivered to a person other than a disabled person ÷ Total value of trust property |
|
| (12) | A person who intends to be granted the right to be excluded from the taxable value of donated property pursuant to Article 52-2 (3) of the Act shall submit a gift tax return and statement of voluntary payment defined in Article 65 (1) accompanied by the following documents, to the head of a tax office having jurisdiction over the place for payment of tax: <Amended by Presidential Decree No. 16660, Dec. 31, 1999; Presidential Decree No. 18989, Aug. 5, 2005; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 28638, Feb. 13, 2018> |
| 1. | Statement of donated property and copy of a donation contract; |
| 3. | Documents evidencing that the person falls under paragraph (1). |
[This Article Newly Inserted by Presidential Decree No. 15971, Dec. 31, 1998]
SECTION 5 Donation Deductions
| Article 46 (Methods, etc. of Deduction of Donated Property) |
| (1) | In applying Article 53 of the Act, calculation of the amount to be deducted from the taxable value of donated property shall be as follows: <Amended by Presidential Decree No. 22042, Feb. 18, 2010> |
| 1. | Where at least two donations are made at different times, deduction in sequence from the taxable value of the property donated first from among at least two donations; |
| 2. | Where at least two donations are made simultaneously, proportionate deduction from respective taxable value of donated property. |
| (2) | Deleted. <by Presidential Decree No. 23591, Feb. 2, 2012> |
| Article 46-2 (Deduction of Assessment Fees) |
"Assessment fee for the donated property prescribed by Presidential Decree" in Article 55 (1) of the Act, with the exception of its subparagraphs, shall mean the fee defined in Article 20-3. In such cases, "inherited property" in Article 20-3 shall be construed as "donated property"; "inheritance tax" as "gift tax"; and "inheritance tax return" as "gift tax return," respectively. <Amended by Presidential Decree No. 21292, Feb. 4, 2009; Presidential Decree No. 22042, Feb. 18, 2010> [This Article Newly Inserted by Presidential Decree No. 18177, Dec. 30, 2003]
| Article 46-3 (Methods of Calculating Extra Taxation on Donation to Lineal Descendants) |
| (2) | The amount of the extra tax defined in Article 57 (1) of the Act shall be assessed as follows: In such cases, where the amount is a negative figure, it shall be deemed nil: |
| 1. | Where the donee is a minor and the value of donated property exceeds two billion won: |
| [Calculated amount of gift tax x (Value of property donated by a lineal ascendant other than a parent of the donee/Total value of donated property) x 40/100] - Amount of extra tax previously paid |
|
| 2. | In any case other than the cases under subparagraph 1: |
| [Calculated amount of gift tax x (Value of property donated by a lineal ascendant other than a parent of the donee/Total value of donated property) x 30/100] - Amount of extra tax previously paid |
|
[This Article Newly Inserted by Presidential Decree No. 26960, Feb. 5, 2016]
| Article 47 (Provisions to be Applied with Necessary Modifications) |
The provisions of Article 20 shall apply to gift tax with necessary modifications. In such cases, "taxable value of inherited property" in Article 20 (2) shall be construed as "taxable value of donated property"; "inherited property" as "donated property"; and "inheritance tax return" in paragraph (3) of the same Article as "return according to the provisions of Article 65 (hereinafter referred to as "gift tax return")."
| Article 48 (Provisions to be Applied with Necessary Modifications) |
The provisions of Article 21 shall apply to gift tax with necessary modifications. In such cases, "calculated amount of inheritance tax" in Article 21 (1) shall be construed as "calculated amount of gift tax"; "inherited property" as "donated property"; "inheritance tax" as "gift tax", and "inheritance tax return" in paragraph (2) of the same Article as "gift tax return."
CHAPTER IV ASSESSMENT OF PROPERTY
| Article 49 (Principles, etc. of Assessment) |
| (1) | "What is accepted as the current market value, as prescribed by Presidential Decree, such as the price of expropriation, price of public auction, appraised value, etc." in Article 60 (2) of the Act, means the price verified by any of the following methods, where sale and purchase, appraisal, expropriation, auction, (referring to an auction defined in the Civil Execution Act; hereafter the same shall apply in this paragraph) or public sale (hereinafter referred to as "sale, etc." in this Article and Article 49-2) occurs within six months (referring to the period that begins six months prior to the base assessment date and ends three months after the base assessment date in the case of donated property; hereinafter referred to as "assessment period" in this paragraph) before or after the base assessment date: Provided, That the value of relevant sale, etc. may be included in the value verified by any of the following methods after examination by the assessment deliberative committee defined in Article 49-2 (1), upon receipt of an application from the inheritance tax payer or gift tax payer (hereafter referred to as "taxpayer" in this Article and Article 54), the commissioner of the relevant regional tax office, or the head of the relevant tax office, deeming that an extenuating circumstance of price fluctuation does not exist, based on the conditions of management of the company that issues stocks, the passage of time, changes in surrounding circumstances, etc. during the period from the base assessment date to the day referred to in any of subparagraphs of paragraph (2), even where sale, etc. take place during the period of not more than two years before the base assessment date, which does not fall within the assessment period or where sale, etc. take place during the period beginning after the expiration of the assessment period and ending on the last day of the deadline specified under Article 78 (1): <Amended by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 16660, Dec. 31, 1999; Presidential Decree No. 17039, Dec. 29, 2000; Presidential Decree No. 17828, Dec. 30, 2002; Presidential Decree No. 18177, Dec. 30, 2003; Presidential Decree No. 18989, Aug. 5, 2005; Presidential Decree No. 19333, Feb. 9, 2006; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 22579, Dec. 30, 2010; Presidential Decree No. 23591, Feb. 2, 2012; Presidential Decree No. 25195, Feb. 21, 2014; Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 27835, Feb. 7, 2017; Presidential Decree No. 29533, Feb. 12, 2019> |
| 1. | Where sale or purchase of relevant property exists, the consideration for transaction: Provided, That any of the following shall be excluded herefrom: |
| (a) | Where the consideration for transaction is deemed objectively unreasonable as the transaction is conducted with a specially related person; |
| (b) | Where the value (referring to the value of a transaction) of unlisted shares that have been traded is less than the amount that is lesser among the following (excluding cases in which the trading amount is deemed to be reasonable as a transactional practice after examination by the assessment deliberative committee defined in Article 49-2 (1)): |
| (i) | An amount equivalent to 1/100 of the total amount of issued shares of the relevant corporation calculated on the basis of the sum of face values or of the total amount of investment; |
| 2. | The average appraised value, if values are appraised for the relevant property (excluding property prescribed in Article 63 (1) 1 of the Act) by at least two reputable appraisal institutions specified by Ordinance of the Ministry of Strategy and Finance (hereinafter referred to as "appraisal institutions"): Provided, That the following values shall be excluded herefrom, and the average appraised value shall be based on the values appraised by other appraisal institutions at the request of the head of the relevant tax office (including the commissioner of the relevant regional tax office; hereafter referred to as "head of the relevant tax office, etc."), where the relevant appraised value is below the smaller amount (hereinafter referred to as "standard amount" in this subparagraph) of the value assessed pursuant to Articles 61, 62, 64, and 65, and the value equivalent to 90/100 of the market value prescribed in paragraph (4) (including cases where the value is deemed unreasonable in view of the purposes of appraisal, assessment, etc. after examination by the assessment deliberative committee defined in Article 49-2 (1), even if the appraised value is at least the standard amount); but this shall not apply where the value is lower than the appraised value presented by the taxpayer: |
| (a) | Assessed value not suitable for the payment of inheritance tax or gift tax, such as where the relevant property is assessed on the presumption that certain conditions will be satisfied; |
| (b) | Where the relevant property is not assessed as it is as at the base assessment date, such assessed value; |
| 3. | The amount of compensation, the relevant auction price, or the relevant public sale price, where expropriation, auction, or public sale of the relevant property takes place: The relevant auction price or public sale price shall be excluded in any of the following cases: |
| (a) | Where an heir or his/her spacially related person acquires the property provided for payment in kind prescribed in Article 73 of the Act through an auction or public sale; |
| (b) | Where the value (referring to the sum of face values) of unlisted shares acquired through auction or public sale, is below the lesser of the following: |
| (i) | An amount equivalent to 1/100 of the total amount of issued shares of relevant corporation or the total amount of investment calculated based upon the sum of face values; |
| (c) | Where it is acquired pursuant to a negotiated contract as prescribed by relevant statutes or regulations after procedures for auction or public sale commence. |
| (2) | In applying paragraph (1), whether the value defined in any of the subparagraphs of paragraph (1) was set within six months (referring to the period that begins six months prior to the base assessment date and ends three months after the base assessment date in cases of donated property) before or after the base assessment date shall be determined on the basis of the following classifications, and where the numeric value deemed market price pursuant to paragraph (1) is at least two, the value (referring to the average value, if two or more values exist) that is nearest to the base assessment date, whether therebefore or thereafter, shall be applicable: Provided, That where the sale price, etc. of the relevant property exists, price defined in paragraph (4) shall not apply: <Amended by Presidential Decree No. 17828, Dec. 30, 2002; Presidential Decree No. 19333, Feb. 9, 2006; Presidential Decree No. 22579, Dec. 30, 2010; Presidential Decree No. 25195, Feb. 21, 2014; Presidential Decree No. 27835, Feb. 7, 2017; Presidential Decree No. 29533, Feb. 12, 2019> |
| 1. | Date of concluding a sales contract in cases falling under paragraph (1) 1; |
| 2. | Price base date and the date the price assessment sheet is prepared in cases falling under paragraph (1) 2; |
| 3. | Date when compensation amount, auction price, or public sale price is determined in cases falling under paragraph (1) 3. |
| (3) | Where the price of respective property is not discernible as at least two prices of property are included in the value defined in the subparagraphs of paragraph (1), the price of respective property shall be calculated in proportion to the value assessed pursuant to Articles 61 through 65; but where the assessed price of respective property (referring to the respective price assessed by the same appraisal institution simultaneously) exists, calculation shall be made in proportion to the assessed price: Provided, That where the price of land and the price of buildings or other structures fixed on the land are unascertainable, proportionate calculation shall be made pursuant to Article 64 of the Enforcement Decree of the Value-Added Tax Act. <Newly Inserted by Presidential Decree No. 17039, Dec. 29, 2000; Presidential Decree No. 18989, Aug. 5, 2005; Presidential Decree No. 24638, Jun. 28, 2013; Presidential Decree No. 26960, Feb. 5, 2016> |
| (4) | In applying paragraph (1), where the value [where an inheritance tax base return or a gift tax base return is filed pursuant to Article 67 or 68 of the Act, referring to the value from six months before the base date of assessment of the value until the date of filing the aforesaid tax base return within the assessment period prescribed in paragraph (1)] falling under any of the subparagraphs of the aforesaid paragraph on other property, whose area, location, use, item and standard market price are identical or similar to those of the relevant property prescribed by Ordinance of the Ministry of Strategy and Finance, exists, the relevant value shall be deemed the market price prescribed in Article 60 (2) of the Act. <Newly Inserted by Presidential Decree No. 18177, Dec. 30, 2003; Presidential Decree No. 22579, Dec. 30, 2010; Presidential Decree No. 23591, Feb. 2, 2012; Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 27835, Feb. 7, 2017; Presidential Decree No. 29533, Feb. 12, 2019> |
| (5) | In applying paragraph (1), where the dates defined in the subparagraphs of paragraph (2) fall on a day before the base assessment date, and where capital expenditures for relevant property from such date until the base assessment date are verified, the capital expenditures may be added to the value defined in paragraph (1). <Newly Inserted by Presidential Decree No. 25195, Feb. 21, 2014; Presidential Decree No. 26960, Feb. 5, 2016> |
| (6) | "Real estate whose value is not more than the amount prescribed by Presidential Decree" in the former part of Article 60 (5) of the Act means real estate, the standard market price of which is not more than one billion won among real estate prescribed in Article 99 (1) 1 of the Income Tax Act. <Newly Inserted by Presidential Decree No. 28638, Feb. 13, 2018> |
| (7) | "Grounds prescribed by Presidential Decree exist" in the latter part of Article 60 (5) of the Act means cases where the value appraised by the appraisal institution (hereafter referred to as "initially appraised value") proposed by a taxpayer (hereafter referred to as "initial appraisal institution" in this Article) is less than 80/100 of the value appraised by another appraisal institution (hereafter referred to as "re-appraised value" in this Article) at the request of the head of the relevant tax office, etc. <Newly Inserted by Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 28638, Feb. 13, 2018> |
| (8) | In cases falling under any ground referred to in paragraph (7), the head of the relevant tax office, etc. may designate an initial appraisal institution that fails to recognize market value for a period specified by Ordinance of the Ministry of Strategy and Finance, not exceeding one year, based on intentionality in inadequate appraisal, the degree of shortfall of the initially appraised value to the re-appraised value, etc. following deliberation by the Assessment Deliberative Committee prescribed in Article 49-2 (1). In such cases, the period shall be counted from the date when the head of the relevant tax office, etc. notifies the initial appraisal institution of designation as an appraisal institution that fails to recognize market value. <Newly Inserted by Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 27835, Feb. 7, 2017; Presidential Decree No. 28638, Feb. 13, 2018> |
| (9) | The head of a tax office, etc. shall notify the relevant appraisal institution of the following matters, etc. and hear its opinions thereon before deliberation by the Assessment Deliberative Committee prescribed in paragraph (8). In such cases, the appraisal institution that receives such notice shall present its opinion thereon within 20 days from the date when it receives the notice, but the institution shall be deemed to have no objection thereto, if it fails to present its opinion, without any justifiable grounds: <Newly Inserted by Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 27835, Feb. 7, 2017; Presidential Decree No. 28638, Feb. 13, 2018> |
| 1. | Details and legal ground of the designation as an appraisal institution that fails to recognize market value; |
| 2. | A statement that opinions on subparagraph 1 may be presented and the methods of processing in cases where no opinion is presented; |
| 3. | The deadline for presenting opinions; |
| 4. | Other matters necessary for presenting opinions. |
| (10) | Except as provided in paragraphs (7) through (9), matters necessary for the designation, notification, etc. of an appraisal institution that fails to recognize market value shall be determined and publicly notified by the Commissioner of the National Tax Service. <Newly Inserted by Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 28638, Feb. 13, 2018> |
| (11) | In order to ensure impartiality in assessing inherited property and donated property, the Minister of Strategy and Finance may determine detailed matters for assessment standards, methods, procedures, etc. for each property. <Newly Inserted by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 25195, Feb. 21, 2014; Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 28638, Feb. 13, 2018> |
| Article 49-2 (Organization, etc. of Assessment Deliberative Committee) |
| (1) | In order to deliberate on the following matters, the National Tax Service and each regional tax office shall establish an assessment deliberative committee: <Amended by Presidential Decree No. 27835, Feb. 7, 2017; Presidential Decree No. 28638, Feb. 13, 2018> |
| 1. | Recognition of the price of sale, etc. prescribed in the proviso to Article 49 (1), with the exception of its subparagraphs, as the market price; |
| 1-2. | Designation of an appraisal institution whose appraised value is not approved as the market price prescribed in Article 49 (8); |
| 2. | Assessment of the value of unlisted stocks, etc. defined in Article 54 (1) (hereinafter referred to as "unlisted stocks, etc." in this Article) and methods for assessment thereof pursuant to Article 54 (6). |
| (2) | An assessment deliberative committee shall be comprised of the following members: |
| 1. | The assessment deliberative committee of the National Tax Service: The following committee members: |
| (a) | Three persons appointed by the Commissioner of the National Tax Service from among its public officials; |
| (b) | Nine persons commissioned by the Commissioner of the National Tax Service from among the following persons: |
| (ii) | Certified public accountants; |
| (iii) | Certified tax accountants; |
| (v) | Other persons who have abundant knowledge and experiences in corporate mergers and acquisition; |
| 2. | The assessment deliberative committee of a regional tax office: The following committee members: |
| (a) | Two persons appointed by the commissioner of the regional tax office from among its public officials; |
| (b) | Three persons commissioned by the commissioner of the regional tax office from among the persons referred to in subparagraph 1 (b) (i) through (v); |
| (c) | One committee member who is a public official and one committee member who is not a public official, who shall be designated by the Commissioner of the National Tax Service respectively for each meeting, from among members of the assessment deliberative committee of the National Tax Service. |
| (3) | The term of office of committee members who are not public officials defined in paragraph (2) shall be two years but may be renewed only once. |
| (4) | The Commissioner of the National Tax Service or the commissioner of a regional tax office may remove or dismiss a committee member from office in any of the following cases: |
| 1. | If a committee member is unable to perform his/her duties due to any mental or physical disability; |
| 2. | If a committee member commits any irregularity in connection with his/her duties; |
| 3. | If a committee member is found incompetent due to dereliction of duties or disrespectful behavior or any other ground; |
| 4. | If a committee member voluntarily states that he/she has difficulty in performing his/her duties. |
| (5) | If a taxpayer deems that deliberation defined in paragraph (1) is necessary, the taxpayer shall file an application therefor with the assessment deliberative committee by no later than four months before the deadline for filing a tax return on the inheritance tax base defined in Article 67 of the Act (by no later than 70 days before the deadline for filing a tax return on the gift tax base defined in Article 68, in cases of donation), along with the following documents: Provided, That where sale, etc. take place during the period beginning after the expiration of the assessment period and ending on the last day of the deadline specified under Article 78 (1) in the case of paragraph (1) 1, the taxpayer shall file an application with the assessment deliberative committee within six months from the date on which such sale, etc. take place, along with the data classified as follows: <Amended by Presidential Decree No. 27835, Feb. 7, 2017; Presidential Decree No. 29533, Feb. 12, 2019> |
| 1. | In cases falling under paragraph (1) 1: Documents evidencing the price of sale, etc.; |
| 2. | In cases falling under paragraph (1) 2: The following data: |
| (a) | Assessed value of unlisted shares, etc. (hereinafter referred to as "assessed value of shares according to the methods of supplementary assessment) assessed pursuant to Articles 54 (1) and (4), 55, and 56, and the assessment annexes; |
| (b) | Data based on which the assessed value of shares according to the method of supplementary assessment may be deemed unreasonable; |
| (c) | Assessed value of unlisted shares, etc. assessed in accordance with any method prescribed in the subparagraphs of Article 54 (6) and the assessment annexes. |
| (6) | Upon receipt of an application filed under paragraph (5), the assessment deliberative committee shall notify the relevant taxpayer, in writing, of the results of its deliberation on the application by no later than one month before the deadline for filing a tax return on the relevant inheritance tax base (by no later than 20 days before the deadline for filing a tax return on the gift tax base, in cases of donation): Provided, That the assessment deliberative committee shall give the relevant taxpayer written notification of the results of its deliberation on the application within three months from the date of receipt of such application, if it is filed under the proviso to paragraph (5), with the exception of its subparagraphs. <Amended by Presidential Decree No. 29533, Feb. 12, 2019> |
| (7) | When an assessment deliberative committee deliberates on the assessment of the value of unlisted shares, etc. and methods of evaluation, it shall take the following matters into consideration: <Amended by Presidential Decree No. 27835, Feb. 7, 2017> |
| 1. | The reasonably forecast value in cases where stocks are assessed by applying mutatis mutandis the methods for assessment of securities, etc. defined in Article 63 of the Act; |
| 2. | Whether it is reasonable to assess the relevant unlisted shares, etc. in accordance with Articles 54 through 56; |
| 3. | The assessed value recognized as reasonable, based on the type and scale of business of the relevant corporation, the status of its assets, its reputation, etc. |
| (8) | If an assessment deliberative committee deems it necessary for fair and objective deliberation, it may request an institution specialized in credit rating defined in Article 56 (2) to conduct an assessment or may hear testimony from relevant persons prior to commencing deliberation. In such cases, assessment fees for the assessment by the institution specialized in credit rating shall be borne by the relevant taxpayer. |
| (9) | Matters necessary for the establishment and operation of assessment deliberative committees, the procedures for filing an application for deliberation, the assessment of the value of unlisted shares, etc., the methods for assessment, etc. shall be determined and publicly notified by the Commissioner of the National Tax Service. <Amended by Presidential Decree No. 27835, Feb. 7, 2017> |
[This Article Newly Inserted by Presidential Decree No. 26960, Feb. 5, 2016]
| Article 50 (Assessment of Real Estate) |
| (1) | "Amount assessed as prescribed by Presidential Decree" in the proviso to Article 61 (1) 1 of the Act, means the value assessed by the head of the tax office having jurisdiction over the place for tax payment (referring to the head of the tax office having jurisdiction over the relevant land, if the head of the tax office having jurisdiction over the place for tax payment is not the head of the tax office having jurisdiction over the relevant land and the head of the tax office having jurisdiction over the place for tax payment makes a request for assessment) according to the comparison table defined in Article 3 (7) of the Act on the Public Announcement of Real Estate Values, regarding the land in the vicinity, as the comparative base land, which has factors affecting the price of land, such as land category, condition of use, etc., similar to those of the relevant land under any of the following subparagraphs without any officially assessed individual land price. In such cases, the head of the tax office having jurisdiction over the place for tax payment may determine the assessed value with the value calculated by the head of the relevant Si/Gun/Gu under the proviso to Article 4 (1) of the Local Tax Act or the average of the values appraised by at least two appraisal institutions at the request of the head of the tax office having jurisdiction over the place for tax payment: <Amended by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 17828, Dec. 30, 2002; Presidential Decree No. 18989, Aug. 5, 2005; Presidential Decree No. 21881, Dec. 14, 2009; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 26302, Jun. 1, 2015; Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 27471, Aug. 31, 2016> |
| 4. | Land (including State-owned land or public land), determination or public notification of the officially assessed individual land price of which is omitted. |
| (2) | "Area prescribed by Presidential Decree" in the proviso to Article 61 (1) 1 of the Act, means an area of land, the price of which surges or is likely to surge due to various development projects, etc., which is designated by the Commissioner of the National Tax Service. <Amended by Presidential Decree No. 22042, Feb. 18, 2010> |
| (3) | "Officetel and commercial building (including land appurtenant thereto) prescribed by Presidential Decree" in Article 61 (1) 3 of the Act, means an officetel and commercial building (including land appurtenant thereto) located in an area designated by the Commissioner of the National Tax Service, based on the use and size of the relevant building, number of buildings owned under sectional title ownership, etc. <Newly Inserted by Presidential Decree No. 18177, Dec. 30, 2003; Presidential Decree No. 18989, Aug. 5, 2005; Presidential Decree No. 22042, Feb. 18, 2010> |
| (4) | "Amount assessed as prescribed by Presidential Decree" in the proviso to Article 61 (1) 4 of the Act, means any of the following amounts: <Newly Inserted by Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 23040, Jul. 25, 2011; Presidential Decree No. 27471, Aug. 31, 2016> |
| 1. | Any of the following amounts: |
| (a) | In cases of a detached house without any price of an individual house prescribed by the Act on the Public Announcement of Real Estate Values, the value assessed by the head of a tax office having jurisdiction over the location of payment of tax (referring to the head of a tax office having jurisdiction over the location of the relevant house where the head of a tax office having jurisdiction over the place for payment of tax and the head of a tax office having jurisdiction over the location of the relevant house are different persons and where the head of a tax office having jurisdiction over the place for payment of tax makes a request) according to the housing price comparison table defined in Article 16 (6) of the aforesaid Act regarding a house in the vicinity as the comparative base house, which has usefulness, such as structure, use, condition of use, etc., comparable to that of the relevant house; |
| (b) | In cases of a multi-unit dwelling without any collective housing price defined in the Act on the Public Announcement of Real Estate Values, the value assessed by the head of a tax office having jurisdiction over the location of payment of tax (referring to the head of a tax office having jurisdiction over the location of the relevant house where the head of a tax office having jurisdiction over the place for payment of tax and the head of a tax office having jurisdiction over the location of relevant house are different persons and where the head of a tax office having jurisdiction over the place for payment of tax makes a request) in comprehensive consideration of the transaction price and rent of a similar multi-unit dwelling in the vicinity and the estimated cost, etc. for the construction of a multi-unit dwelling deemed to have usefulness similar to that of the relevant multi-unit dwelling; |
| 2. | Value assessed by the head of a tax office having jurisdiction over the location of payment of tax in consideration of the price calculated by the head of a Si or a Gun pursuant to the proviso to Article 4 (1) of the Local Tax Act or the price assessed by at least two appraisal institutions requested to conduct an appraisal of the relevant house. |
| (5) | "Rate prescribed by Presidential Decree" in Article 61 (2) of the Act means a multiplication rate applicable to the officially assessed individual land price as at the base assessment date, which is publicly notified by the Commissioner of the National Tax Service, based on the actual transaction amount of land in an area with a comparable price condition. <Amended by Presidential Decree No. 22042, Feb. 18, 2010> |
| (6) | In applying the provisions of Article 61 (1) 1 of the Act, the officially assessed individual land price publicly notified and in force as at the base assessment date shall apply. |
| (7) | "Assessed value according to methods prescribed by Presidential Decree" in Article 61 (5) of the Act, means an amount (hereafter referred to as "amount converted from rent, etc." in this Article) calculated according to the following formula: <Amended by Presidential Decree No. 23591, Feb. 2, 2012> |
(One year's rent ÷ Rate prescribed by Ordinance of the Ministry of Strategy and Finance) + Security deposit
| (8) | When calculating the value of land and building according to the state, etc. of occupancy by applying the amount converted from rent, etc. defined in paragraph (7), following methods shall be used: <Newly Inserted by Presidential Decree No. 22042, Feb. 18, 2010> |
| 1. | Where the land owner and the building owner are the same person: An amount obtained by dividing the amount converted from rent, etc. received by the land and building owner from the tenant by the value of land and building assessed pursuant to the provisions of Article 61 (1) through (4) of the Act, shall be the assessed value of the land and building (hereafter referred to as "standard market price" in this paragraph); |
| 2. | Where the land owner and the building owner are different persons: |
| (a) | Where the land owner and the building owner are parties to a lease contract with a third party, the amount converted from rent, etc. divided between and delivered to the land owner and the building owner shall be the assessed value of land and building; |
| (b) | Where only one of the owner of land and the owner of building is a party to a lease contract with a third party, an amount obtained by dividing the amount converted from rent, etc. paid by the third party by the standard market price of land and building, regarding the rent and security deposit paid by the third party as attributable to the whole of the land and building, regardless of whether a lease contract between the land owner and the building owner exists, and of the details of the contract, shall be the assessed value of land and building. |
| Article 51 (Assessment of Superficies, etc.) |
| (1) | The value of superficies defined in Article 61 (3) of the Act shall be obtained by converting the amount obtained by multiplying the value of land on which superficies is created by the rate prescribed by Ordinance of the Ministry of Strategy and Finance according to the method prescribed by Ordinance of the Ministry of Strategy and Finance in consideration of the remaining period of the relevant superficies. In such cases, the remaining period of superficies defined in Articles 280 and 281 of the Civil Act shall apply mutatis mutandis to the remaining period. <Amended by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 18989, Aug. 5, 2005; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22042, Feb. 18, 2010> |
| (2) | The value of a right (including a right to acquire a building and appurtenant land when construction of the building is completed) to acquire real estate and a right to use specific facilities defined in Article 61 (3) of the Act shall be an amount obtained by aggregating the payments made until the base assessment date and the amount equivalent to the premium as at the base assessment date: Provided, That where a value defined in Article 165 (8) 3 of the Enforcement Decree of the Income Tax Act exists on the right, such value shall apply. <Amended by Presidential Decree No. 17459, Dec. 31, 2001; Presidential Decree No. 18989, Aug. 5, 2005; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 26069, Feb. 3, 2015> |
| (3) | In applying the provisions of paragraph (2), the right to use specific facilities means the right vested in a person who becomes a member of an organization that has agreed to allow members to use such facilities exclusively or on terms more favorable than general users irrespective of how named, such as the right to use specific facilities, membership, etc. |
| (4) | "Methods prescribed by Presidential Decree" in Article 61 (4) of the Act means subtracting an amount equivalent to the depreciation cost prescribed by Ordinance of the Ministry of Strategy and Finance from the date of installation until the base assessment date from an amount (hereafter referred to as "amount re-acquired, etc." in this paragraph) required to again construct other facility and structure (excluding the assessment of land and building as a parcel) or to again acquire them. In such cases, where it is impracticable to calculate the amount re-acquired, etc. the amount defined in Article 4 (1) of the Enforcement Decree of the Local Tax Act may be deemed the value of the relevant facility and structure (where assessed value of a special auxiliary facility prescribed in the subparagraphs of Article 6 of the Enforcement Decree of the Local Tax Act exists separately from the relevant facility and structure pursuant to Article 4 (1) of the Enforcement Decree of the Local Tax Act, referring to the value obtained by aggregating them). <Amended by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 18177, Dec. 30, 2003; Presidential Decree No. 18989, Aug. 5, 2005; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 22395, Sep. 20, 2010> |
| (5) | In applying the provisions of paragraph (4), facilities and structures appurtenant or attached to a multi-unit dwelling shall be deemed to have been assessed as a parcel with land or building. <Newly Inserted by Presidential Decree No. 15971, Dec. 31, 1998> |
| Article 52 (Assessment of Other Tangible Property) |
| (1) | "Methods prescribed by Presidential Decree" in Article 62 (1) of the Act shall refer to the value expected to be reacquired if the relevant vessels, aircraft, vehicles, machinery, equipment, or standing timber prescribed by the Standing Timber Act is disposed of; but where the value is not verifiable, it shall refer to the value obtained by applying the book value (referring to the value obtained by subtracting the depreciation cost from the acquisition price; hereafter the same shall apply in this Article) and the value according to the statutory standard price defined in Article 4 (1) of the Enforcement Decree of the Local Tax Act in orderly sequence. <Amended by Presidential Decree No. 17828, Dec. 30, 2002; Presidential Decree No. 18177, Dec. 30, 2003; Presidential Decree No. 18989, Aug. 5, 2005; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 22395, Sep. 20, 2010> |
| (2) | The assessment defined in Article 62 (2) of the Act shall be conducted as follows: <Amended by Presidential Decree No. 16660, Dec. 31, 1999; Presidential Decree No. 17828, Dec. 30, 2002; Presidential Decree No. 20621, Feb. 22, 2008; Presidential Decree No. 23040, Jul. 25, 2011> |
| 1. | For goods, products, part-finished products, work-in-progress, materials, moveables corresponding thereto and moveables subject to ownership, the value expected upon disposal thereof shall be the assessed value: Provided, That where the value is not verifiable, book value shall apply; |
| 2. | For tangible property with artistic value, such as paintings, calligraphic works, antiques, etc. that are not for sale, the average value assessed by at least two specialists in the following respective fields shall be the assessed value: Provided, That where the value is less than the value assessed by the assessment deliberative committee comprised of at least three specialists entrusted by the Commissioner of the National Tax Service, the latter shall apply: |
| (a) | Paintings, calligraphic works, books; |
| (b) | Porcelain, earthenware, iron work; |
| (c) | Woodenware, folk jewelry, and accessories; |
| (g) | Fine art works not falling under items (a) through (f); |
| 3. | The assessment of animals subject to ownership and other tangibles, the method for assessment of which is not separately prescribed by this Decree shall be pursuant to the assessed value obtained by applying the provisions of subparagraph 1 with necessary modifications. |
| (3) | "Assessed value according to methods prescribed by Presidential Decree" in Article 62 (3) of the Act means the assessed value obtained by applying Article 50 (7) with necessary modifications. <Newly Inserted by Presidential Decree No. 18177, Dec. 30, 2003; Presidential Decree No. 22042, Feb. 18, 2010> |
| Article 52-2 (Assessment of Shares, etc. Traded on Securities Market and KOSDAQ Market) |
| (1) | "Securities markets prescribed by Presidential Decree" in the main sentence of Article 63 (1) 1 (a) of the Act means the securities market and KOSDAQ market. <Newly Inserted by Presidential Decree No. 24697, Aug. 27, 2013; Presidential Decree No. 26069, Feb. 3, 2015; Presidential Decree No. 27835, Feb. 7, 2017> |
| (2) | "Average value of the period calculated, as prescribed by Presidential Decree" in the main sentence of Article 63 (1) 1 (a) of the Act means the average value during the period calculated as follows: <Amended by Presidential Decree No. 20621, Feb. 22, 2008; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 24697, Aug. 27, 2013; Presidential Decree No. 27835, Feb. 7, 2017> |
| 1. | Where any ground for capital increase, merger, etc. arises before the base assessment date, the period from the day after the day when such ground arises (where grounds for capital increase or merger arise at least two times, referring to the day nearest to the base assessment date; hereafter the same shall apply in this Article) until the day two months elapse from the base assessment date; |
| 2. | Where a ground for capital increase, merger, etc. arises after the base assessment date, the period from two months prior to the base assessment date until the day before such ground arises; |
| 3. | Where a ground for capital increase, merger, etc. arises before or after the base assessment date, the period from the day after the day when such ground arises before the base assessment date until the day before such ground arises after the assessment base date. |
| (3) | "Shares, etc. prescribed by Presidential Decree" in the main sentence of Article 63 (1) 1 (a) of the Act, means shares, etc. excluding shares, etc. (where shares, etc. are normally traded by appropriately reflecting the market price, cases prescribed by Ordinance of the Ministry of Strategy and Finance shall be excluded) whose trading is suspended or in which all or part of the period during which shares, etc. are designated as administrative issues, is included in accordance with standards prescribed by the Exchange within two months before and after the base date of assessment. <Newly Inserted by Presidential Decree No. 27835, Feb. 7, 2017> |
| (4) | "No trading days prescribed by Presidential Decree, such as holidays" in the main sentence of Article 63 (1) 1 (a) of the Act, means the following days: <Newly Inserted by Presidential Decree No. 27835, Feb. 7, 2017> |
| 1. | Holidays and substitute holidays prescribed in the Regulations concerning Holidays of Government and Municipal Offices; |
[This Article Newly Inserted by Presidential Decree No. 17039, Dec. 29, 2000]
| Article 53 (Assessment, etc. of Shares, etc. of Corporations Applying for Listing on KOSDAQ) |
| (1) | and (2) Deleted. <by Presidential Decree No. 27835, Feb. 7, 2017> |
| (3) | "Securities exchange prescribed by Presidential Decree" in Article 63 (2) 2 of the Act means the KOSDAQ. <Newly Inserted by Presidential Decree No. 24697, Aug. 27, 2013> |
| (4) | "Largest shareholder or the largest investor prescribed by Presidential Decree" in the former part of Article 63 (3) of the Act, means the person who holds the greatest number of stocks, etc., who is a largest shareholder, etc. <Amended by Presidential Decree No. 23591, Feb. 2, 2012; Presidential Decree No. 24697, Aug. 27, 2013; Presidential Decree No. 26960, Feb. 5, 2016> |
| (5) | In calculating the stake of shares, etc., held by the largest shareholder etc. defined in Article 63 (3) of the Act, it shall be calculated by adding the shares, etc. transferred or donated to a third party within one year retrospectively from the base assessment date to the shares, etc. held by the largest shareholder etc. <Amended by Presidential Decree No. 24697, Aug. 27, 2013> |
| (6) | "Stocks, etc. prescribed by Presidential Decree, such as those of a corporation that has continued to have deficits under Article 14 (2) of the Corporate Tax Act during not more than three business years prior to the business year in which the base assessment date falls" in the former part of Article 63 (3) of the Act means any of the following shares: <Amended by Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 24697, Aug. 27, 2013; Presidential Decree No. 26069, Feb. 3, 2015; Presidential Decree No. 26960, Feb. 5, 2016> |
| 2. | Where all of the shares, etc. held by the largest shareholder etc. have been sold within six months (three months in cases of donated property) before or after the base assessment date (limited to cases appropriate for the provisions of Article 49 (1) 1); |
| 4. | Where the shares, etc. of a first-tier corporation invested in and of a second-tier corporation invested in are assessed when a corporation that has issued shares, etc. subject to assessment holds shares, etc. issued by another corporation (hereafter referred to as "first-tier corporation" in this subparagraph) and the first-tier corporation holds shares, etc. issued by yet another corporation (including cases in which such corporation makes investment in a corporation other than the first-tier corporation; hereafter referred to as "second-tier corporation" in this subparagraph), and thus the first-tier corporation and the second-tier corporation correspond to the largest shareholder etc.; |
| 5. | Where a corporation that began business within three years retrospectively from the base assessment date, the business profits of which according to the enterprise accounting standards for each business year from the business year in which the day business began falls until the business year immediately before the business year in which the base assessment date falls are nill or below; |
| 6. | Where liquidation of a corporation that issued shares, etc. subject to assessment within the deadline for filing inheritance tax return defined in Article 67 of the Act or the deadline for filing gift tax return defined in Article 68 is determined; |
| 7. | Where a person, other than the largest shareholder etc., inherits or receives donation of shares, etc. held by the largest shareholder etc. within the period prescribed in Article 47 (2) of the Act, and thus he/she does not correspond to the largest shareholder etc. due to the inheritance or donation; |
| 8. | Where the registered holder of stocks, etc. is not the actual owner and the relevant stocks, etc. are deemed donated to the registered holder by the actual owner defined in Article 45-2 of the Act. |
| (7) | "Small or medium enterprise prescribed by Presidential Decree" in the former part of Article 63 (3) of the Act, means a small or medium enterprise defined in Article 2 of the Framework Act on Small and Medium Enterprises. <Amended by Presidential Decree No. 18177, Dec. 30, 2003; Presidential Decree No. 18989, Aug. 5, 2005; Presidential Decree No. 19899, Feb. 28, 2007; Presidential Decree No. 21292, Feb. 4, 2009; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 24697, Aug. 27, 2013> |
[This Article Wholly Amended by Presidential Decree No. 17828, Dec. 30, 2002]
| Article 54 (Assessment of Unlisted Shares, etc.) |
| (1) | The value of shares, etc. (hereinafter referred to as "unlisted shares, etc." in this Article) under Article 63 (1) 1 (b) of the Act, shall be the weighted average of the value per share assessed in accordance with the following formula (hereinafter referred to as "net profit or loss value") and the net asset value per share in the ratio of 3:2, respectively [in cases of a corporation which owns excessive real estate (referring to the corporation falling under Article 94 (1) 4 (c) of the Income Tax Act), the weighted average of the net profit or loss value per share and the net asset value per share shall stand at the ratio of 2:3, respectively]: Provided, That, where the value of the weighted average thereof is lower than the amount obtained by multiplying the net asset value per share by 80/100, the amount obtained by multiplying the net asset value per share by 80/100 shall be the value of unlisted shares, etc.: <Amended by Presidential Decree No. 16660, Dec. 31, 1999; Presidential Decree No. 17828, Dec. 30, 2002; Presidential Decree No. 18177, Dec. 30, 2003; Presidential Decree No. 18989, Aug. 5, 2005; Presidential Decree No. 20621, Feb. 22, 2008; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 26069, Feb. 3, 2015; Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 27835, Feb. 7, 2017> |
| Price per share = Weighted average of net profit or loss per share during the latest three years ÷ Interest rate determined and publicly notified by the Minister of Strategy and Finance, based on the yield on corporate bonds maturing in three years |
|
| (2) | The amount assessed by the following formula shall be the net asset value per share defined in paragraph (1): <Amended by Presidential Decree No. 16660, Dec. 31, 1999; Presidential Decree No. 18177, Dec. 30, 2003> |
| Price per share = Amount of net asset of the relevant corporation ÷ Total number of shares issued (hereinafter referred to as "net asset value") |
|
| (3) | Where paragraphs (1) and (2) are applied, if a corporation that issued shares, etc. defined in Article 63 (1) 1 (b) of the Act holds not more than 10/100 of the total number of stocks and investment shares issued by another corporation that issued unlisted shares, etc. (excluding treasury stocks and treasury equity shares), such unlisted shares, etc. may be assessed at the acquisition price defined in Article 74 (1) 1 (e) of the Enforcement Decree of the Corporate Tax Act, notwithstanding paragraphs (1) and (2): Provided, That, if the market price defined in Article 60 (1) of the Act exists, the market value shall apply preferentially. <Amended by Presidential Decree No. 16660, Dec. 31, 1999; Presidential Decree No. 18989, Aug. 5, 2005; Presidential Decree No. 21292, Feb. 4, 2009; Presidential Decree No. 26069, Feb. 3, 2015; Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 27835, Feb. 7, 2017> |
| (4) | Where any of the following applies, net asset value defined in paragraph (2) shall apply, notwithstanding paragraph (1): <Amended by Presidential Decree No. 18627, Dec. 31, 2004; Presidential Decree No. 18989, Aug. 5, 2005; Presidential Decree No. 23591, Feb. 2, 2012; Presidential Decree No. 26069, Feb. 3, 2015; Presidential Decree No. 27835, Feb. 7, 2017; Presidential Decree No. 28638, Feb. 13, 2018> |
| 1. | Shares, etc. of a corporation, continuation of business of which is deemed impracticable as procedures for liquidation of the corporation subject to assessment are pending or due to death of the business operator, etc. within the deadline for filing inheritance tax return or gift tax return defined in Article 67 or 68 of the Act; |
| 2. | Shares, etc. of a corporation before it commences business, of a corporation which has conducted business for less than three years after it commenced business, or of a corporation whose business is suspended or closed. In such cases, the period of business of a corporation newly incorporated by qualified spin-off or qualified spin-off in kind meeting requirements prescribed in Articles 46-3, 46-5 and 47 of the Corporate Tax Act shall be counted from the date of commencement of business of the same business division before the spin-off; |
| 4. | Deleted; <by Presidential Decree No. 28638, Feb. 13, 2018> |
| 5. | Shares, etc. of a corporation in which the sum of the value of shares, etc. accounts for 80/100 of the amount of total assets of the corporation; |
| 6. | Shares, etc. of a corporation, the duration of existence of which was determined in the articles of incorporation as at the time of the incorporation thereof, in which case the remaining duration of its existence as of the base date of assessment is within three years. |
| (5) | In applying paragraph (2), "total number of shares issued" shall be according to the total number of shares issued as at the base assessment date. <Amended by Presidential Decree No. 17039, Dec. 29, 2000; Presidential Decree No. 26069, Feb. 3, 2015> |
| (6) | Where a taxpayer files an application for deliberation on the assessed value and the methods for assessment of unlisted shares, etc. with the assessment deliberative committee prescribed in Article 49-2 (1) along with the value assessed through any of the following methods when he/she assesses unlisted shares, etc., notwithstanding Articles 54 (1) and (4), 55, and 56, assessment of unlisted shares, etc. may be conducted based on the assessed value deliberated and presented by the assessment deliberative committee or the assessed value calculated based on the methods for assessment presented by the assessment deliberative committee: Provided, That the foregoing shall be limited to cases where the value assessed by the taxpayer is the value within 70/100 to 130/100 of the assessed value of shares based on the methods for supplementary assessment: <Newly Inserted by Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 27835, Feb. 7, 2017> |
| 1. | Method for assessment using the value of shares of another corporation which engages in business within the same category (referring to the corporation listed on the securities market and KOSDAQ market prescribed in Article 52-2 (1)), based on the size of assets and sales of the relevant corporation, the period for which the relevant corporation has engaged in business, etc.; |
| 2. | Method for assessment by applying a certain discount rate to a cash flow expected to flow into the corporation in the future; |
| 3. | Method for assessment by applying a certain discount rate to dividends which shareholders expect to receive in the future; |
| 4. | Other methods deemed generally fair and appropriate, corresponding to methods prescribed in subparagraphs 1 through 3. |
| Article 55 (Methods for Calculating Net Asset Value) |
| (1) | An amount obtained by subtracting liabilities from the value of asset as at the base assessment date of the relevant corporation assessed pursuant to Articles 60 through 66 of the Act shall be the net asset value defined in Article 54 (2); where the net asset value is below zero won, it shall be deemed zero won. In such cases, where the asset value of the relevant corporation assessed pursuant to Articles 60 (3) and 66 of the Act is less than the book value (referring to the value obtained by subtracting depreciation cost from acquisition price; hereafter the same shall apply in this paragraph), the book value shall apply; this shall not apply in extenuating circumstances making the assessed value less than the book value. <Amended by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 17039, Dec. 29, 2000; Presidential Decree No. 18177, Dec. 30, 2003; Presidential Decree No. 21292, Feb. 4, 2009> |
| (2) | In applying the provisions of paragraph (1), the value related to the assessment of assets and liabilities, such as intangible fixed asset, reserve fund, appropriation fund, etc. prescribed by Ordinance of the Ministry of Strategy and Finance shall be subtracted from or added to the value of assets and liabilities, respectively. <Amended by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 17828, Dec. 30, 2002; Presidential Decree No. 20720, Feb. 29, 2008> |
| (3) | In applying paragraph (1), the value of business rights assessed under Article 59 (2) shall be added to the value of assets of the relevant corporation: Provided, That this shall not apply where the following subparagraphs apply: <Amended by Presidential Decree No. 26069, Feb. 3, 2015; Presidential Decree No. 28638, Feb. 13, 2018> |
| 2. | Where Article 54 (4) 2 applies: Provided, That this shall not apply where all of the following apply: |
| (b) | Where the total period during which business has been performed by a sole proprietorship defined in item (a) and by a corporation defined in item (a) is at least three years; |
| 3. | Where the relevant corporation is a corporation that has a loss because the total amount of deficits which continuously belong or are to belong to each business year pursuant to the Corporate Tax Act from the business year within three years before the business year to which the basic date of assessment belongs, exceeds the total amount of profits which belong or are to belong to the relevant business year. |
| Article 56 (Method of Calculating Net Profit or Loss per Share During Recent Three Years) |
| (1) | The weighted average net profit or loss per share during the recent three years defined in Article 54 (1) shall be calculated as follows. In such cases, where the amount is negative, it shall be deemed nil: <Amended by Presidential Decree No. 25195, Feb. 21, 2014> |
| Weighted average net profit or loss per share during the recent three years = {(Net profit or loss per share in business year one year before base assessment date × 3) + (Net profit or loss per share in business year two years before base assessment date × 2) + (Net profit or loss per share in business year three years before base assessment date × 1) ÷ 6 |
|
| (2) | Where all of the following requirements are met, notwithstanding paragraph (1), the average amount of forecast profit per share calculated according to the standards prescribed by Ordinance of the Ministry of Strategy and Finance by at least two of the credit rating agencies prescribed by Ordinance of the Ministry of Strategy and Finance, accounting firms prescribed by the Certified Public Accountant Act or tax accountant firms prescribed by the Certified Tax Accountant Act may be deemed the weighted average of net profit or loss per share during the recent three years defined in Article 54 (1): <Amended by Presidential Decree No. 25195, Feb. 21, 2014> |
| 1. | That the cases prescribed by Ordinance of the Ministry of Strategy and Finance shall apply, such as net profit or loss of the relevant corporation increases during the recent three years due to a temporary and accidental incident, etc.; |
| 2. | That the average amount of forecast profit per share shall be reported by the deadline for filing inheritance tax return and the deadline for filing gift tax return defined in Articles 67 and 68; |
| 3. | That the base date for calculation of forecast profit per share and the date when assessment report is prepared is within the deadline for filing tax base; |
| 4. | That the base date of calculation of forecast profit per share and the date inheritance commences or the date of donation falls in the same year. |
| (3) | In applying paragraph (1), the total number of shares issued as at the end of each business year shall be the number of shares for each business year: Provided, That where capital is increased or reduced within three years before the business year in which the base assessment date falls, the total number of shares issued as at the end of each business year before capital increase or capital reduction shall be prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 16660, Dec. 31, 1999; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 23040, Jul. 25, 2011; Presidential Decree No. 26069, Feb. 3, 2015> |
| (4) | An amount obtained by subtracting the amount defined in subparagraph 2 from the amount calculated by adding the amount defined in subparagraph 1 to the income for each business year defined in Article 14 of the Corporate Tax Act (hereinafter in this Article referred to as “income for each business year”) shall be the net loss or profit defined in paragraph (1). In such cases, where appropriation fund or reserve fund included in the loss is temporarily returned pursuant to the provisions of tax laws, the amount proportionately divided as at the year in which relevant amount is returned shall be added to the income of each business year in which proportionately divided amount will be returned: <Amended by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 16660, Dec. 31, 1999; Presidential Decree No. 17828, Dec. 30, 2002; Presidential Decree No. 18627, Dec. 31, 2004; Presidential Decree No. 18989, Aug. 5, 2005; Presidential Decree No. 20621, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21292, Feb. 4, 2009; Presidential Decree No. 22579, Dec. 30, 2010; Presidential Decree No. 23040, Jul. 25, 2011; Presidential Decree No. 25195, Feb. 21, 2014; Presidential Decree No. 29533, Feb. 12, 2019> |
| 1. | The following amounts: |
| (d) | In calculating the income for each business year, if monetary assets or liabilities denominated in foreign currencies, foreign forwards, etc. prescribed in Article 76 of the Enforcement Decree of the Corporate Tax Act (hereinafter in this Article referred to as “monetary assets or liabilities denominated in foreign currencies, etc.”) are not evaluated at the basic rates of exchange, etc. defined in Article 76 (1) of the same Enforcement Decree (hereafter in this Article referred to as “basic rates of exchange, etc.”) as on the last day of the relevant business year, profits accrued by evaluating the monetary assets or liabilities denominated in foreign currencies, etc. at the basic rates of exchange, etc. as on the last day of the relevant business year; |
| (e) | Other amounts prescribed by Ordinance of the Ministry of Strategy and Finance; |
| 2. | The following amounts: |
| (a) | The amount of corporate tax (including the amount of corporate tax for a foreign corporation defined in Article 57 of the Corporate Tax Act, excluded from the expenses) for relevant business year, the amount of corporate tax deductions or special agricultural or fishing village tax and local income tax added to the tax base; |
| (e) | In calculating the income for each business year, if monetary assets or liabilities denominated in foreign currencies, etc. are not evaluated at the basic rates of exchange, etc. as on the last day of the relevant business year, losses incurred by evaluating the monetary assets or liabilities denominated in foreign currencies, etc. at the basic rates of exchange, etc. as on the last day of the relevant business year. |
| (5) | Where, in calculating net profit or loss pursuant to paragraph (4), the fact of issuing (hereafter in this paragraph, referred to as "capital increase by issuing new shares, etc.") new stocks or investment shares (hereafter referred to as "shares, etc." in this paragraph) to increase capital (including the amount of investment; hereafter in this paragraph the same shall apply) of the relevant corporation or the fact of retiring shares, etc. to reduce capital (hereafter in this paragraph referred to as "capital reduction with compensation") within three years before the business year in which the base assessment date falls, an amount obtained by adding the amount prescribed in subparagraph 1 to the amount calculated pursuant to paragraph (4) by subtracting the amount prescribed in subparagraph 2 therefrom shall be the net amount of profit or loss in the business year in which capital increase by issuing new shares, etc. or capital reduction with compensation is conducted. In such cases, the amount of net profit or loss in the business year in which capital increase by issuing new shares, etc. or capital reduction with compensation is conducted shall be calculated pro rata the number of months in the period until the date capital increase by issuing new shares, etc. or capital reduction with compensation is conducted, and the period less than one month shall be deemed one month: <Newly Inserted by Presidential Decree No. 23040, Jul. 25, 2011; Presidential Decree No. 26069, Feb. 3, 2015> |
| 1. | The amount paid for a share, etc. for capital increase by issuing new shares, etc. × Number of shares, etc. increased by capital increase by issuing new shares, etc. × Rate prescribed by Ordinance of the Ministry of Strategy and Finance; |
| 2. | The amount paid for a share, etc. for capital reduction with compensation × Number of shares, etc. reduced by capital reduction with compensation × Rate prescribed by Ordinance of the Ministry of Strategy and Finance. |
| Article 56-2 Deleted. <by Presidential Decree No. 26960, Feb. 5, 2016> |
| Article 57 (Assessment, etc. of Shares, etc. Preparing for Initial Public Offering) |
| (1) | "Period prescribed by Presidential Decree" in Article 63 (2) 1 of the Act, means the period from six months (three months in cases of shares, etc. assessed for gift tax) immediately before reporting securities (referring to a request for listing where a request for listing is made without reporting securities) as at the base assessment date until initially listing shares, etc. on the Exchange, and the larger of the value prescribed in subparagraph 1 and the value prescribed in subparagraph 2 shall be the assessed value of the relevant shares, etc.: <Amended by Presidential Decree No. 17828, Dec. 30, 2002; Presidential Decree No. 18989, Aug. 5, 2005; Presidential Decree No. 20621, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 26069, Feb. 3, 2015; Presidential Decree No. 27835, Feb. 7, 2017> |
| 2. | The value of shares, etc. assessed pursuant to Article 63 (1) 1 (a) of the Act (where there is no value under the aforesaid item, referring to the value under item (b) of the aforesaid subparagraph). |
| (2) | "Period prescribed by Presidential Decree" in Article 63 (2) 2 of the Act means the period from six months (three months in cases of shares, etc. assessed for gift tax) before reporting securities (referring to an application for registration, where an application for registration is filed without reporting securities) as at the base assessment date until registration is made with the Korea Financial Investment Association, and the larger of the value prescribed in paragraph (1) 1 and the value assessed pursuant to Article 63 (1) 1 (b) of the Act shall be the assessed value of the relevant shares, etc. <Amended by Presidential Decree No. 17828, Dec. 30, 2002; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 27835, Feb. 7, 2017> |
| (3) | An amount obtained by subtracting the difference in dividend of shares of a corporation listed on the Exchange, which is prescribed by Ordinance of the Ministry of Strategy and Finance, from the value assessed pursuant to Article 63 (1) 1 (a) of the Act, shall be the assessed share value prescribed in Article 63 (2) 3 of the Act. <Amended by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 17039, Dec. 29, 2000; Presidential Decree No. 20621, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 26069, Feb. 3, 2015; Presidential Decree No. 27835, Feb. 7, 2017> |
| Article 58 (Assessment of Government Bonds, Public Bonds and other Bonds) |
| (1) | The value of government bonds, public bonds, and corporate bonds (excluding convertible bonds prescribed in Article 40 (1) of the Act, with the exception of its subparagraphs; hereafter in this paragraph referred to as "government bonds, etc.") among securities prescribed in Article 63 (1) 2 of the Act, shall be assessed pursuant to any of the following: <Amended by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 17039, Dec. 29, 2000; Presidential Decree No. 20621, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 26069, Feb. 3, 2015; Presidential Decree No. 27835, Feb. 7, 2017> |
| 1. | The larger of the value assessed by applying the main sentence of Article 63 (1) 1 (a) of the Act with necessary modifications and the latest market value before the base assessment date, shall be the value of government bonds, etc. traded on the Exchange, but subparagraph 2 shall apply to the value of government bonds, etc. that have no track record of a transaction during two months before the base assessment date. In such cases, "shares, etc." in the main sentence of Article 63 (1) 1 (a) of the Act shall be construed as "government bonds, etc."; and "two-month period each prior to or after the base date of assessment" as "two months before the base assessment date," respectively; |
| 2. | The following value shall be the value of government bonds, etc. other than those prescribed in subparagraph 1: |
| (a) | An amount obtained by adding the equivalent to uncollected interest until the base assessment date to the purchase price, shall be the value of government bonds, etc. (excluding those purchased directly from the agency or company issuing the government bonds, etc.) purchased from a third party; |
| (b) | An amount (hereinafter referred to as "expected amount to receive when government bonds, etc. are disposed of") expected to receive if government bonds, etc., other than those prescribed in item (a), are disposed of as at the base assessment date: Provided, That where it is impracticable to calculate the expected amount to receive when government bonds, etc. are disposed of, the value may be assessed, as prescribed by Ordinance of the Ministry of Strategy and Finance, based on the period for redeeming the relevant government bonds, etc., interest rate, method of paying interests, etc. |
| (2) | The amount of credit, such as loans, accounts receivable, bills receivable, etc. and the amount of debts, such as entrance fees, guarantee fees, etc., shall be assessed, as prescribed by Ordinance of the Ministry of Strategy and Finance, based on the period for collecting the principal, agreed interest rate, average interest rate determined in the financial market, etc.: Provided, That where all of some of the credit is deemed to be uncollectable as at the base assessment date, the amount shall not be included. <Amended by Presidential Decree No. 15509, Nov. 10, 1997; Presidential Decree No. 17039, Dec. 29, 2000; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22042, Feb. 18, 2010> |
| (3) | The standard price at the Exchange as at the base assessment date or the standard price calculated or publicly announced by a collective investment vehicle or an investment company according to the same Act, shall be the assessed value of the collective investment securities prescribed by the Financial Investment Services and Capital Markets Act: Provided, That where no standard price is determined as at the base assessment date, the redemption price as at the base assessment date or the standard price on the most recent day before the base assessment date shall be the assessed value. <Amended by Presidential Decree No. 18177, Dec. 30, 2003; Presidential Decree No. 18989, Aug. 5, 2005; Presidential Decree No. 20621, Feb. 22, 2008; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 26069, Feb. 3, 2015; Presidential Decree No. 27835, Feb. 7, 2017> |
| Article 58-2 (Assessment of Convertible Bonds, etc.) |
| (1) | The value assessed by applying the methods for assessing national bonds, etc. prescribed in Article 58 (1) 1 with necessary modifications shall be the assessed value of the convertible bonds, etc. (referring to the convertible bonds, etc. prescribed in Article 40 (1) of the Act, with the exception of its subparagraphs; hereafter in this Article the same shall apply) traded on the Exchange among the securities prescribed in Article 63 (1) 2 of the Act. <Amended by Presidential Decree No. 20621, Feb. 22, 2008; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 26069, Feb. 3, 2015> |
| (2) | The value assessed pursuant to any of the following shall be the assessed value of the convertible bonds, etc. that do not fall under paragraph (1) from among the securities prescribed in Article 63 (1) 2 of the Act and of the certificates of the preemptive right to new stocks, and where a value assessed pursuant to the proviso to Article 58 (1) 2 (b) exists, such value may apply: <Amended by Presidential Decree No. 17828, Dec. 30, 2002; Presidential Decree No. 18627, Dec. 31, 2004; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 26069, Feb. 3, 2015; Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 28638, Feb. 13, 2018> |
| 1. | Where it is in a period during which conversion, etc. into shares is impracticable, the value assessed as follows may apply: |
| (a) | Securities with a preemptive right to new stocks: An amount obtained by subtracting the amount obtained by discounting the redemption amount at maturity (including an amount equivalent to interest accrued before maturity; hereafter in this subparagraph the same shall apply) of bonds with warrant at the interest rate determined by the Minister of Strategy and Finance (hereafter in this subparagraph referred to as "appropriate discount rate") to the present value as at issuance in consideration of the yield on corporate bonds maturing in three years from the redemption amount at maturity of bonds with warrant discounted to the present value as at issuance according to the bond issue interest rate. In such cases, where the amount is negative, it shall be deemed nil; |
| (b) | Convertible bonds, etc. other than those prescribed in item (a): An amount obtained by adding an amount equivalent to interest accrued until the base assessment date after issuance, to the amount redeemed at maturity discounted by the interest rate as at issuance of bonds or appropriate discount rate, whichever is lower to the current price as at issuance; |
| 2. | Where it is in a period during which conversion, etc. into stocks is possible, the value assessed according to the following shall apply: |
| (a) | Convertible bonds: An amount that is larger of the value assessed pursuant to subparagraph 1 (b) and an amount obtained by subtracting the difference in dividend prescribed in Article 57 (3) from the value of shares that can be converted into convertible bonds; |
| (b) | Bonds with warrant: An amount that is larger of the amount assessed pursuant to subparagraph 1 (b) and an amount obtained by subtracting the value of warrant assessed by applying the provisions of item (a) of the same subparagraph with necessary modifications from the aforementioned amount and by adding the value of warrant assessed by applying the provisions of item (c) with necessary modifications; |
| (c) | Securities with a preemptive right to new stocks: An amount that is larger of the amount assessed pursuant to subparagraph 1 (a) and an amount obtained by subtracting the amount of difference in dividend prescribed in Article 57 (3) and the acquisition amount of new shares from the amount of shares obtainable with the relevant securities with a preemptive right to new shares; |
| (d) | Certificates of the preemptive right to acquire new shares: The values based on the following classification: |
| i) | Where such certificates are traded on the stock exchange: the average of the closing prices of all trading days during which such certificates are listed and traded on the stock exchange; |
| ii) | In other cases: The value obtained by subtracting the difference in dividend prescribed in Article 57 (3) and the acquisition price of new shares from the value of shares before the ex-rights date acquirable with the relevant certificates of the preemptive right to acquire new shares: Provided, That where the relevant shares are shares of a stock listed corporation, etc., in which case the value of shares after the ex rights date is less than the value obtained by subtracting the difference in dividend from the value of shares before the ex rights date, the value obtained by subtracting the acquisition value of new shares from the value of shares after the ex rights date shall apply; |
| (e) | Others: An amount assessed by applying the provisions of items (a) through (c) with necessary modifications. |
[This Article Wholly Amended by Presidential Decree No. 17039, Dec. 29, 2000]
| Article 58-3 (Assessment of Overseas Property) |
| (1) | Where application of the provisions of Articles 60 through 65 of the Act to the inheritances or gifts located abroad is inappropriate, the value of the relevant property assessed by the country where located for the purpose of imposing capital gains tax, inheritance tax, gift tax, etc. shall be its value. |
| (2) | Where the value assessed under paragraph (1) does not exist, the value assessed by the head of a tax office in consideration of the value assessed by at least two domestic or foreign appraisal institutions that are requested to conduct an appraisal. |
[This Article Newly Inserted by Presidential Decree No. 16660, Dec. 31, 1999]
| Article 58-4 (Assessment of Foreign Currency Assets and Liabilities) |
[This Article Newly Inserted by Presidential Decree No. 23591, Feb. 2, 2012]
| Article 59 (Assessment of Intangible Property Rights) |
| (1) | Deleted. <by Presidential Decree No. 25195, Feb. 21, 2014> |
| (2) | A business right shall be assessed by the price obtained by converting the excessive profit calculated according to the following formula using a method prescribed by Ordinance of the Ministry of Strategy and Finance in consideration of the number of years during which a business right continues after the base assessment date (five years in the principle): Provided, That in cases of intangible property right that has been purchased and is assessed after including it in the business right according to its character, is shall not be assessed separately; where the assessed price of the relevant property exceeds the converted price, such price shall be the assessed price of the business right: <Amended by Presidential Decree No. 15509, Nov. 10, 1997; Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 17039, Dec. 29, 2000; Presidential Decree No. 18177, Dec. 30, 2003; Presidential Decree No. 20720, Feb. 29, 2008> |
| [Equivalence of 50/100 of weighted average of net profit or loss during the recent three years (where the period is less than three years, such number of years)? (Equity capital as at base assessment date × Rate prescribed by Ordinance of the Ministry of Strategy and Finance in consideration of interest rate of deposit with one-year maturity)] |
|
| (3) | In applying paragraph (2), the weighted average of net loss or profit during the recent three years shall be assessed by applying Article 56 (1) and (2) with necessary modifications. In such cases, "net profit or loss per share" in paragraph (1) of the same Article and "presumed profit per share" in paragraph (2) of the same Article shall be construed as "net profit or loss." <Amended by Presidential Decree No. 16682, Dec. 31, 1999; Presidential Decree No. 25195, Feb. 21, 2014> |
| (4) | The price of fishing rights shall be included in the business rights for the purposes of calculation under paragraph (2). |
| (5) | The patent right, utility model right, trade mark right, design right, copyright, etc shall be pursuant to the aggregate calculated as prescribed by Ordinance of the Ministry of Strategy and Finance on the basis of revenue of each year to be received in the future according to such rights. In such cases, where the amount of revenue for each year is undetermined, the amount obtained by averaging the sum of revenue of each year for three years before the base assessment date may be the annual revenue. <Amended by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 18903, Jun. 30, 2005; Presidential Decree No. 20720, Feb. 29, 2008> |
| (6) | An amount obtained by aggregating the amounts obtained by converting average income (where no mining record exists, referring to the estimated net income) for three years before the base assessment date in accordance with the method prescribed by Ordinance of the Ministry of Strategy and Finance for each year in which mining is possible after the base assessment date shall be the assessed value of a mining right, stone gathering right, etc.: Provided, That where mining, stone gathering, etc. are not lucrative, the assessed value of equipment, etc. alone, shall apply. <Amended by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 20720, Feb. 29, 2008> |
| (7) | In assessing the business right pursuant to paragraph (2), where verifying equity capital with submitted evidence is impracticable, the amount calculated as follows, whichever is larger, shall be the equity capital: <Amended by Presidential Decree No. 18627, Dec. 31, 2004; Presidential Decree No. 18989, Aug. 5, 2005> |
| Article 60 (Assessment of Conditional Rights, etc.) |
The amount assessed as follows shall be the amount of a conditional right, a right, the existence period of which is uncertain, and a right pending litigation under Article 65 (1) of the Act: | 1. | For a conditional right, appropriate price based upon the fact constituting the details of conditions as at the base assessment date on the basis of original price of a right, certainty of fulfilling conditions and other various circumstances; |
| 2. | For a right, the existence period of which is uncertain, appropriate price based upon the nature of the right as at the base assessment date, useful life of the object and other various matters, shall be the price thereof; |
| 3. | The price of a right pending litigation shall be the appropriate price based upon status of inspection of the actual nature of conflict and status of litigation proceedings as at the base assessment date. |
| Article 61 (Assessment of Right to Receive Profits from Trust) |
The value of a right to receive profits from a trust prescribed in Article 65 (1) of the Act shall be the value assessed pursuant to any of the following: Provided, That, if a lump-sum payment a person can receive upon withdrawal, termination, cancellation, etc. of a trust contract as of the base date of assessment exceeds the value assessed using the following formula, such value shall be the amount of such lump-sum payment: <Amended by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 27835, Feb. 7, 2017; Presidential Decree No. 28638, Feb. 13, 2018; Presidential Decree No. 29533, Feb. 12, 2019> | 1. | Where the beneficiaries of profits from principal and proceeds are the same person, the sum of value of property in trust assessed pursuant to this Act, calculated in accordance with the following calculation formula, based on the period until the time when proceeds are earned and the amount, etc. equivalent to the withholding tax on the profits from proceeds, etc.: |
Value of property in trust + Profits from proceeds receivable each year - Amount equivalent to withholding tax
____________________________________________________________
(1 + Rate of interest prescribed by Ordinance of the Ministry of Strategy and Finance, based on the average rate of return, etc. from property in trust)n
n: Number of years from the base date of assessment until the time when proceeds are generated. |
|
| 2. | Where the beneficiaries of profits from principal and proceeds are different persons, the value prescribed in the following items: |
| (a) | Where profits are earned from principal, the sum obtained by adding the amount calculated in accordance with the calculation formula for the period until the time proceeds are earned to the value of principal as of the base date of assessment: |
Value of principal as of the base date of assessment
____________________________________________________________
(1 + Rate of interest prescribed by Ordinance of the Ministry of Strategy and Finance, based on the average rate of return, etc. from property in trust)n
n: Number of years from the base date of assessment until the time proceeds are earned. |
|
| (b) | Where profits are earned from proceeds, the sum of proceeds receivable each year in the future estimated through the method prescribed by Ordinance of the Ministry of Strategy and Finance, calculated in accordance with the following calculation formula, based on the amount, etc. equivalent to the withholding tax on the profits from proceeds, etc.: |
Profits from proceeds receivable each year - Amount equivalent to withholding tax
____________________________________________________________
(1 + Rate of interest prescribed by Ordinance of the Ministry of Strategy and Finance, based on the average rate of return, etc. from property in trust)n
n: Number of years from the base date of assessment until the time proceeds are earned. |
|
| Article 62 (Assessment of Right to Receive Periodic Payments) |
The value of a right to receive periodic payments prescribed in Article 65 (1) of the Act shall be assessed as follows: Provided, That, if a lump-sum payment a person can receive upon withdrawal, termination, cancellation, etc. of a contract exceeds the value assessed using the following formula, such value shall be the amount of such lump-sum payment: <Amended by Presidential Decree No. 18177, Dec. 30, 2003; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22579, Dec. 30, 2010; Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 29533, Feb. 12, 2019> | 1. | Fixed-term periodic payments: The aggregate calculated by the following formular based on the periodic payment receivable each period during the remaining period: Provided, That the payments shall not exceed 20 times the periodic payment for one year: |
Periodic payment receivable each year/(1 + Interest rate specified by Ordinance of the Ministry of Strategy and Finance, taking into consideration the average interest rate publicly announced by the insurance company)n
n: The number of years after the base date of assessment |
|
| 2. | Indefinite periodic payments: An amount equivalent to 20 times the periodic payment for one year; |
| 3. | Life-long periodic payments: The aggregate calculated by the formula prescribed in subparagraph 1 (a decimal fraction shall be cut off) based on the periodic payment receivable each year during a period until the number of years of life expectancy by gender and by age according to the statistical charts approved and publicly notified by the Commissioner of the Statistics Korea prescribed in Article 18 of the Statistics Act. |
| Article 63 (Assessment of Property on which Mortgage, etc. is Settled) |
| (1) | "Amount assessed as prescribed by Presidential Decree" in Article 66 of the Act means any of the following amounts: <Amended by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 29533, Feb. 12, 2019> |
| 1. | The amount of property over which mortgage (excluding joint mortgage and collateral security) is the amount of credit for which such property stands security; |
| 2. | The amount of property for which joint mortgage is established is the amount obtained by proportionately dividing the credit for which such property stands security as the amount as at the base assessment date; |
| 3. | The amount of property for which collateral security is established is the amount of credit for which the relevant property stands security as at the base assessment date; |
| 4. | The amount of property for which a right of pledge is established and the amount of mortgaged property shall be the amount of credit for which the relevant property stands security; |
| 5. | The amount of property for which a right to lease on a deposit basis shall be the amount of the deposit (where lease is made after receiving deposit for lease, such deposit); |
| 6. | The value of property for which a trust contract prescribed in subparagraph 4 of Article 66 of the Act has been concluded shall be the maximum amount that the creditor, which is the primary beneficiary, is entitled to receive under the trust contract or beneficiary certificate. |
| (2) | In assessing the property prescribed in subparagraph 1 of Article 66 of the Act under the subparagraphs of paragraph (1), where the maximum amount of credit for collateral security established on the relevant property is less than the amount of credit secured by such maximum amount, the amount of maximum credit shall apply; where security by a credit guarantee institution prescribed by Ordinance of the Ministry of Strategy and Finance exists in addition to the material security established on the property, an amount obtained by subtracting the amount guaranteed by the credit guarantee institution from the amount of credit shall apply and where the same property is security for several claims (including credit for exclusive lease and credits for deposit for lease), the aggregate credit guaranteed by the property shall apply. <Amended by Presidential Decree No. 17828, Dec. 30, 2002; Presidential Decree No. 20720, Feb. 29, 2008> |
CHAPTER V TAX RETURN AND PAYMENT
| Article 64 (Inheritance Tax Base Return) |
| (1) | The inheritance tax return prescribed in Article 67 (1) of the Act shall be filed on a inheritance tax base return and voluntary payment statement prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 20720, Feb. 29, 2008> |
| (2) | "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." in Article 67 (2) of the Act means any of the followings: <Amended by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 17828, Dec. 30, 2002; Presidential Decree No. 18989, Aug. 5, 2005; Presidential Decree No. 19507, Jun. 12, 2006; Presidential Decree No. 20621, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 22467, Nov. 2, 2010; Presidential Decree No. 23591, Feb. 2, 2012; Presidential Decree No. 25195, Feb. 21, 2014; Presidential Decree No. 27835, Feb. 7, 2017; Presidential Decree No. 28638, Feb. 13, 2018; Presidential Decree No. 29533, Feb. 12, 2019> |
| 1. | Archived family relationship register entry of an ancestor and a certificate relating to the family relations of an heir; |
| 2. | Details of inheritance prescribed by Ordinance of the Ministry of Strategy and Finance and statements of assessment thereof; |
| 3. | Documents evidencing the debt prescribed in Article 10 (1); |
| 4. | Where inheritance of a spouse is divided, details of division of inheritance and statement of assessment thereof; |
| 5. | Documents prescribed in Articles 15 (18), 16 (5), 17 (3), 18 (3), 19 (3), 20 (3) and 21 (2) and other documents submitted pursuant to this Act. |
| (3) | Deleted. <by Presidential Decree No. 22467, Nov. 2, 2010> |
| Article 65 (Gift Tax Return) |
| (1) | The gift tax return prescribed in Article 68 (1) of the Act shall be filed based upon a gift tax return and voluntary payment statement prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 20720, Feb. 29, 2008> |
| (2) | "Those prescribed by Presidential Decree, such as documents, etc. evidencing the kinds, quantity, assessed price of donated property, various deductions, etc." in Article 68 (2) of the Act means any of the followings: <Amended by Presidential Decree No. 22042, Feb. 18, 2010> |
| 1. | Documents prescribed in Article 64 (2) 1 and 2. In such cases, "ancestor and heir" in subparagraph 1 of the same paragraph shall be construed as "donor and donee" and "inheritance" in subparagraph 2 of the same paragraph as "donated property"; |
| 2. | Deleted; <by Presidential Decree No. 15971, Dec. 31, 1998> |
| 3. | Documents evidencing the debt prescribed in Article 36; |
| 4. | Documents prescribed in Articles 47 and 48 and other documents to be submitted pursuant to this Act. |
| Article 65-2 (Deduction of Filed Amount of Tax) |
The calculated amount of inheritance tax and the calculated amount of gift tax prescribed in the main sentence of Article 69 (1) of the Act and under paragraph (2) of the same Article means the respective amount of tax calculated on the tax base filed within the deadline for filing inheritance tax base prescribed in Article 67 of the Act and the deadline for filing gift tax base prescribed in Article 68 of the Act. [This Article Newly Inserted by Presidential Decree No. 17828, Dec. 30, 2002]
| Article 66 (Voluntary Payment) |
| (1) | A person who pays tax voluntarily under Article 70 of the Act shall pay it to the head of a tax office having jurisdiction over the place for payment of tax together with an inheritance tax return or gift tax return, or pay it to the Bank of Korea or a postal agency with a payment notice prescribed by the National Tax Collection Act. <Amended by Presidential Decree No. 18989, Aug. 5, 2005> |
| (2) | The amount of tax that can be paid in installments under Article 70 (2) of the Act shall be as follows: <Newly Inserted by Presidential Decree No. 17039, Dec. 29, 2000> |
| 1. | Where the amount of tax to be paid does not exceed 20 million won, the amount exceeding 10 million won; |
| 2. | Where the amount of tax to be paid exceeds 20 million won, the amount that is 50/100 of or less than the amount of tax. |
| Article 67 (Application for Payment in Annual Installments and Permission therefor) |
| (1) | Where a person who intends to apply for permission to pay annual installments pursuant to Article 71 (1) of the Act files inheritance tax return or gift tax return prescribed in Article 67 or 68 of the Act (including cases of filing tax return after a deadline prescribed in Article 45-3 of the Framework Act on National Taxes), he/she shall submit an application for permission to pay in annual installments, prescribed by Ordinance of the Ministry of Strategy and Finance, of the amount of tax to be paid together with the inheritance tax return or gift tax return to the head of a tax office having jurisdiction over the place for payment of tax: Provided, That a person notified of the determination of tax base and amount of tax prescribed in Article 77 of the Act may submit the application by the deadline for payment (where an person having joint liability to pay tax prescribed in Article 4-2 (6) of the Act is notified pursuant to paragraph (7) of the same Article, referring to the deadline for payment on the relevant notice of payment of tax) on the relevant notice of payment of tax. <Amended by Presidential Decree No. 16660, Dec. 31, 1999; Presidential Decree No. 17828, Dec. 30, 2002; Presidential Decree No. 18177, Dec. 30, 2003; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 22579, Dec. 30, 2010; Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 29533, Feb. 12, 2019> |
| (2) | The head of a tax office, in receipt of an application for payment in annual installments prescribed in paragraph (1), shall determine whether to grant permission and give written notice of the result to the applicant within the following period. In such cases, where written notification of whether permission is granted is not sent, permission is deemed granted: <Amended by Presidential Decree No. 22579, Dec. 30, 2010> |
| 3. | In the case of the proviso to paragraph (1): 14 days after the deadline for paying tax on the notice of payment of tax. |
| (3) | In the case of the proviso to paragraph (1), where notification of whether payment in annual installments is permitted is given after the deadline for payment, Article 21 of the National Tax Collection Act shall not apply to the aggregate of tax equivalent to the amount of annual installments limited to cases before the date of notification of permission for payment in annual installments. <Amended by Presidential Decree No. 16660, Dec. 31, 1999; Presidential Decree No. 18989, Aug. 5, 2005; Presidential Decree No. 26069, Feb. 3, 2015> |
| Article 68 (Calculation of Amount of Annual Installments, etc.) |
| (1) | The amount of payment in cases of annual installments prescribed in Article 71 (2) of the Act shall be calculated as follows within the scope of an amount payable annually exceeding 10 million won: <Amended by Presidential Decree No. 17039, Dec. 29, 2000; Presidential Decree No. 18177, Dec. 30, 2003; Presidential Decree No. 20621, Feb. 22, 2008> |
| 1. | The amount of payment in annual installments prescribed in the main sentence of Article 71 (2) 1 of the Act: The amount to be paid annually during the period of payment in annual installments from the date two years after payment in annual installments is permitted shall be calculated as follows: |
Amount to be paid in annual installments / (Period of payment in annual installments + One);
| 2. | The amount of payment in annual installments under the proviso to Article 71 (2) 1 of the Act: The amount to be paid annually during the period of payment in annual installments from three years after payment in annual installments is permitted shall be calculated according to the calculation formula in subparagraph 1; |
| 3. | The amount payable in annual installments prescribed in Article 71 (2) 2 of the Act: The amount to be paid annually during the period of payment in annual installments from the date three years after a deadline for payment after reports or deadline for payment on payment notice (hereafter referred to as "deadline for payment" in this subparagraph) or deadline shall be calculated according to the calculation formula in subparagraph 1. |
| (2) | The amount of inheritance tax payable in annual installments pursuant to Article 71 (2) 1 of the Act shall be calculated as follows: <Amended by Presidential Decree No. 20621, Feb. 22, 2008; Presidential Decree No. 28638, Feb. 13, 2018> |
| [Amount of inheritance tax to be paid × (Amount of property the heir inherited on succession to family business - Amount of tax deduction for succession to family business prescribed in Article 18 (2) 1 of the Act / Total amount of inherited property - Amount of tax deduction for succession to family business prescribed in Article 18 (2) 1 of the Act) |
|
| (3) | "Cases where an heir inherits a family business in accordance with requirements prescribed by Presidential Decree" in the main sentence of Article 71 (2) 1 of the Act means cases fully meeting requirements prescribed in Article 15 (3), which is succession to family business. <Amended by Presidential Decree No. 28638, Feb. 13, 2018> |
| (4) | "Property an heir inherited on succession to family business prescribed by Presidential Decree" in the main sentence of Article 71 (2) 1 of the Act means property an heir who fully meets requirements under Article 15 (3) 2 inherits or is to inherit according to the classification prescribed in the subparagraphs of Article 15 (5). <Newly Inserted by Presidential Decree No. 28638, Feb. 13, 2018> |
| (5) | "Property prescribed by Presidential Decree, such as property, etc. used directly for a private kindergarten" in Article 71 (2) 1 and (4) 5 of the Act means inherited property, such as a school site, a site for practical training, school buildings, etc. used directly for a private kindergarten prescribed in subparagraph 3 of Article 7 of the Early Childhood Education Act. <Newly Inserted by Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 28638, Feb. 13, 2018> |
| (6) | "Cases falling under grounds prescribed by Presidential Decree, such as cases where an heir discontinues a family business he/she inherited or the relevant heir is no longer engaged in the family business" in Article 71 (4) 4 of the Act means any of the following cases: <Newly Inserted by Presidential Decree No. 28638, Feb. 13, 2018> |
| 1. | Where he/she disposes of at least 50/100 of assets for family business prescribed in Article 15 (9): Provided, That the foregoing shall not apply where he/she falls under any of the items of Article 15 (8) 1; |
| 2. | Where he/she falls under any of the following: Provided, That the foregoing shall not apply where he/she falls under any of the items of Article 15 (8) 2: |
| (a) | Where the heir (where he/she falls under the latter part of Article 15 (3) 2, his/her spouse) fails to engage in the family business as the representative director, etc.; |
| (b) | Where the heir suspends (including cases where he/she has realized no sales) or discontinues the relevant family business for at least one year; |
| 3. | Where the heir fails to fall under the largest shareholder, etc.: Provided, That the foregoing shall not apply where he/she falls under Article 15 (8) 3 (c) and (d). |
| (7) | "Cases prescribed by Presidential Decree, such as cases where property is not used directly for the relevant business" in Article 71 (4) 5 of the Act means the following cases: <Newly Inserted by Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 28638, Feb. 13, 2018> |
| 1. | Where a private kindergarten is permanently closed; |
| 2. | Where the inherited property for a private kindergarten is not used directly for the private kindergarten. |
| (8) | Where any of the subparagraphs of Article 71 (4) of the Act is applicable after permission for payment in annual installments, permission for payment in annual installments originally shall be revoked or modified by any of the following methods: <Newly Inserted by Presidential Decree No. 20621, Feb. 22, 2008; Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 28638, Feb. 13, 2018> |
| 1. | Where Article 71 (4) 4 of the Act applies within five years from the date payment in annual installments is permitted, permission shall be granted after the methods for payment in annual installments are modified only where the remaining period is short of five years from the date of permission. In such cases, paragraph (1) 2 shall apply mutatis mutandis to the amount of payment in annual installments; |
| 2. | In other cases, permission for payment in annual installments shall be revoked and the amount of tax related to the payment in annual installments shall be collected each time. |
| Article 69 (Additional Rate for Additional Dues on Payment in Annual Installments) |
[This Article Wholly Amended by Presidential Decree No. 22042, Feb. 18, 2010]
| Article 70 (Application for Payment in Kind and Permission therefor) |
| (1) | Article 67 (1) and (3) shall apply mutatis mutandis to the application, etc. for payment in kind prescribed in Article 73 of the Act. In such cases, "payment in annual installments" in Article 67 (1) and (3) shall be construed as "payment in kind" and "day of notification of payment in annual installments" in Article 67 (3) shall be construed as "day of receipt of property paid in kind." <Amended by Presidential Decree No. 17039, Dec. 29, 2000; Presidential Decree No. 24358, Feb. 15, 2013> |
| (2) | Where a person permitted to make payment in annual installments of inheritance tax prescribed in Article 71 of the Act intends to make payment in kind for an installment payment [limited to the first portion of installment payment (referring to the amount of tax for five installments for a small or medium business operator prescribed in the former part of Article 28 (1), with the exception of its subparagraphs, of the Enforcement Decree of the Restriction of Special Taxation Act) but referring to that excluding the additional dues for annual installments prescribed in Article 72 of the Act] during the period of payment in annual installments pursuant to Article 73 of the Act, he/she may file an application with the head of a tax office having jurisdiction over the place for payment of tax by no later than 30 days before the deadline for payment of tax in installments. <Amended by Presidential Decree No. 16660, Dec. 31, 1999; Presidential Decree No. 24358, Feb. 15, 2013; Presidential Decree No. 26960, Feb. 5, 2016> |
| (3) | Article 67 (2) shall apply mutatis mutandis (in cases of a deadline for an application for payment in kind prescribed in paragraph (2), it shall be 14 days from the receipt of such application, and, in such cases, "payment in annual installments" shall be construed as "payment in kind") to the deadline for permission for an application for payment in kind, procedures therefor, etc. prescribed in paragraphs (1) and (2), and where extension of the period is intended in consideration of the days required for the assessment, etc. of the property with which payment in kind is applied, a document on extension shall be dispatched and extension may be allowed only once within 30 days. In such cases, where a document on whether permission is granted is not dispatched within the deadline, permission shall be deemed granted. <Amended by Presidential Decree No. 16682, Dec. 31, 1999; Presidential Decree No. 18177, Dec. 30, 2003; Presidential Decree No. 24358, Feb. 15, 2013> |
| (4) | The latter part of paragraph (3) shall not apply where the property with which payment in kind is applied is the property that cannot be acquired as national property pursuant to Article 11 of the State Property Act. <Amended by Presidential Decree No. 16682, Dec. 31, 1999; Presidential Decree No. 18989, Aug. 5, 2005; Presidential Decree No. 21641, Jul. 27, 2009; Presidential Decree No. 24358, Feb. 15, 2013> |
| (5) | Where the head of a tax office having jurisdiction over the place for payment of tax permits payment in kind pursuant to paragraph (3), he/she shall designate a date by which the property with which payment in kind shall be made within 30 days from the date he/she grants permission. In such cases, where payment in kind with the property within the period is deemed impracticable as the property is divided, etc., he/she may re-designate the date by which payment in kind with property is to be made within the range of once during 20 days. <Amended by Presidential Decree No. 16682, Dec. 31, 1999; Presidential Decree No. 24358, Feb. 15, 2013; Presidential Decree No. 26069, Feb. 3, 2015> |
| (6) | Where payment in kind with property is not made by the date prescribed in paragraph (5) by which payment in kind with property is to be made, relevant permission for payment in kind shall lose effect. <Amended by Presidential Decree No. 24358, Feb. 15, 2013> |
| (7) | Where property is divided or payment in kind is applied on condition of division of property, payment in kind may be permitted only where the value of property with which payment in kind is applied does not decrease compared with that before division. <Amended by Presidential Decree No. 24358, Feb. 15, 2013> |
| (8) | The Commissioner of the National Tax Service may determine detailed matters for application and permission for payment in kind, change of property with which payment in kind is to be made, etc. for the smooth performance of duties regarding payment in kind. |
[This Article Wholly Amended by Presidential Decree No. 15971, Dec. 31, 1998]
| Article 71 (Payment in Kind with Property, Management and Disposal of which is Inappropriate) |
| (1) | Where the head of a tax office deems that the property applied for payment in kind pursuant to Article 73 (1) of the Act is inappropriate for management and disposal due to any of the following reasons, he/she may choose not to permit payment in kind with the property or order to replace the property with another property with which payment in kind is possible: <Amended by Presidential Decree No. 16660, Dec. 31, 1999; Presidential Decree No. 17828, Dec. 30, 2002; Presidential Decree No. 20720, Feb. 29, 2008> |
| 1. | Where property right, such as superficies, easement, right to lease on a deposit basis, mortgage, etc., is established; |
| 2. | Where the owner of land with which payment in kind is applied and the owner of a building thereon are different persons; |
| 3. | Where land contains a grave; |
| 4. | Cases similar to those in subparagraphs 1 through 3, in which management and disposal of property is deemed to be inappropriate by Ordinance of the Ministry of Strategy and Finance. |
| (2) | In the case of paragraph (1), the reason shall be notified to a taxpayer. |
| Article 72 (Replacement, etc. of Property for Payment in Kind) |
| (1) | A person ordered to replace property with which payment in kind is to be made pursuant to Article 71 (1) shall file an application with the head of the tax office having jurisdiction over the place for tax payment, along with a statement of other property that the person intends to use for the payment in kind, out of inherited property, within 20 days from the date he/she receives the notice prescribed in Article 71 (2). <Amended by Presidential Decree No. 26960, Feb. 5, 2016> |
| (2) | Where no application prescribed in paragraph (1) is filed within the period prescribed in the same paragraph, relevant application for payment in kind shall lose effect. |
| (3) | Where a taxpayer's address is in a foreign country, the period prescribed in paragraph (1) shall be three months. |
| (4) | The provisions of Article 70 (3) through (7) shall apply mutatis mutandis to the permission, etc. for payment in kind for an application for payment in kind filed by a person order to replace property with which payment in kind is to be made. <Amended by Presidential Decree No. 15971, Dec. 31, 1998> |
| (5) | Where a reason for which management and disposal are deemed inappropriate is found during the period until the deadline for payment in kind with property prescribed in Article 70 (5) after permission for payment in kind prescribed in paragraph (3) of the same Article is granted, an order to replace with other property may be issued. In such cases, Article 71 and paragraphs (1) through (4) shall apply mutatis mutandis to the replacement, etc. of property with which payment in kind is to be made. <Newly Inserted by Presidential Decree No. 18177, Dec. 30, 2003> |
| Article 72-2 Deleted. <by Presidential Decree No. 16660, Dec. 31, 1999> |
| Article 73 (Scope of Application for Payment in Kind) |
| (1) | The amount of tax to be paid for which a person may file an application for payment in kind pursuant to Article 73 of the Act shall not exceed the smaller amount of the following amounts: <Amended by Presidential Decree No. 26069, Feb. 3, 2015; Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 28638, Feb. 13, 2018> |
| 1. | Amount of inheritance tax to be paid on the value of real estate and securities that may be appropriated for the payment in kind pursuant to Article 74 (1) among inherited property; |
| 2. | Amount obtained by subtracting the value of financial assets (referring to the amount obtained by subtracting the amount of debts owed to a financial company, etc. proved pursuant to Article 10 (1) 1) prescribed in paragraph (5) and the value of securities (excluding those whose disposal is restricted pursuant to Acts and subordinate statutes) listed on the stock exchange among inherited property from the amount of inheritance tax to be paid. |
| (2) | If there is no appropriate asset for the payment of the tax amount prescribed in paragraph (1), among inherited property comprised of real estate and securities, the head of the relevant tax office may permit payment in kind even for a tax amount exceeding the relevant tax amount, notwithstanding paragraph (1). <Amended by Presidential Decree No. 26069, Feb. 3, 2015; Presidential Decree No. 26960, Feb. 5, 2016> |
| (3) | For the purpose of paragraph (1), if the relevant inherited asset is substituted by any other asset inappropriate for management and disposal, without any justifiable grounds, during the period until before filing an application for payment in kind after the date of commencement of inheritance, the amount of inheritance tax equivalent to the value of the relevant asset inappropriate for management and disposal shall be excluded from the tax amount for which payment in kind may be requested. <Newly Inserted by Presidential Decree No. 18627, Dec. 31, 2004; Presidential Decree No. 26069, Feb. 3, 2015; Presidential Decree No. 26960, Feb. 5, 2016> |
| (4) | Notwithstanding paragraphs (1) and (2), the amount of tax that may be paid in kind with shares, etc. of a corporation not listed on the stock exchange (hereafter referred to as "unlisted shares, etc." in this paragraph) shall not exceed the amount obtained by subtracting the amount of inheritance tax imposed [referring to the amount obtained by subtracting the value of unlisted shares, etc., and value of a house where the heir resides as of the date on which succession takes place and the land attached thereto (referring to the value obtained by subtracting the amount of debt secured by the relevant assets)] from the amount of inheritance tax to be paid. <Newly Inserted by Presidential Decree No. 28638, Feb. 13, 2018> |
| (5) | "Financial assets prescribed by Presidential Decree" in Article 73 (1) 3 of the Act means deposits, installment deposits, installment savings, fraternity funds, investments, specified money trusts, insurance proceeds, mutual aid funds, notes handled by financial companies, etc. <Newly Inserted by Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 28638, Feb. 13, 2018> |
| Article 74 (Scope, etc. of Property Appropriable for Payment in Kind) |
| (1) | The following real estate and securities can be appropriated for payment in kind prescribed in Article 73 of the Act: <Amended by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 16660, Dec. 31, 1999; Presidential Decree No. 17828, Dec. 30, 2002; Presidential Decree No. 18989, Aug. 5, 2005; Presidential Decree No. 20621, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 24358, Feb. 15, 2013; Presidential Decree No. 26069, Feb. 3, 2015; Presidential Decree No. 27835, Feb. 7, 2017> |
| 1. | Real estate located in Korea; |
| 2. | National bonds, public bonds, shares, debentures, or bonds issued by domestic corporations and other securities prescribed by Ordinance of the Ministry of Strategy and Finance: Provided, That any of the following securities shall be excluded herefrom: |
| (a) | Exchange-listed property: Provided, That where they are listed on the exchange for the first time and the disposal thereof is limited pursuant to the Financial Investment Services and Capital Markets Act as at the date before the date on which notification of permission for payment in kind is sent, this shall not apply; |
| (b) | Shares, etc. of a corporation not listed on the Exchange: Provided, That where, in cases of inheritance, another inheritance does not exist or appropriation in inheritance tax with the inheritance prescribed in paragraph (2) 1 through 3 is deficient, this shall not apply. |
| (2) | Property appropriated for payment in kind pursuant to paragraph (1) shall be applied or permission shall be granted in accordance in the following order except on just grounds recognized by the head of a tax office: <Amended by Presidential Decree No. 16660, Dec. 31, 1999; Presidential Decree No. 20621, Feb. 22, 2008; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 26069, Feb. 3, 2015; Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 27835, Feb. 7, 2017> |
| 1. | National bonds and public bonds; |
| 2. | Securities (excluding property prescribed in subparagraph 1) falling under the proviso to paragraph (1) 2 (a), which are listed on the exchange; |
| 3. | Real estate located in Korea (excluding property prescribed in subparagraph 6); |
| 4. | Securities prescribed in paragraph (1) 2 (other than property referred to in subparagraphs 1, 2, and 5); |
| 5. | Shares, etc. of a corporation not listed on the Exchange, falling under the proviso to paragraph (1) 2 (b); |
| 6. | A house in which an heir resides as at the date inheritance commences and land appurtenant thereto. |
| Article 75 (Determination of Accepting Price of Property to Be Appropriated for Payment in Kind) |
| (1) | Except in the following cases, the value of real estate and securities that are acceptable for payment in kind prescribed in Article 73 of the Act shall be the value of inherited property: <Amended by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 16660, Dec. 31, 1999; Presidential Decree No. 17828, Dec. 30, 2002; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 24358, Feb. 15, 2013; Presidential Decree No. 26960, Feb. 5, 2016> |
| 1. | In cases of shares, if the corporation that issued the relevant shares during the period from the date of commencement of inheritance to the date of acceptance issues new shares or reduces shares, the value calculated by the formula prescribed by Ordinance of the Ministry of Strategy and Finance shall be the value acceptable for payment; Provided, That this shall not apply in cases specified by Ordinance of the Ministry of Strategy and Finance; |
| 2. | The acceptable value of real estate and securities appropriated for payment in kind for the tax amount payable in installments during the period of payment in annual installments prescribed in Article 70 (2) shall be determined with either of the following amounts assessed by the assessment method applied to the relevant real estate and securities as at the time of determining the tax base and tax amount prescribed in Article 76 (1); |
| (a) | The amount assessed in accordance with Article 60 (2) of the Act as at the date immediately before the date the notice of permission for payment in kind is issued, if the taxable value for inheritance tax is calculated in accordance with the same paragraph; |
| (b) | The amount assessed in accordance with Article 60 (3) of the Act as at the date immediately before the date the notice of permission for payment in kind is issued, if the taxable value for inheritance tax is calculated in accordance with the same paragraph; |
| 3. | Where the price of securities to be appropriated for payment in kind has decreased by at least 50/100 of the value of the inherited property, compared with the value thereof as at the base assessment date due to poor management by the heir, such as cases where the heir disposes of major assets of the corporation that issued securities, etc., during the period from the base date of assessment to the date immediately before the date the notice of permission for payment in kind is issued, the price of securities to be appropriated for payment in kind shall be determined with the price assessed in accordance with either item of subparagraph 2. In such cases, if the total assessed value of securities concerning which an application is filed for payment in kind (referring to the securities of the same items as the securities concerning which an application is filed for payment in kind) falls short of the tax amount for which an application for payment in kind is filed and if even the sum of value of other assets inherited in addition to such securities and the value of such securities falls short of the tax amount for which an application for payment in kind is filed, the deficiency in the tax amount shall be added to the total assessed value of securities concerning which an application is filed for payment in kind. |
| (2) | The acceptable value of donated property to be added to inherited property prescribed in Article 73 (1) 1 of the Act shall be assessed in accordance with Chapter IV of the Act as at the date of commencement of inheritance. <Newly Inserted by Presidential Decree No. 26960, Feb. 5, 2016> |
| Article 76 (Calculation, etc. of Amount, Collection of which Is Deferred) |
| (1) | The amount of inheritance tax, the collection of which is deferred pursuant to Article 74 (1) of the Act shall be an amount calculated by multiplying the calculated amount of inheritance tax by the proportion occupied by the property falling under any of the subparagraphs of Article 74 (1) of the Act among the inheritance (including donated property added to inheritance pursuant to Article 13 of the Act). |
| (2) | "Reason prescribed by Presidential Decree" in Article 74 (2) of the Act shall refer to any of the following cases: <Amended by Presidential Decree No. 17828, Dec. 30, 2002; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22042, Feb. 18, 2010> |
| 1. | Where the registration of a museum or gallery is revoked; |
| 2. | Where a museum or gallery is closed; |
| 3. | Where it is excluded from the data of a museum or gallery registered with the Ministry of Culture, Sports, and Tourism. |
| (3) | Where an heir establishes a museum or gallery pursuant to Article 74 (5) of the Act and exhibits and preserves museum data or gallery data from among inheritance in the relevant museum or gallery, he/she shall establish a museum or gallery and exhibit and preserve museum data or gallery data by the deadline for filing inheritance tax return: Provided, That where the establishment of the museum or gallery is delayed due to legal or administrative reasons, he/she shall perform such acts within six months from the date such reasons cease to exist. |
| Article 77 (Provisions to Be Applied mutatis mutandis) |
The provisions of Article 76 (1) and (2) shall apply mutatis mutandis to gift tax. In such cases, "amount of gift tax" in Article 76 (1) shall be construed as "amount of gift tax"; "calculated amount of inheritance tax" as "calculated amount of gift tax"; “donated property added to inheritance pursuant to Article 13 of the Act" as "donated property added to the imposition amount of gift tax prescribed in the main sentence of Article 47 (2) of the Act." <Amended by Presidential Decree No. 18177, Dec. 30, 2003>
CHAPTER VI DETERMINATION AND CORRECTION
| Article 78 (Determination and Correction) |
| (1) | The statutory deadline for determination prescribed in Article 76 (3) of the Act shall be set pursuant to the following: <Amended by Presidential Decree No. 28638, Feb. 13, 2018> |
| 1. | Inheritance tax: Nine months from the deadline for filing the inheritance tax base pursuant to Article 67 of the Act; |
| 2. | Gift tax: Six months from the deadline for filing the gift tax base pursuant to Article 68 of the Act. |
| (2) | "Period prescribed by Presidential Decree" in the main sentence of Article 76 (5) of the Act means the period until the date (hereafter referred to as "inspection standard date" in this Article) five years elapse from the date inheritance commences. <Amended by Presidential Decree No. 18177, Dec. 30, 2003; Presidential Decree No. 22042, Feb. 18, 2010> |
| (3) | "Major property prescribed by Presidential Decree" in the main sentence of Article 76 (5) of the Act means financial assets, writings, drawings, antiques, tangible property, intangible property rights prescribed in Article 59, etc. <Amended by Presidential Decree No. 22042, Feb. 18, 2010> |
| (4) | The inspection conducted under Article 76 (5) of the Act shall be limited to cases where normal scale of increase in the value of property prescribed in paragraph (3) is deemed to have been markedly exceeded in view of the fluctuation, etc. of economic situation, etc. from the date inheritance commences to the inspection standard date, and the ground for the increase is not objectively clear. <Amended by Presidential Decree No. 18177, Dec. 30, 2003> |
| (5) | The provisions of subparagraphs of Article 34 (1) shall apply mutatis mutandis to proving the source of funds prescribed in the proviso to Article 76 (5) of the Act. <Amended by Presidential Decree No. 15971, Dec. 31, 1998> |
| Article 79 (Notification of Determination of Tax Base and Amount of Tax) |
When the head of a tax office notifies a tax base and a tax amount prescribed in Article 77 of the Act, he/she shall specify the grounds for the calculation of the tax base and tax amount of tax in the tax notice. In such cases, he/she shall state that the commissioner of the relevant regional tax office conducted an inspection and determined the tax base and the amount of tax with reference to the tax base and the amount of tax determined by the commissioner of the relevant regional tax office. <Amended by Presidential Decree No. 26960, Feb. 5, 2016>
| Article 80 (Additional Tax, etc.) |
| (1) | through (4) Deleted. <by Presidential Decree No. 19899, Feb. 28, 2007> |
| (5) | "Unclear cases prescribed by Presidential Decree" in Article 78 (3) of the Act, means cases in which the fact is not verifiable as the details of contributed property, operating income, sold property, etc. are omitted or wrongly entered in the submitted report. <Amended by Presidential Decree No. 22042, Feb. 18, 2010> |
| (6) | In imposing additional tax on the shares, etc. held in excess of the possession standard prescribed in Article 78 (4) of the Act, it shall be imposed, starting with shares, etc. acquired afterward. <Newly Inserted by Presidential Decree No. 16660, Dec. 31, 1999> |
| (7) | "Amount of earnings during the period for which income tax is imposed or the business year for which corporate tax is imposed, which is prescribed by Presidential Decree" in the main sentence of Article 78 (5) of the Act means the sum of the following amounts: <Amended by Presidential Decree No. 27835, Feb. 7, 2017> |
| 1. | Amount of earnings during the period for which income tax is imposed or the business year for which corporate tax is imposed, during which a public service corporation, etc. fails to undergo tax verification by an external expert prescribed in Article 50 (1) of the Act or to make a report prescribed in paragraph (2) of the aforesaid Article; |
| 2. | Amount of earnings during the period for which income tax is imposed or the business year for which corporate tax is imposed, during which a public service corporation, etc. fails to undergo an audit conducted under Article 50 (3) of the Act; |
| 3. | Amount of earnings during the period for which income tax is imposed or the business year for which corporate tax is imposed, during which a public service corporation, etc. fails to fulfill its duty to prepare and keep books prescribed in Article 51 of the Act. |
| (8) | "Value of property donated" in the main sentence of Article 78 (5) of the Act, with the exception of its subparagraphs, means the sum of the value obtained by subtracting the value of property directly and continuously used for a public service project, on which tax verification by an external expert under Article 50 (1) and (2) of the Act has already been reported, and the value obtained by subtracting the value of property directly and continuously used for a public service project, on which the audit prescribed in Article 50 (3) of the Act has already been conducted. <Amended by Presidential Decree No. 27835, Feb. 7, 2017> |
| (9) | "Cases prescribed by Presidential Decree" in the proviso to Article 78 (5) of the Act, with the exception of its subparagraphs, means any of the following cases: <Amended by Presidential Decree No. 27835, Feb. 7, 2017> |
| (10) | "Direct expenses and indirect expenses prescribed by Presidential Decree" in Article 78 (6) of the Act, means the wages, official expenses, expenses for operating a secretary's office, vehicle maintenance expenses, etc. defrayed for the relevant director or executive officers and employees (excluding expenses related to medical doctors, teachers and staff members of schools (applicable only to staff members for whom expenses are paid in an account affiliated with a school prescribed in Article 29 of the Private School Act from among teachers and staff members), and persons qualified as child caretakers at child welfare centers, librarians at libraries, curators at museums and galleries, and social welfare specialists at social welfare facilities). In such cases, where the dates directors take office are different, additional tax shall be imposed, beginning with the portion for a director who takes office afterward; where they take office on the same date, additional tax shall be imposed, starting with the director whose expense is higher. <Newly Inserted by Presidential Decree No. 16660, Dec. 31, 1999; Presidential Decree No. 17828, Dec. 30, 2002; Presidential Decree No. 20621, Feb. 22, 2008; Presidential Decree No. 22042, Feb. 18, 2010> |
| (11) | The provisions of paragraph (6) shall apply mutatis mutandis to the imposition of additional tax prescribed in the provisions of Article 78 (7) of the Act. <Newly Inserted by Presidential Decree No. 16660, Dec. 31, 1999; Presidential Decree No. 18177, Dec. 30, 2003> |
| (12) | "Expenses directly incurred" in Article 78 (8) of the Act, means the following expenses: <Newly Inserted by Presidential Decree No. 16660, Dec. 31, 1999; Presidential Decree No. 17459, Dec. 31, 2001; Presidential Decree No. 18177, Dec. 30, 2003; Presidential Decree No. 26960, Feb. 5, 2016> |
| 1. | In cases falling under Article 38 (15) 1, expenses incurred in using the relevant advertising or publicity media; |
| 2. | In cases falling under Article 38 (15) 2 and 3, the total amount of the relevant event. |
| (13) | "Standard amount prescribed by Presidential Decree" in Article 78 (9) 1 of the Act, means the standard amount of use under Article 38 (5). <Amended by Presidential Decree No. 27835, Feb. 7, 2017> |
| (14) | "Standard amount prescribed by Presidential Decree" in Article 78 (9) 2 of the Act, means the amount corresponding to standards for use under Article 38 (7). <Newly Inserted by Presidential Decree No. 27835, Feb. 7, 2017> |
| (15) | "Amount of revenue directly related to public interest projects" in Article 78 (10) 2 (a) of the Act, means an amount obtained by subtracting the amount of revenue related to profit-making business on which corporate tax is imposed pursuant to the Corporate Tax from the total amount of income of the relevant public service corporation, etc. <Newly Inserted by Presidential Decree No. 20621, Feb. 22, 2008; Presidential Decree No. 27835, Feb. 7, 2017> |
| (16) | "Total assets" in Article 78 (11) of the Act, means the total aggregate assets (in cases of real estate, if the price assessed pursuant to Articles 60, 61 and 66 is higher than the price on the balance sheet, referring to the assessed price) on the balance sheet as at the close of a taxable period or business year to be publicly announced. <Newly Inserted by Presidential Decree No. 20621, Feb. 22, 2008; Presidential Decree No. 27835, Feb. 7, 2017> |
| (17) | "Where unclear matters prescribed by Presidential Decree exist" in the former part of Article 78 (12) of the Act, means cases in which the fact of payment is unverifiable as the address, name, identification number, and business registration number of a taxpayer and income earner, kind of income, year in which the income falls, or amount paid is not entered in the submitted payment statement, etc. or falsely entered and cases in which no securities standard code is entered in the submitted payment statement and interest and dividend payment statement or falsely entered: Provided, That where any of the following applies, such case shall be excluded: <Newly Inserted by Presidential Decree No. 21292, Feb. 4, 2009; Presidential Decree No. 27835, Feb. 7, 2017> |
| 1. | Where payment is made to a person to whom a business registration certificate is issued or who is vested with an identification number as at the payment date; |
| 2. | Where a person to whom payment, other than that under subparagraph 1, is made is verified as missing. |
| Article 81 (Grounds, etc. for Acknowledging Requests, etc. for Correction) |
| (1) | A person who intends to make a request for determination or correction prescribed in Article 79 of the Act shall submit a written request for determination or correction in which the following are entered: <Amended by Presidential Decree No. 17828, Dec. 30, 2002; Presidential Decree No. 24358, Feb. 15, 2013> |
| 1. | Name and address or abode of a requester; |
| 2. | Tax base and amount of tax before determination or correction; |
| 3. | Tax base and amount of tax after determination or correction; |
| 4. | Documents proving that the grounds prescribed in paragraph (2), subparagraphs of Article 79 (1) and paragraph (2) of the same Article apply; |
| 5. | Other necessary matters in addition to those prescribed in subparagraphs 1 through 4. |
| (2) | "Ground prescribed by Presidential Decree, such as a lawsuit, etc. to request the recovery of inheritance" in Article 79 (1) 1 of the Act means cases in which final and conclusive judgement on lawsuits over the recovery of inheritance or lawsuits over the return of legal portion of inheritance due to any dispute between an ancestor or heir and a third party is rendered. <Amended by Presidential Decree No. 17828, Dec. 30, 2002; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 24358, Feb. 15, 2013> |
| (3) | "Ground prescribed by Presidential Decree, such as expropriation of the inherited property" in Article 79 (1) 2 of the Act means any of the following cases: <Amended by Presidential Decree No. 16660, Dec. 31, 1999; Presidential Decree No. 17459, Dec. 31, 2001; Presidential Decree No. 17828, Dec. 30, 2002; Presidential Decree No. 18989, Aug. 5, 2005; Presidential Decree No. 21292, Feb. 4, 2009; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 24358, Feb. 15, 2013; Presidential Decree No. 26960, Feb. 5, 2016> |
| 1. | Where the inherited property is expropriated, auctioned (referring to the auction prescribed by the Civil Execution Act) or put to public sale during the period prescribed in Article 78 (1) 1 and the amount of compensation, auctioned price, or public sale price is lower than the taxable value of inherited property; |
| 2. | Where shares, etc. do not amount to the shares, etc. of the largest shareholder etc. as the shares, etc. are sold off en bloc (excluding cases in which they are sold en bloc to a person in a relationship prescribed in Article 2-2 (1) 1 with an ancestor and an heir) during the period under Article 78 (1) 1 even though the shares, etc. are assessed at a premium pursuant to Article 63 (3) of the Act. |
| (4) | Where a request for determination or correction is made due to a ground falling under paragraph (3) 2, it shall be made on the value assessed at a premium pursuant to Article 63 (3) of the Act. <Newly Inserted by Presidential Decree No. 17459, Dec. 31, 2001; Presidential Decree No. 24358, Feb. 15, 2013> |
| (5) | "Gratuitous use period of real estate prescribed by Presidential Decree" in Article 79 (2) 1 of the Act means the period specified in the latter part of Article 27 (3) or the latter part of Article 27 (5). <Amended by Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 26960, Feb. 5, 2016; Presidential Decree No. 29533, Feb. 12, 2019> |
| (6) | "Ground prescribed by Presidential Decree" in Article 79 (2) 1 of the Act means any of the following cases: <Newly Inserted by Presidential Decree No. 17828, Dec. 30, 2002; Presidential Decree No. 18177, Dec. 30, 2003; Presidential Decree No. 22042, Feb. 18, 2010> |
| 1. | Where the owner of real estate transfers relevant real estate; |
| 2. | Deleted; <by Presidential Decree No. 18177, Dec. 30, 2003> |
| 3. | Where the owner of real estate dies; |
| 4. | Cases similar to those prescribed in subparagraphs 1 through 3, in which the user of real estate gratuitously ceases to use the real estate gratuitously. |
| (7) | "Grounds prescribed by Presidential Decree" in Article 79 (2) 2 of the Act means any of the following cases: <Newly Inserted by Presidential Decree No. 22042, Feb. 18, 2010> |
| 1. | Where the status of a claimant to the relevant money is transferred; |
| 2. | Where the lender of money dies; |
| 3. | Cases similar to those falling under subparagraphs 1 and 2, in which a person who has borrowed money gratuitously or at an interest rate below fair interest rate ceases to borrow gratuitously or at an interest rate below fair interest rate. |
| (8) | "Grounds prescribed by Presidential Decree" in Article 79 (2) 3 of the Act means any of the following cases: <Newly Inserted by Presidential Decree No. 27835, Feb. 7, 2017> |
| 1. | Where a person who has provided security dies; |
| 2. | Where the person chooses not to use the relevant property as collateral, for grounds similar to subparagraph 1. |
| (9) | In making a request for determination or correction pursuant to Article 79 (2) of the Act, it shall be made on an amount calculated by multiplying the amount prescribed in subparagraph 1 by the rate prescribed in subparagraph 2. In such cases, the number of months shall be calculated according to the calendar, and any period less than a month shall be counted as a month: <Newly Inserted by Presidential Decree No. 17828, Dec. 30, 2002; Presidential Decree No. 18177, Dec. 30, 2003; Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. 24358, Feb. 15, 2013; Presidential Decree No. 27835, Feb. 7, 2017> |
| 1. | Calculated amount of gift tax (including the amount added to the calculated amount of tax pursuant to Article 57 of the Act); |
| 2. | Percentage based on the following classification: |
Number of months from the date on which a ground prescribed in Article 79 (2) 1 of the Act arises to the expiration date of the period during which real estate is used without compensation under paragraph (5)
_____________________________________________________________
Number of months during the period during which real estate is used without compensation prescribed in paragraph (5) |
|
Number of months from the date on which a ground prescribed in Article 79 (2) 2 of the Act arises to the expiration date of the period during which money prescribed in Article 41-4 of the Act is borrowed without compensation or at the rate of interest lower than the reasonable rate of interest
_____________________________________________________________
Number of months in the period during which money prescribed in Article 41-4 of the Act is borrowed without compensation or at the rate of interest lower than the reasonable rate of interest |
|
Number of months from the date on which a ground prescribed in Article 79 (2) 3 of the Act arises to the expiration date of the period during which security under Article 42 of the Act is provided
_____________________________________________________________
Number of months during the period during which security prescribed in Article 42 of the Act is provided |
|
CHAPTER VII SUPPLEMENTARY PROVISIONS
| Article 82 (Provision of Data) |
The Minister of the Interior and Safety, Special Metropolitan City Mayor, Metropolitan City Mayors, Do Governors or Special Self-Governing Province Governor shall notify the Commissioner of the National Tax Service of the details of land, buildings and houses subject to imposition of property tax and of taxpayers and the situation of taxation by no later than October 31 of the relevant year. <Amended by Presidential Decree No. 24441, Mar. 23, 2013; Presidential Decree No. 25751, Nov. 19, 2014; Presidential Decree No. 28211, Jul. 26, 2017>
[This Article Wholly Amended by Presidential Decree No. 22579, Dec. 30, 2010]
| Article 83 Deleted. <by Presidential Decree No. 20621, Feb. 22, 2008> |
| Article 84 (Submission of Payment Records, etc.) |
| (1) | Where a payment record or details of modification of a title are to be submitted pursuant to Article 82 (1) of the Act, a payment record or statement of modification of a title prescribed by Ordinance of the Ministry of Strategy and Finance prepared according to each payer or person handling modification of a title to the head of a tax office having jurisdiction over the seat of head office or main office by the end of the month following the month in which payment is made or a title is modified: Provided, That this shall not apply in applying Article 82 (1) 1 of the Act, where the beneficiary of insurance proceeds and the payer of insurance premiums are the same person and the cumulative amount of insurance proceeds paid is less than ten million won. <Amended by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 18627, Dec. 31, 2004; Presidential Decree No. 20621, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 26069, Feb. 3, 2015> |
| (2) | The computer tapes and diskettes submitted pursuant to Article 82 (2) of the Act shall include matters prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 20720, Feb. 29, 2008> |
| (3) | A person who handles the transfer or modification of title pursuant to Article 82 (3) of the Act and a person who deposits foreign currency securities in the Korea Securities Depository (hereafter referred to as "person who handles the transfer of title" in this paragraph) shall submit the details of the transfer or modification of title conducted by each person who handles the transfer of title, to the head of the tax office having jurisdiction over the seat of his/her head office or main office by the end of the month following the date on which a quarter to which the date of transfer or modification of title belongs ends, as prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 27835, Feb. 7, 2017> |
| (4) | A person who handles trust business pursuant to Article 82 (4) of the Act shall submit the details of trust business prepared according to the following standards by each person handling trust business to the head of the tax office having jurisdiction over the seat of a head office or main office: <Amended by Presidential Decree No. 16660, Dec. 31, 1999> |
| 1. | By the end of the month next to the end of the quarter in which (where profits from principal and revenue are not determined on the date contract is entered into, referring to the date on which profits from principal and revenue are actually determined and paid) a truster and a beneficiary enter into a trust contract for another trust property; |
| 2. | Where the beneficiary or the amount of trust property is changed during a contract period, by the end of the month next to the end of the quarter in which the change is made. |
| (5) | Detailed matters necessary for the issuance of convertible bonds, etc. and the underwriters thereof under Article 82 (6) of the Act shall be submitted to the head of the tax office having jurisdiction over the seat of a head office or main office of the relevant corporation (including the underwriters prescribed by the Financial Investment Services and Capital Markets Act) by the end of the month next to the end of the quarter in which the convertible bonds, etc. are issued, as prescribed by Ordinance of the Ministry of Strategy and Finance. <Newly Inserted by Presidential Decree No. 17039, Dec. 29, 2000; Presidential Decree No. 18177, Dec. 30, 2003; Presidential Decree No. 18989, Aug. 5, 2005; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22042, Feb. 18, 2010> |
| Article 85 Deleted. <by Presidential Decree No. 16660, Dec. 31, 1999> |
| Article 86 (Questioning and Making Inspections) |
Where a public official engaged in taxation makes an inspection of inheritance tax or gift tax and inspects books, documents and other articles, he/she shall present a certificate of inspection to interested persons.
| Article 87 (Persons Subject to Collection and Management of Data on Property Taxation of Each Taxpayer) |
| (1) | "Person prescribed by Presidential Decree" in Article 85 (1) of the Act means any of the following persons: <Amended by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 16660, Dec. 31, 1999; Presidential Decree No. 18669, Jan. 5, 2005; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22042, Feb. 18, 2010> |
| 1. | A person who owns excessive real estate and pays property tax exceeding a certain amount and his/her spouse; |
| 2. | A person who pays income tax on the lease of real estate above a certain amount and his/her spouse; |
| 3. | A person who pays global income tax (excluding income tax on the lease of real estate) above a certain amount and his/her spouse; |
| 4. | The largest shareholder et al. of a corporation, the paid-in capital or size of assets of which is above a certain amount and his/her spouse; |
| 5. | Other persons deemed necessary to implement the duties of imposition and collection of inheritance tax or gift tax, who are prescribed by Ordinance of the Ministry of Strategy and Finance. |
| (2) | The selection of persons subject to the collection and management of data on property taxation of each taxpayer and the establishment of a criteria for owning excessive real estate and of a standard for an amount prescribed in paragraph (1) shall be prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 15971, Dec. 31, 1998; Presidential Decree No. 20720, Feb. 29, 2008> |
ADDENDA
Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 1997.
Article 2 (General Applicability)
This Decree shall begin to apply from the first inheritance or donation after this Decree enters into force.
Article 3 (Applicability to Inclusion of Shares, etc. Excessively Contributed to Public Service Corporations, etc. in Taxable Value)
| (1) | The amended provisions of Articles 13 (3) and 37 (3) shall begin to apply from the first contribution of stocks or investment shares made to a public service corporation, etc. or the first acquisition of stocks or investment shares by a public service corporation, etc. |
| (2) | For the purposes of determining whether the contribution or acquisition exceeds 5/100 of the total number of issued stocks or total amount of investment in a domestic corporation, the stocks or investment shares in the relevant domestic corporation that have been already contributed by a public service corporation, etc. before this Decree enters into force and the stocks or investment shares in the relevant domestic corporation that have been held by a public service corporation, etc. from before this Decree enters into force, shall be included in the calculation. |
Article 4 (Applicability to In-Kind Payment)
The amended provisions of subparagraph 2 of Article 75 shall begin to apply from the first application for in-kind payment made after this Decree enters into force. Article 5 (Transitional Measures concerning Scope of Public Service Corporations, etc.)
Where a project corresponding to a previous public works project is performed pursuant to previous Article 3-2 (2) 3, 6, 11 and 13 through 16 as at the time this Decree enters into force, a public service corporation, etc. prescribed in the provisions of Article 12 of this Decree shall be deemed operated. Article 6 (Transitional Measures concerning Ex Post Facto Management of Property Contributed to Public Service Corporations)
The provisions of Article 38 (4) and (5) shall apply to the property, to which the former provisions of proviso to Article 3-2 (7) 2 apply, already received as a contribution as at the time this Decree enters into force deeming that it is received on January 1, 1997 as a contribution. Article 7 (General Transitional Measures)
The former provisions shall apply to the inheritance tax or gift tax imposed or to be imposed on the inheritance or donation commenced or made before this Decree enters into force.
Article 8 Omitted.
Article 9 (Relationship with other Acts and Subordinate Statutes)
Where the former Enforcement Decree of the Inheritance Tax Act or provisions thereof are cited in other statues as at the time this Decree enters into force, and provisions corresponding thereto exist in this Decree, this Decree or such corresponding provisions of this Decree shall be deemed cited in lieu of the former provisions.
ADDENDA <Presidential Decree No. 15486, Sep. 30, 1997>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Articles 2 and 3 Omitted.
ADDENDA <Presidential Decree No. 15509, Nov. 10, 1997>
| (1) | (Enforcement Date) This Decree shall enter into force on the date of its promulgation. |
| (2) | (Applicability) This Decree shall apply begin to apply from the first inheritance or donation after this Decree enters into force. |
ADDENDA <Presidential Decree No. 15604, Dec. 31, 1997>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Articles 2 through 10 Omitted.
ADDENDA <Presidential Decree No. 15971, Dec. 31, 1998>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 1999: Provided, That the amended provisions of Article 54 (2) 4 shall enter into force on the date of promulgation. Article 2 (General Applicability)
This Decree shall begin to apply from the first inheritance or donation after this Decree enters into force.
Article 3 (Applicability to Deemed Donation when Merger is Conducted)
The amended provisions of Article 28 (6) and (7) shall begin to apply from the first merger registered after this Decree enters into force. Article 4 (Applicability to Scope of Public Service Corporations Subject to Tax Verification by Outside Experts)
The amended provisions of Article 43 (2) 1 shall apply to the first business year after this Decree enters into force. Article 5 (Applicability to Payment in Annual Installments and Payment in Kind)
The amended provisions of Articles 67, 70 through 72, 72-2, and 75 shall begin to apply from the first application for payment in annual installments and for payment in kind (excluding the application filed by a person who is ordered to change property for in-kind payment pursuant to previous provisions for change after this Decree enters into force) after this Decree enters into force. Article 6 Omitted.
ADDENDA <Presidential Decree No. 16660, Dec. 31, 1999>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 2000: Provided, That the amended provisions of Article 28 (7) shall enter into force on the date of its promulgation. Article 2 (General Applicability)
This Decree shall begin to apply from the first inheritance or donation after this Decree enters into force.
Article 3 (Applicability to Scope of Public Service Corporation, etc.)
| (1) | The amended provisions of subparagraph 6 of Article 12 shall begin to apply from the public service corporation, etc. incorporated after this Decree enters into force. |
| (2) | The amended provisions of Article 38 (2), (4) and (6), Article 42 (1) 1 and Article 43 (2) 1 shall begin to apply from the first business year of the relevant public service corporation, etc. after this Decree enters into force. |
Article 4 (Applicability to Deemed Donation of Rights to Use Land Gratuitously)
The amended provisions of Article 27 (1) 1 shall begin to apply from the first extension after this Decree enters into force. Article 5 (Applicability to Deemed Donation when Merger Is Conducted)
The amended provisions of Article 28 (3) through (7) shall begin to apply from the first registration of merger after this Decree enters into force. Article 6 (Applicability to Payment in Annual Installments and Payment in Kind)
The amended provisions of Articles 67 (2) and 70 (3) and subparagraph 1 of Article 75 shall begin to apply from the first payment in annual installment and payment in kind after this Decree enters into force. Article 7 (Applicability to Payment Records, etc.)
The amended provisions of Article 84 (4) shall begin to apply from the first payment or processing after this Decree enters into force. Article 8 (Transitional Measures concerning Public Service Corporations, etc.)
The public service corporations, etc. corresponding to the previous provisions of subparagraph 6 of Article 12 as at the time this Decree enters into force, shall be deemed designated by the Minister of Finance and Economy pursuant to the amended provisions of subparagraph 6 of Article 12.
ADDENDA <Presidential Decree No. 16682, Dec. 31, 1999>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 2000.
Articles 2 through 4 Omitted.
ADDENDA <Presidential Decree No. 17039, Dec. 29, 2000>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 2000: Provided, That the amended provisions of the main sentence of Article 38 (2), paragraphs (4) through (7), (9), (10) and (12) of the same Article, Article 40 (1) 2-2 and 3, Article 41 (1), Article 43 (3) and (4) and Article 80 (10) shall enter into force on the date of its promulgation. Article 2 (General Applicability)
This Decree shall begin to apply from the first inheritance or donation after this Decree enters into force.
Article 3 (Applicability to Deemed Donation when Merger Is Conducted)
The amended provisions of Article 28 (1), (3) and (5) shall begin to apply from the first registration of merger after this Decree enters into force; but where the base assessment date prescribed in the latter part of Article 28 (5) 2 passes before this Decree enters into force, the former provisions may apply to the base assessment date. Article 4 (Applicability to Ex Post Facto Management, etc. of Property Received as Donation by Public Service Corporations, etc.)
| (1) | The amended provisions of proviso to Article 38 (2), and Article 42 (1) and Article 43 (2) shall begin to apply from the first determination of inheritance tax or gift tax after this Decree enters into force. |
| (2) | The amended provisions of the main sentence of Article 38 (2), paragraphs (9), (10) and (12) of the same Article, Article 41 (1) and Article 43 (3) and (4) shall begin to apply from the first business year that ends after this Decree enters into force. |
Article 5 (Applicability to Payment in Annual Installments)
The amended provisions of Articles 67 (2) and 69 shall begin to apply from the first application for payment in annual installments filed after this Decree enters into force. Article 6 (Exceptions to Application to Calculation of Results of Using Operating Income)
For the purposes of the amended provisions of the latter part of Article 38 (6), where the result of using operating income calculated pursuant to the former provisions does not exceed the standard amount of use until five business years from the day this Decree enters into force, the former provisions shall apply notwithstanding the amended provisions of the latter part of the same paragraph.
ADDENDA <Presidential Decree No. 17052, Dec. 29, 2000>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 2001. (Proviso Omitted.)
Articles 2 through 6 Omitted.
ADDENDA<Presidential Decree No. 17459, Dec. 31, 2001>
| (1) | (Enforcement Date) This Decree shall enter into force on January 1, 2002: Provided, That the amended provisions of Article 28 (1) shall enter into force on the date of its promulgation. |
| (2) | (General Applicability) This Decree shall begin to apply from the first inheritance or donation after this Decree enters into force. |
| (3) | (Applicability to Deemed Donation when Merger is Conducted) The amended provisions of Article 28 (1) shall begin to apply from the first registration of merger after this Decree enters into force. |
| (4) | (Transitional Measures concerning Disposal of Own Equity Share by Largest Shareholder) Where the largest shareholder, to whom the provisions of the latter part of the main sentence of Article 28 (7) apply, disposes of his/her equity share within five years from the date of registration of merger, the provisions of the latter part of the main sentence of Article 28 (7) shall apply to the amount deemed to have been received by him/her. |
ADDENDA <Presidential Decree No. 17791, Dec. 5, 2002>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Articles 2 and 3 Omitted.
ADDENDA <Presidential Decree No. 17828, Dec. 30, 2002>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 2003: Provided, That the amended provisions of Articles 13 (2) 2 and 37 (1) 3 shall enter into force on the date of its promulgation. Article 2 (General Applicability)
This Decree shall begin to apply from the first inheritance or donation after this Decree enters into force.
Article 3 (Applicability to Permission for Taking Office of Directors of Public Service Corporations)
The amended provisions of Article 13 (2) 2 shall begin to apply from the first business year that ends after this Decree enters into force. Article 4 (Applicability to Justifiable Grounds for Re-division of Inheritance)
The amended provisions of Article 24 (2) 3 shall begin to apply from the first application for payment in kind after this Decree enters into force. Article 5 (Applicability to Base Date for Calculation of Excessive Shares, etc. Holding in Domestic Corporations by Public Service Corporations, etc.)
The amended provisions of Article 37 (1) 3 shall begin to apply from the first determination of gift tax after this Decree enters into force. Article 6 (Applicability to Scope, etc. of Shares, etc. Entitled to Exemption from Additional Charges)
The amended provisions of Articles 53 (5) and 57 (1) shall begin to apply from the first determination of inheritance tax or gift tax after this Decree enters into force. Article 7 (Applicability to Expansion of Scope of Payment of Gift Tax in Annual Installments)
The amended provisions of Article 67 (1) shall begin to apply from the first application for payment in annual installments after this Decree enters into force. Article 8 (Applicability to Adjustment, etc. of Scope of Property for Payment in Kind)
The amended provisions of Articles 71 (1) 4 and 74 (1) 2 and subparagraph 3 of Article 75 shall begin to apply from the first application for payment in kind after this Decree enters into force. Article 9 (Transitional Measures concerning Base Date for Calculation of Excessive Shares, etc. Holding in Domestic Corporations by Public Service Corporations)
In applying the amended provisions of Article 37 (1) 3, where the business year of the relevant corporation is changed in the year in which a resolution of shareholders' meeting for capital reduction is passed, the last day of the business year before change shall be deemed the closing date of entry of alterations into shareholders' list.
ADDENDA <Presidential Decree No. 18108, Sep. 29, 2003>
Article 1 (Enforcement Date)
This Decree shall enter into force on October 1, 2003.
Articles 2 through 7 Omitted.
ADDENDA <Presidential Decree No. 18177, Dec. 30, 2003>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 2004: Provided, That the amended provisions of the proviso to Article 49 (1), subparagraph 2 of the same paragraph, Article 50 (3) and Article 56-2 shall enter into force on January 1, 2005. Article 2 (General Applicability)
This Decree shall begin to apply from the inheritance or donation after this Decree enters into force.
Article 3 (Applicability to Timing for Acquisition of Inheritance)
The amended provisions of Article 23 (1) 2 shall begin to apply from the acquisition or acquisition by transfer of the right to acquire a parcel of a building after this Decree enters into force. Article 4 (Applicability to Adjustment, etc. of Scope Included in Donation or Deemed Donation Among Sale and Purchase of Securities)
The amended provisions of Article 26 (1) 2 and Article 33 (2) shall begin to apply from the first determination or correction of inheritance tax or gift tax made after this Decree enters into force. Article 5 (Applicability to Adjustment, etc. of Scope of Taxation of Gift Tax Following Transfer at High Price or Low Price Between Individuals and Corporations)
The amended provisions of Article 26 (9) shall begin to apply from the first determination or correction of inheritance tax or gift tax made after this Decree enters into force. Article 6 (Applicability to Methods of Calculating Profits Through Transactions with Specified Corporations)
The amended provisions of Article 31 (6) (excluding matters concerning standards for amount of 100 million won among the same paragraph) shall begin to apply from the first determination or correction of inheritance tax or gift tax made after this Decree enters into force. Article 7 (Applicability to Ex Post Facto Management of Property Received by Public Service Corporations, etc. as Contribution)
The amended provisions of Article 38 (9) shall begin to apply from the first determination or correction of inheritance tax or gift tax made after this Decree enters into force. Article 8 (Applicability to Ex Post Factor Management, etc. of Amount of Sale of Contributed Property of Public Service Corporations)
The amended provisions of Articles 40 (1) 3 and 44 (1) shall begin to apply from the first business year which commences after this Decree enters into force. Article 9 (Applicability to Assessment of Unlisted Shares by Net Asset Value)
The amended provisions of Articles 54 (4) and 55 (3) shall begin to apply from the first determination or correction of inheritance tax or gift tax made after this Decree enters into force. Article 10 (Applicability to Calculation of Amount of Payment in Annual Installments for Family Business Inheritance)
The amended provisions of Article 68 (1) 1 (c) shall begin to apply from the first application for payment in annual installments after this Decree enters into force. Article 11 (Applicability to Change, etc. of Property for Payment in Kind)
The amended provisions of Article 72 (5) shall begin to apply from the first application for payment in annual installments after this Decree enters into force. Article 12 (Applicability to Additional Tax)
The amended provisions of Article 80 (8) shall begin to apply from the first determination or correction of inheritance tax or gift tax made after this Decree enters into force. Article 13 (Applicability to Notification of Commencement, etc. of Inheritance)
The amended provisions of the latter part of Article 82 (2) shall begin to apply from the first notification of commencement of inheritance or the causative factors thereof provided to the Commissioner of the National Tax Service after this Decree enters into force. Article 14 (Applicability to Contentious Cases, etc. concerning Deemed Donation of Rights to Use Land Gratuitously)
The provisions of Article 27 (5) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (referring to the one amended by Presidential Decree No. 17459 on December 31, 2001) shall apply to the disposition issued pursuant to Article 27 (5) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (referring to the one amended by Presidential Decree No. 15193 on December 31, 1996, but not yet amended by Presidential Decree No. 17459 on December 31, 2001) and the disposition already issued (limited to the one against which an objection, request for examination, application for adjudication or administrative litigation is filed). In such cases, the provisions of Article 79 (2) of the Inheritance Tax and Gift Tax Act (referring to the one before amendment by Act No. 6780 on December 18, 2002) shall apply to the correction of inheritance, donation, etc. of relevant land.
ADDENDA <Presidential Decree No. 18627, Dec. 31, 2004>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 2005.
Article 2 (General Applicability)
This Decree shall begin to apply from the first inheritance or donation after this Decree enters into force.
Article 3 (Applicability to Ex Post Facto Management of Property Received by Public Service Corporations, etc. as Contribution)
The amended provisions of Article 38 (14) 1 and 2 shall begin to apply from the first disbursement of expenses for advertisement and publicity made after this Decree enters into force. Article 4 (Applicability to Scope of Application for Payment in Kind)
The amended provisions of Article 73 (1) and (3) shall begin to apply from the first application for payment in kind filed after this Decree enters into force. Article 5 (Applicability to Submission of Payment Records, etc.)
The amended provisions of proviso to Article 84 (1) shall begin to apply from the first payment record submitted after this Decree enters into force.
ADDENDA <Presidential Decree No. 18669, Jan. 5, 2005>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Articles 2 through 5 Omitted.
ADDENDA <Presidential Decree No. 18903, Jun. 30, 2005>
Article 1 (Enforcement Date)
This Decree shall enter into force on July 1, 2005.
Article 2 Omitted.
ADDENDA <Presidential Decree No. 18989, Aug. 5, 2005>
| (1) | (Enforcement Date) This Decree shall enter into force on the date of its promulgation. |
ADDENDA <Presidential Decree No. 19333, Feb. 9, 2006>
| (1) | (Enforcement Date) This Decree shall enter into force on the date of its promulgation. |
| (2) | (Applicability to Deduction of Assessment Fees) The amended provisions of Article 20-2 (1) 2, (2) and (3) shall begin to apply from the first application filed pursuant to the provisions of Article 56-2 (1) after this Decree enters into force. |
| (3) | (Applicability to Scope of Acknowledgement of Market Value of Auction Price, etc.) The amended provisions of Article 49 (1) 3 shall begin to apply from the first acquisition conducted after this Decree enters into force. |
ADDENDUM <Presidential Decree No. 19507, Jun. 12, 2006>
This Decree shall enter into force on the date of its promulgation.
ADDENDA <Presidential Decree No. 19513, Jun. 12, 2006>
Article 1 (Enforcement Date)
This Decree shall enter into force on July 1, 2006.
Articles 2 through 4 Omitted.
ADDENDA <Presidential Decree No. 19899, Feb. 28, 2007>
| (1) | (Enforcement Date) This Decree shall enter into force on the date of its promulgation. |
| (2) | (General Applicability) This Decree shall begin to apply from the first inheritance or donation after this Decree enters into force. |
| (3) | (Applicability to Scope of Public Service Corporations, etc.) The amended provisions of the main sentence of subparagraph 9 of Article 12 shall begin to apply from the first determination of inheritance tax or gift tax made after this Decree enters into force. |
| (4) | (Applicability to Reports on Details of Contributed Property) The amended provisions of Article 41 (1) shall begin to apply from the first business year that ends after this Decree enters into force. |
ADDENDA <Presidential Decree No. 20323, Oct. 15, 2007>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Articles 2 and 3 Omitted.
ADDENDA <Presidential Decree No. 20621, Feb. 22, 2008>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation: Provided, That the amended provisions of Article 38 (13) shall enter into force on January 1, 2009. Article 2 (General Applicability)
This Decree shall begin to apply from the first inheritance or donation after this Decree enters into force.
Article 3 (Applicability to Contribution of Shares, etc. to and Acquisition of Shares, etc. by Public Service Corporations, etc.)
| (1) | The amended provisions of Article 13 (3), (5) and (7) 2, Article 37 (6) and (7), Article 40, and Article 42 shall begin to apply from the first contribution of shares, etc. to public service corporations, etc. or the first acquisition of shares, etc. by public service corporations, etc. made after this Decree enters into force. <Amended by Presidential Decree No. 21292, Feb. 4, 2009> |
| (2) | Where a public service corporation that receives contribution of shares, etc. or acquires shares, etc., in the year 2008 receives an audit prescribed in Article 50 (3) of the Act for the taxable period or business year beginning in the year 2008 or announces statement of accounts, etc. prescribed in Article 50-3 of the Act, it shall be deemed to be included in the public service corporation, etc. prescribed in the amended provisions of Article 13 (5) 1 and 3 from the date of receipt of contribution or the date of acquisition of the relevant shares, etc. <Newly Inserted by Presidential Decree No. 21292, Feb. 4, 2009> |
Article 4 (Applicability to Additional Tax on Shares in Domestic Corporation, etc. in Special Relationship Held by Public Service Corporations, etc.)
The amended provisions of Article 38 (13) shall begin to apply from the taxable period or business year beginning for the first time after January 1, 2009. Article 5 (Applicability to Deduction, etc. for Family Business Inheritance)
The amended provisions of Article 15 shall begin to apply from the inheritance tax return, filed after this Decree enters into force, for the inheritance that commences after the Inheritance Tax and Gift Tax Act as partly amended by Act No. 8828 (hereinafter referred to as "amended Act") enters into force. Article 6 (Applicability to Payment in Annual Installments)
The amended provisions of Article 68 shall begin to apply from the first application for payment in annual installments after this Decree enters into force for the inheritance or donation that commences after the amended Act enters into force. Article 7 (Applicability to Payment in Kind)
The amended provisions of Article 74 shall begin to apply from the first application for payment in kind made after this Decree enters into force for the inheritance or donation that commences after the amended Act enters into force. Article 8 (Applicability to Additional Tax)
The amended provisions of Article 80 (10) shall begin to apply from the first determination of additional tax after this Decree enters into force.
ADDENDA <Presidential Decree No. 20720, Feb. 29, 2008>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation: Provided, That the amended provision of the Presidential Decree that was promulgated before this Decree enters into force, for which the date on which it enters into force has not yet arrived, among the Presidential Decree amended pursuant to Article 8 of Addenda, shall enter into force on the date the respective Presidential Decree enters into force.
Articles 2 through 8 Omitted.
ADDENDA <Presidential Decree No. 20791, May 26, 2008>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Articles 2 through 4 Omitted.
ADDENDA <Presidential Decree No. 21214, Dec. 31, 2008>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Articles 2 through 5 Omitted.
ADDENDA <Presidential Decree No. 21292, Feb. 4, 2009>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (General Applicability)
This Decree shall begin to apply from the first inheritance or donation after this Decree enters into force.
Article 3 (Applicability to Assessment of Unlisted Shares)
The amended provisions of Articles 54 (3) and 55 (1) shall begin to apply from the first assessment of unlisted shares made after this Decree enters into force.
ADDENDA <Presidential Decree No. 21641, Jul. 27, 2009>
Article 1 (Enforcement Date)
This Decree shall enter into force on July 31, 2009. (Proviso Omitted.)
Articles 2 through 15 Omitted.
ADDENDA <Presidential Decree No. 21881, Dec. 14, 2009>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation. (Proviso Omitted.)
Articles 2 through 7 Omitted.
ADDENDA <Presidential Decree No. 22042, Feb. 18, 2010>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation: Provided, That the amended provisions of Article 56 (1) 2 shall enter into force on January 1, 2011. Article 2 (General Applicability)
This Decree shall begin to apply from the first inheritance or donation after this Decree enters into force.
Article 3 (Applicability to Methods, etc. of Making Contribution to Public Service Corporations)
The amended provisions of Article 13 (3) shall begin to apply from the business year in which this Decree enters into force. Article 4 (Applicability to Application for Payment in Annual Installments and Permission therefor)
The amended provisions of the proviso to Article 67 (1) shall begin to apply from the taxpayer for whom the deadline for payment on the tax notice arrives after this Decree enters into force. Article 5 (Applicability to Addition Rate for Additional Dues on Payment in Annual Installments)
The amended provisions of Article 69 shall begin to apply from the first application for payment in annual installments made after this Decree enters into force.
ADDENDA <Presidential Decree No. 22151, May 4, 2010>
Article 1 (Enforcement Date)
This Decree shall enter into force on May 5, 2010.
Articles 2 through 4 Omitted.
ADDENDA <Presidential Decree No. 22395, Sep. 20, 2010>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 2011.
Articles 2 through 9 Omitted.
ADDENDUM <Presidential Decree No. 22467, Nov. 2, 2010>
This Decree shall enter into force on the date of its promulgation.
ADDENDA <Presidential Decree No. 22516, Dec. 7, 2010>
Article 1 (Enforcement Date)
This Decree shall enter into force on December 9, 2010.
Articles 2 through 8 Omitted.
ADDENDA <Presidential Decree No. 22579, Dec. 30, 2010>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 2011.
Article 2 (General Applicability)
This Decree shall begin to apply from the inheritance or donation after this Decree enters into force.
Article 3 (Applicability to Tax Verification, etc. of Public Service Corporations, etc. by Outside Experts)
The amended provisions of Article 43 (7) shall begin to apply from the first taxable period or business year after this Decree enters into force. Article 4 (Applicability to Application, Permission, etc. for Payment in Annual Installments)
The amended provisions of Article 67 (1) and (2) shall begin to apply from the first application for payment in annual installments made after this Decree enters into force.
ADDENDA <Presidential Decree No. 23040, Jul. 25, 2011>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (Applicability to Scope of Public Service Corporations, etc. Subject to Tax Verification by Outside Experts)
The amended provisions of the proviso to Article 43 (2) 1 shall begin to apply from the public service corporation, etc. to which the proviso to Article 43 (2) 1 applies in the taxable period or business year in which this Decree enters into force. Article 3 (Applicability to Scope of Public Service Corporations, etc. under Duty to Make Public Announcement of Statements of Accounts, etc.)
The amended provisions of the proviso to Article 43-3 (1) shall begin to apply from the public service corporation, etc. to which the amended provisions of the proviso to Article 43-3 (1) apply in the taxable period or business year in which this Decree enters into force. Article 4 (Applicability to Assessment of Fine Art Works)
The amended provisions of Article 52 (2) 2 (g) shall begin to apply from the first fine art work inherited or donated after this Decree enters into force. Article 5 (Applicability to Change of Methods of Calculating Net Profits or Losses for Recent Three Years per Share When Capital Increase or Capital Reduction with Compensation Is Conducted)
The amended provisions of Article 56 (3) and (5) shall begin to apply from the unlisted shares inherited or donated for the first time after this Decree enters into force.
ADDENDA <Presidential Decree No. 23527, Jan. 25, 2012>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 26, 2012. (Proviso Omitted)
Articles 2 through 4 Omitted.
ADDENDA <Presidential Decree No. 23591, Feb. 2, 2012>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (General Applicability)
This Decree shall begin to apply from the first inheritance or donation after this Decree enters into force.
Article 3 (Applicability to Ex Post Facto Management of Property Received as Contribution by Public Service Corporations, etc.)
The amended provisions of Article 38 (2) 1 shall begin to apply from the first taxable period or business that commences in the year in which this Decree enters into force.
ADDENDA <Presidential Decree No. 24358, Feb. 15, 2013>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (General Applicability)
This Decree shall apply begin to apply from the inheritance or donation after this Decree enters into force.
Article 3 (Applicability to Requirements, etc. for Conscientious Public Service Corporations, etc. Relating to Methods, etc. of Making Contribution to Public Service Corporations)
The amended provisions of Article 13 (3) 3 and 4, (5) and (14) shall begin to apply from the first taxable period or business year that commences in the year in which this Decree enters into force, and where the domestic corporation corresponds to a conscientious public service corporation, etc. under previous provisions as at the time this Decree enters into force, this Decree shall apply to the domestic corporation regarding it as a conscientious public corporation, etc. until the end of the first taxable period or business year that commences in the year in which this Decree enters into force. Article 4 (Applicability to Cases in Which Head of Competent Tax Office Is Regarded as Relevant Minister or Relevant Administrative Agency)
| (1) | The amended provisions of Article 13 (15), Article 37 (5) and Article 38 (15) shall begin to apply from the cases acknowledged by the relevant administrative agency or relevant Minister or an application to the relevant administrative agency or relevant Minister for permission filed by a public service corporation, etc. after this Decree enters into force. |
| (2) | Where the deadline for receiving acknowledgement or permission from the relevant administrative agency or relevant Minister arrives in the taxable period or business year in which this Decree enters into force and where a request for permission, authorization, etc. is filed within the relevant deadline pursuant to the amended provisions of Articles 13 (15), 37 (5) and 38 (15), the deemed permission, etc. prescribed in this Decree shall apply until a reply arrives from the relevant administrative agency or relevant Minister. |
Article 5 (Applicability to Deemed Donation of Profits Through Transactions with Specially Related Corporations)
| (1) | The amended provisions of Article 34-2 (1), (8) 1, (9) 2 and (10) shall begin to apply from a report filed pursuant to the proviso to Article 68 (1) of the Act after this Decree enters into force. |
| (2) | The amended provisions of Article 34-2 (11) shall begin to apply from the transaction with a specially related corporation occurring in the first business year that commences in the year in which this Decree enters into force. |
Article 6 (Applicability to Tax Verification, etc. of Public Service Corporations, etc. by Outside Experts)
The amended provisions of Article 43 (3) shall begin to apply from the first outside audit conducted after this Decree enters into force. Article 7 (Applicability to Duty of Public Service Corporations, etc. to Make Public Announcement of Statement of Accounts, etc.)
The amended provisions of Article 43-3 (3) 4 shall begin to apply from the first taxable period or business year that commences after this Decree enters into force. Article 8 (Applicability to Appointment, etc. of Members when Unlisted Shares are Assessed by Assessment Deliberative Committee)
| (1) | The amended provisions of Article 56-2 (3) shall begin to apply from the first person appointed as a member of the assessment deliberative committee of the National Tax Service or a member of the assessment deliberative committee of a local tax service (hereafter referred to as "assessment deliberative committee" in this Article) after this Decree enters into force. |
| (2) | A member of the assessment deliberative committee who has been appointed before this Decree enters into force and is in his/her term of office may serve further term after current term expires; a member who is in his/her term of office as he/she has been reappointed for at least one term before this Decree enters into force shall not serve further term after the current term expires. |
Article 9 (Applicability to Application, Permission, etc. for Payment in Kind)
The amended provisions of Articles 70 (2) and 74 (1) shall begin to apply from the first application for payment in kind made after this Decree enters into force. Article 10 (Applicability to Grounds for Acknowledging Requests, etc. for Correction)
The amended provisions of Article 81 (2) shall begin to apply from the first request for determination or correction after this Decree enters into force.
ADDENDA <Presidential Decree No. 24441, Mar. 23, 2013>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Articles 2 through 5 Omitted.
ADDENDA <Presidential Decree No. 24576, Jun. 11, 2013>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (Applicability to Deemed Donation of Profits Through Transactions with Specially Related Corporations)
The amended provisions of Article 34-2 (1) shall begin to apply from the inheritance tax base return filed pursuant to the proviso to Article 68 (1) of the Act after this Decree enters into force.
ADDENDA <Presidential Decree No. 24638, Jun. 28, 2013>
Article 1 (Enforcement Date)
This Decree shall enter into force on July 1, 2013. (Proviso Omitted.)
Articles 2 through 17 Omitted.
ADDENDA <Presidential Decree No. 24697, Aug. 27, 2013>
Article 1 (Enforcement Date)
This Decree shall enter into force on August 29, 2013. (Proviso Omitted.)
Articles 2 through 13 Omitted.
ADDENDA <Presidential Decree No. 24710, Sep. 9, 2013>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (Applicability to Transactions of Acquisition and Merger Excluded from Taxation of Gift Tax as Justifiable Grounds Are Deemed to Exist)
The amended provisions of Article 31-9 (4) shall begin to apply from the first acquisition and merger performed after this Decree enters into force.
ADDENDA <Presidential Decree No. 25195, Feb. 21, 2014>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (General Applicability)
This Decree shall begin to apply from the first inheritance or donation after this Decree enters into force.
Article 3 (Applicability to Scope of Specially Related Persons)
The amended provisions of Article 12-2 (1) 3 shall begin to apply from the determination of inheritance tax or gift tax after this Decree enters into force. Article 4 (Applicability to Ex Post Facto Management of Inheritance to which Deductions for Family Business Inheritance Were Given)
The amended provisions of Article 15 (6) 3 (e), paragraph (9) 2 of the same Article and paragraph (12) of the same Article shall begin to apply from the taxable period or business year in which this Decree enters into force. Article 5 (Applicability to Ex Post Facto Management of Inheritance to which Deductions for Farming Business Inheritance Were Given)
The amended provisions of Article 16 (4) 6 shall begin to apply from the taxable period or business year in which this Decree enters into force. Article 6 (Applicability to Deductions for Assessment Fees)
The amended provisions of Article 20-3 (1) 3 and paragraph (3) of the same Article shall begin to apply from the assessment of property after this Decree enters into force. Article 7 (Applicability to Fair Interest Rates where Money Is Borrowed from Corporations)
The amended provisions of the proviso to Article 31-7 (2) shall begin to apply from the first loan made after this Decree enters into force. Article 8 (Applicability to Methods of Assessing Current Value of Property as at Date on which Grounds for Increase in Value of Property Occur)
The amended provisions of Article 31-9 (8) 1 shall begin to apply from the assessment of property after this Decree enters into force. Article 9 (Applicability to Deemed Donation of Profits Through Transactions with Specially Related Corporations)
The amended provisions of Article 34-2 (1), (3), (4), (5) and (7) through (13) shall begin to apply from the first portion, the deadline to file an inheritance tax return for which, arrives in the year in which this Decree enters into force. Article 10 (Applicability to Tax Verification, etc. of Public Service Corporations, etc. by Outside Experts)
The amended provisions of Article 43 (2) 1 shall begin to apply from the first taxable period or business year that commences in the year in which this Decree enters into force. Article 11 (Applicability to Duty of Public Service Corporations, etc. to Make Public Announcement of Statements of Accounts, etc.)
The amended provisions of Article 43-3 (1), (4) and (7) shall begin to apply from the first taxable period or business year that begins in the year in which this Decree enters into force. Article 12 (Applicability to Principles, etc. of Assessment)
The amended provisions of Article 49 (1), paragraph (2) 2 of the same Article and paragraph (6) of the same Article shall begin to apply from the first property assessed after this Decree enters into force. Article 13 (Applicability to Methods of Calculating Net Profits or Losses per Share during Recent Three Years)
The amended provisions of Article 56 (1) and (2) and paragraph (4) 2 (d) of the same Article shall begin to apply from unlisted shares assessed after this Decree enters into force. Article 14 (Transitional Measures concerning Scope of Specially Related Corporations and Amount of Sale Excluded from Taxation)
| (1) | Notwithstanding the amended provisions of Article 34-2 (3), the former Article 34-2 (3) 3 shall apply to an enterprise affiliated with an enterprise group other than the enterprise group (referring to the enterprise group subject to the limitations on mutual investment prescribed in Article 9 of the Monopoly Regulation and Fair Trade Act) with which the beneficiary enterprise is affiliated as at the time this Decree enters into force until the business year in which this Decree enters into force. |
| (2) | In calculating the rate of transactions of a beneficiary corporation with a specially related corporation, the former provisions shall remain in effect regarding sales from transactions conducted by a beneficiary corporation with a specially related corporation located in a foreign country for the purpose of export of products or goods and to the sales from transactions mandatorily conducted by a beneficiary corporation with a specially related corporation pursuant to other Acts until the business years that end on or before December 31, 2016, notwithstanding the amended provisions of Article 34-2 (8) and (9). <Amended by Presidential Decree No. 26960, Feb. 5, 2016> |
ADDENDA <Presidential Decree No. 25751, Nov. 19, 2014>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation: Provided, That the parts that amend the Presidential Decrees promulgated before this Decree enters into force, for which the date on which it enters into force has not yet arrived, among the Presidential Decrees amended pursuant to Article 5 of Addenda, shall enter into force on the date when respective relevant Presidential Decree enters into force.
Articles 2 through 5 Omitted.
ADDENDA <Presidential Decree No. 26069, Feb. 3, 2015>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (General Applicability)
This Decree shall begin to apply from the inheritance or gift that commences or is received after this Decree enters into force.
Article 3 (Applicability to Standards for Judging whether Requirements for Conscientious Public Service Corporation, etc. are Met)
The amended provisions of Article 13 (6) shall begin to apply from the first case in which a corporation intends to be confirmed as a conscientious public service corporation, etc. after this Decree enters into force. Article 4 (Applicability to Calculation of Donated Profits where a Third Person's Property Is Gratuitously Used)
| (1) | The amended provisions of Article 31-9 (1) 1 (a) shall begin to apply from the first case in which a third person's property is gratuitously used afresh after this Decree enters into force. |
| (2) | Where a third person's property is used gratuitously as at the time this Decree enters into force and where the period is at least one year, the amended provisions of Article 31-9 (1) 1 (a) shall begin to apply from the first case in which property is deemed to be used afresh pursuant to Article 42 (2) of the Act after this Decree enters into force. |
Article 5 (Applicability to Deemed Donation of Profits Through Transactions with Specially Related Corporations)
| (1) | The amended provisions of Article 34-2 (1), with the exception of its subparagraphs, shall begin to apply from the first transaction conducted with a specially related corporation in the business year in which this Decree enters into force. |
| (2) | The amended provisions of Article 34-2 (8) 7 shall begin to apply from the first gift tax return filed after this Decree enters into force. |
Article 6 (Applicability to Date of Receipt of Property Paid in Kind)
The amended provisions of Article 70 (5) shall begin to apply from the first case in which the date of receipt of property paid in kind is designated after this Decree enters into force. Article 7 (Transitional Measures concerning Calculation of Donated Profits where a Third Person's Property Is Gratuitously Used)
Where a third person's property is used gratuitously as at the time this Decree enters into force and where the period is less than one year, the former provisions shall apply, notwithstanding the amended provisions of Article 31-9 (1) 1.
ADDENDA <Presidential Decree No. 26302, Jun. 1, 2015>
Article 1 (Enforcement Date)
This Decree shall enter into force on June 4, 2015.
Articles 2 and 3 Omitted.
ADDENDA <Presidential Decree No. 26922, Jan. 22, 2016>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 25, 2016.
Articles 2 through 6 Omitted.
ADDENDA <Presidential Decree No. 26960, Feb. 5, 2016>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (General Applicability)
This Decree shall begin to apply from the first case of inheritance or commencing after this Decree enters into force.
Article 3 (Applicability to Requirements for Directors of Public Service Corporations)
The amended proviso to Article 13 (3) 2 shall apply to the first correction or decision made after this Decree enters into force. Article 4 (Applicability to Follow-up Management of Deduction for Family Business Inheritance)
The amended proviso to Article 15 (9) 2 shall begin to apply from the first business years that begin as of the date when this Decree enters into force. Article 5 (Applicability to Designation of Appraisal Institutions that Fail to Recognize Market Value)
The amended proviso to Article 49 (6) through (9) shall apply to the first appraisal by an initial appraisal institution after this Decree enters into force. Article 6 (Applicability to Officially Assessed Individual Land Price)
The amended proviso to the latter part of Article 50 (1) shall apply to the first assessment made after this Decree enters into force. Article 7 (Applicability to Stocks, etc. Excluded from Application of Extra Assessment of Largest Shareholders, etc.)
The amended proviso to Article 53 (6) 8 shall apply to the first assessment made after this Decree enters into force. Article 8 (General Transitional Measures)
Former provisions shall apply to the first inheritance which commences or donation made after this Decree enters into force.
Article 9 (Transitional Measures concerning Methods of Calculating Surtax Amount for Donation to Lineal Descendants)
Notwithstanding the amended provisions of Article 46-3, the amount of the surtax on the property donated by a lineal ascendant, other than a parent of the donee, before January 1, 2016, shall be calculated by the following formula, if the donee is a minor as at the time this Decree enters into force and the value of donated property exceeds two billion won: | {Amount of gift tax calculated x (Value of property donated by a lineal ascendant other than a parent of the donee/Total value of donated property x 30/100} - Amount of surtax already paid |
|
Article 10 (Relationship to other Acts and Subordinate Statutes)
A citation of any provision of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act by any other statute in force as at the time this Decree enters into force shall be deemed a citation of the relevant provision of this Decree in lieu of the former provision, if such relevant provision exists in this Decree.
ADDENDA <Presidential Decree No. 27205, May 31, 2016>
Article 1 (Enforcement Date)
This Decree shall enter into force on September 30, 2016. (Proviso Omitted.)
Articles 2 and 3 Omitted.
ADDENDA <Presidential Decree No. 27471, Aug. 31, 2016>
Article 1 (Enforcement Date)
This Decree shall enter into force on September 1, 2016.
Articles 2 and 3 Omitted.
ADDENDA <Presidential Decree No. 27472, Aug. 31, 2016>
Article 1 (Enforcement Date)
This Decree shall enter into force on September 1, 2016.
Articles 2 through 7 Omitted.
ADDENDA <Presidential Decree No. 27835, Feb. 7, 2017>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation: Provided, That the amended provision of the proviso to Article 54 (1) shall enter into force on April 1, 2017, the amended provisions of Articles 13 (7), 37 (3), 49 (7) and (8), 49-2 (1) 1-2 and (5) 2, and 54 (6) shall enter into force on July 1, 2017, and the amended provisions of Articles 38 (2), (9), (18) and (19), 43 (2), 43-3 (1) and (2), 43-4 (2), and 80 (13) and (14) shall enter into force on January 1, 2018. Article 2 (General Applicability)
This Decree shall begin to apply to any property, the inheritance of which takes place or which is donated after this Decree enters into force.
Article 3 (Applicability to Deemed Donation of Profits through Trading with Specially Related Corporations)
The amended provision of Article 34-2 (5) shall begin to apply to the business year which commences in the year to which the enforcement date of this Decree belongs. Article 4 (Applicability to Deemed Donation of Profits Generated from Business Opportunities Provided by Specially Related Corporations)
The amended provision of the proviso to Article 34-3 (3) shall begin to apply to cases where a gift tax return is filed after this Decree enters into force. Article 5 (Applicability to Duty of Public Announcement of Financial Statements, etc. of Public Service Corporations, etc.)
The amended provision of Article 43-3 (3) 4 shall begin to apply to shares to which an exemplary public service corporation, etc. exercises voting rights in the business year which commences in the year to which the enforcement date of this Decree belongs. Article 6 (Applicability to Formation, etc. of Assessment Deliberative Committee)
The amended provisions of Articles 49 (7) and (8) and 49-2 (1) 1-2 shall begin to apply to the appraisal of the market price of which is etc. entrusted to an appraisal institution, other than the original appraisal institution, by the head of a tax office, after July 1, 2017. Article 7 (Exceptions to Assessment of Unlisted Shares, etc.)
Where the amended provision of the proviso to Article 54 (1) applies to unlisted shares, etc., inheritance of which takes place or which are donated during the period from April 1, 2017 to March 31, 2018, 80 percent, shall be construed as 70 percent.
ADDENDA <Presidential Decree No. 28074, May 29, 2017>
Article 1 (Enforcement Date)
This Decree shall enter into force on May 30, 2017.
Articles 2 through 4 Omitted.
ADDENDA <Presidential Decree No. 28211, Jul. 26, 2017>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation: Provided, That Presidential Decrees amended by Article 8 of the Addenda, which were promulgated before this Decree enters into force but the enforcement dates of which have not arrived yet, shall enter into force on the enforcement date of the respective Decrees.
Articles 2 through 8 Omitted.
ADDENDA <Presidential Decree No. 28638, Feb. 13, 2018>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation: Provided, That the amended provisions of Articles 45-2 (5) through (8), 49, 49-2 (1) 1-2, and 73 (1) and (4) shall enter into force on April 1, 2018, and the amended provisions of Articles 12 and 15 (6) and (7) on January 1, 2019. Article 2 (General Applicability)
This Decree shall begin to apply to where succession takes place or a person receives donation after this Decree enters into force.
Article 3 (Applicability to Verification of Conscientious Public Service Corporation, etc.)
The amended provision of Article 13 (5) shall begin to apply to cases where a public service corporation, etc. intends to be verified to be a conscientious public service corporation, etc. after this Decree enters into force. Article 4 (Applicability to Profits Deemed Donated through Transactions with Specially-Related Corporations)
The amended provisions of Article 34-2 shall begin to apply to profits deemed donated in the business year which commences in the year to which the enforcement date of this Decree belongs. Article 5 (Applicability to Deduction of Profits Generated from Business Opportunities Provided by Specially-Related Corporations as Adjusted Profits Deemed Gained from Donations)
The amended provisions of Article 34-3 (6) shall begin to apply to cases where a dominant shareholder, etc. reports adjusted profits deemed gained from donations pursuant to Article 45-4 (3) and (5) after this Decree enters into force. Article 6 (Applicability to Subsequent Management of Public Service Corporations, etc.)
The amended provision of the proviso to Article 38 (19) shall begin to apply to subsequent management in the business year to which the enforcement date of this Decree belongs. Article 7 (Applicability to Imposition of Gift Tax on Internal Transactions of Public Service Corporations, etc.)
The amended provisions of Article 39 (2) 1-2 and (3) shall begin to apply to a gift tax determined or revised after this Decree enters into force. Article 8 (Applicability to Assessment of Unlisted Shares, etc.)
The amended provision of Article 54 (4) shall begin to apply to cases where unlisted shares, etc. are assessed after this Decree enters into force. Article 9 (Applicability to Assessment of Certificates of Preemptive Right to Acquire New Shares)
The amended provision of Article 58-2 (2) 2 (d) shall begin to apply to cases where certificates of the preemptive right to acquire new shares are assessed after this Decree enters into force. Article 10 (Applicability to Amount of Inheritance Tax Payable in Annual Installments)
The amended provision of Article 68 (2) shall begin to apply to cases where an heir files an application for payment of inheritance tax in annual installments after this Decree enters into force. Article 11 (Applicability to Application for Payment in Kind)
The amended provisions of Article 73 (1) and (4) shall begin to apply to cases where an heir files an application for payment of inheritance tax in kind after April 1, 2018. Article 12 (Transitional Measures concerning Scope of Public Service Corporations, etc.)
Notwithstanding the amended provisions of Article 12, a person who falls under a public service corporation, etc. on December 31, 2018 pursuant to the former subparagraphs 5 through 8 and 11 of Article 12 shall be deemed to fall under a public service corporation, etc. until December 31, 2020.
ADDENDA <Presidential Decree No. 29533, Feb. 12, 2019>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (General Applicability)
This Decree shall begin to apply to property the inheritance of which takes place or which is donated after this Decree enters into force.
Article 3 (Applicability to Deductions, etc. for Inherence of Family Business)
| (1) | The amended provisions of Article 15 (8) shall begin to apply to stocks that are reduced or debts that are swapped for equity after this Decree enters into force. |
| (2) | The amended provisions of Article 15 (16) shall begin to apply to divisions or mergers that take place after this Decree enters into force. |
Article 4 (Applicability to Deductions, etc. for Inherence of Farming Business)
The amended provisions of Article 16 (2) and (3) shall begin to apply to determinations or corrections that are made after this Decree enters into force. Article 5 (Applicability to Legal Fiction Deeming Donation of Earnings through Transactions with Specially Related Corporations)
The amended provisions of Article 34-2 (1) shall begin to apply to earnings deemed donated in the business year that begins after this Decree enters into force. Article 6 (Applicability to Legal Fiction Deeming Donation of Earnings through Transactions with Specific Corporations)
The amended provisions of Article 34-4 (8) shall begin to apply to determinations or corrections made after this Decree enters into force. Article 7 (Applicability to Ex Post Facto Management of Property that Public Interest Corporations, etc. Received as Contribution)
The amended provisions of Article 38 (4) shall begin to apply to stocks, etc. that are acquired with proceeds from sale after this Decree enters into force. Article 8 (Applicability to Duties of Public Interest Corporations, etc. to Make Public Announcement of Statements of Accounts, etc.)
The amended provisions of Article 43-3 (6) shall begin to apply to requests for provision of materials that are publicly announced after this Decree enters into force. Article 9 (Applicability to Non-Inclusion in Taxable Value of Property Donated to Disabled Persons)
The amended provisions of Article 45-2 (9) 3 shall begin to apply to determinations or corrections that are made after this Decree enters into force. Article 10 (Applicability to Assessments)
The amended provisions of Articles 56 (4), 61, and 62 shall begin to apply to the assessment of property the inheritance of which takes place or which is donated after this Decree enters into force.