CHAPTER I GENERAL PROVISIONS
[This Article Newly Inserted on Feb. 5, 2016]
[Previous Article 1 moved to Article 2 <Feb. 5, 2016>]
| Article 2 (Definitions of Domicile and Abode) |
[This Article Wholly Amended on Feb. 5, 2016]
[Moved from Article 1; previous Article 2 Deleted <Feb. 5, 2016>]
| Article 2-2 (Scope of Specially Related Person) |
| (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 on Feb. 21, 2014; Feb. 5, 2016; Feb. 12, 2019; Dec. 28, 2021; Feb. 28, 2023> |
| 2. | An employee (including an employee of a corporation controlled through investment; hereinafter the same applies) 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 applies) 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 31 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 executive officers 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 referred to in subparagraph 3; |
| 6. | A corporation in which at least 30/100 of the total number of outstanding 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 as defined in paragraph (1) 6; |
| 2. | A corporation as 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 on Feb. 2, 2012]
[Moved from previous Article 12-2; previous Article 2-2 moved to Article 3 <Feb. 5, 2016>]
| Article 3 (Obligation to Pay Inheritance Tax) |
| (1) | "Rate prescribed by Presidential Decree" in Article 3-2 (1) of the Act means a rate calculated 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 on Dec. 31, 2004; 22042, Feb. 18, 2010; Feb. 5, 2016> |
| 1. | An amount calculated 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 calculated 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 equity calculated as prescribed by Presidential Decree" in Article 3-2 (2) of the Act means an amount calculated as follows: <Newly Inserted on Feb. 21, 2014; 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
| (3) | "Property each has received or is to receive" in Article 3-2 (3) of the Act means an amount calculated by subtracting the total amount of debts and the inheritance tax to be imposed or payable for inheritance and the gift tax on donated property that is added under Article 13 (1) of the Act from the total value of assets (including donated property added under Article 13 (1) of the Act) acquired by inheritance. <Amended on Dec. 30, 2010; Feb. 21, 2014; Feb. 5, 2016; Feb. 11, 2020> |
[This Article Newly Inserted on Dec. 29, 2000]
[Title Amended on Feb. 5, 2016]
[Moved from Article 2-2; previous Article 3 moved to Article 3-4 <Feb. 5, 2016>]
| Article 3-2 (Property subject to Gift Tax) |
"Good cause prescribed by Presidential Decree exists, such as nullification or revocation” in the proviso of Article 4 (3) of the Act means any of the following cases: <Amended on 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 co-heirs’ statutory shares 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 statutory share in 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 on Feb. 5, 2016]
[Moved from Article 24 <Feb. 5, 2016>]
| Article 3-3 (Obligations to Pay Gift Tax) |
| (1) | Deleted. <Feb. 7, 2017> |
| (2) | "Cases prescribed by Presidential Decree" in the proviso, with the exception of the subparagraphs, of Article 4-2 (6) of the Act means cases meeting all of the following requirements: <Amended on Feb. 12, 2019> |
| 1. | The period until the date of contribution of property retroactively from the date on which a reason for imposing gift tax or additional tax under 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-interest corporation and has never had decision-making power on important matters concerning business operations of the public-interest corporation, such as appointment and dismissal of directors during the period specified in subparagraph 1. |
[This Article Wholly Amended on Feb. 5, 2016]
[Moved from Article 2-3 <Feb. 5, 2016>]
| Article 3-4 (Scope of Financial Property) |
[Moved from Article 3 <Feb. 5, 2016>]
CHAPTER II CALCULATION OF BASE AND AMOUNT OF INHERITANCE TAX
SECTION 1 Inherited Property
| Article 4 (Insurance Proceeds Deemed Inherited Property) |
| (1) | An amount of insurance proceeds deemed to be inheritance under Article 8 (1) of the Act mean an amount calculated according to the following formula: <Amended on Feb. 2, 2012; Feb. 3, 2015> |
Total amount of insurance proceeds received × (Amount of premiums borne by a decedent ÷ Total amount of premiums paid until the death of a decedent according to the relevant insurance contract)
| (2) | In applying paragraph (1), the amount of premiums borne by a decedent shall be calculated according to the amount of premiums stated in the insurance policy; where dividends, etc. received by the decedent 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 decedent. |
| Article 5 (Trust Property Deemed Inherited Property) |
Whether one holds a right to receive profits from a trust under the proviso of Article 9 (1) of the Act and paragraph (2) of that Article shall be determined based upon a case in which the principal or profit is paid to a third person under Article 25. <Amended on Feb. 17, 2021>
| Article 6 (Retirement Allowances Excluded from Inherited Property) |
| Article 7 (Scope of Performance of Official Duties Corresponding to War) |
"Performing his or her official duties prescribed by Presidential Decree" in Article 11 of the Act means performing military operations, such as suppression or guard, due to any incident or state of emergency corresponding thereto. [This Article Wholly Amended on Feb. 7, 2017]
| Article 8 (Non-Taxable Inherited Property) |
| (1) | "Public organizations prescribed by Presidential Decree" in subparagraph 1 of Article 12 of the Act means the following public organizations: <Newly Inserted on Dec. 31, 1998; Feb. 29, 2008; Feb. 18, 2010; Feb. 15, 2013> |
| 1. | Local government associations; |
| 2. | Deleted; <Dec. 31, 1999> |
| 3. | Public libraries, public museums or others similar ones that are prescribed by Ordinance of the Ministry of Strategy and Finance. |
| (2) | Deleted. <Feb. 28, 2023> |
| (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 decedents (referring to all heirs who jointly preside over memorial ceremonies for decedents where many heirs jointly preside over memorial ceremonies for decedents): 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 on Dec. 31, 1998; Dec. 31, 2001; Feb. 18, 2010; 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 in this Article referred to as "grave"); |
| 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) | "Organizations 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 on Dec. 31, 2001; Aug. 5, 2005; Feb. 18, 2010; Dec. 7, 2010; Feb. 12, 2019> |
| (5) | "Property prescribed by Presidential Decree" in subparagraph 6 of Article 12 of the Act means property bequeathed to help less fortunate people. <Amended on 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 a decedent is liable to pay as of the date of commencement of inheritance, 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 on Dec. 31, 1998; Feb. 29, 2008> |
| (2) | The sum of following amounts shall be the funeral expenses defined in Article 14 (1) 2 of the Act: <Amended on Dec. 31, 2001; May 26, 2008; 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 a decedent 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 of Substantiating Debts) |
| (1) | "Amount substantiated according to the methods prescribed by Presidential Decree" in Article 14 (4) of the Act means debts of a decedent 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 on Feb. 18, 2010; Feb. 3, 2015> |
| 1. | Documents verifying that debts owed to the State, local governments, financial 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 on Dec. 31, 1998; Dec. 29, 2000; Feb. 29, 2008> |
| 1. | Where the property of a decedent is disposed of, an amount actually earned within one or two years before the date of commencement of inheritance, from the proceeds from the disposal thereof; |
| 2. | Where the property, such as money, etc., (hereafter in this Article referred to as "money, etc.") of a decedent is withdrawn, money, etc. actually withdrawn within one or two years before the date of commencement of inheritance 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 calculated by subtracting the sum of money, etc. deposited within one or two years before the date of commencement of inheritance, 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 on Feb. 18, 2010; Feb. 2, 2012> |
| 1. | Where the other party to a transaction (hereafter in this Article referred to as "the other party to a transaction"), to whom proceeds calculated by a decedent after disposal of property, or money, etc. withdrawn from the property of a decedent 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 a decedent, and thus the fact of paying disbursements is not acknowledged as socially acceptable; |
| 4. | Where other property acquired by a decedent 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 a decedent. |
| (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 on Feb. 18, 2010> |
| (4) | For the purpose of paragraph (2), where the amount not verified under the subparagraphs of that paragraph is less than the smaller amount among the following, its use shall be presumed to be objectively unclear: <Amended on Nov. 10, 1997; Dec. 30, 2002> |
| 1. | An amount corresponding to 20/100 of proceeds calculated by a decedent after disposal of property, of the amount of money, etc. withdrawn from the property of a decedent or of the amount a decedent 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 on Dec. 31, 1998; Feb. 18, 2010> |
| 1. | Cash, deposits, and securities; |
| 2. | Real estate and rights in real estate; |
| 3. | Deleted; <Dec. 31, 1998> |
| 4. | Property other than those listed in subparagraphs 1 and 2; |
| 5. | Deleted. <Dec. 31, 1998> |
[Title Amended on Feb. 18, 2010]
SECTION 4 Non-Inclusion of Property Contributed for Public Interest in Taxable Value
| Article 12 (Scope of Public-Interest Corporation) |
"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-interest corporation, etc."): Provided, That where the person is publicly notified as a public-interest corporation, etc. under Article 39 (1) 1 (f) of the Enforcement Decree of the Corporate Tax Act within one year from the date of establishment for purposes of subparagraph 9, the person shall be deemed to be a public-interest corporation, etc. from the date of its establishment: <Amended on Dec. 31, 1998; Dec. 31, 1999; Dec. 31, 2001; Aug. 5, 2005; Feb. 28, 2007; Feb. 22, 2008; Feb. 29, 2008; Feb. 2, 2012; Feb. 7, 2017; May 29, 2017; Feb. 13, 2018; Feb. 12, 2019; Feb. 17, 2021> | 1. | Business that significantly contributes to the propagation of religion and reformation of the people; |
| 5. | Deleted; <Feb. 13, 2018> |
| 6. | Deleted; <Feb. 13, 2018> |
| 7. | Deleted; <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. <Feb. 13, 2018> |
| Article 13 (Methods for Making Donation to Public-Interest Corporation) |
| (1) | "Unavoidable reasons prescribed by Presidential Decree, such as the establishment of a public-interest corporation, etc. being delayed for any legal or administrative reason " in Article 16 (1) of the Act means any of the following cases: <Amended on Feb. 22, 2008; Feb. 2, 2012; Feb. 15, 2013; Feb. 7, 2017> |
| 1. | Where, in connection with the donation of property, transfer of ownership of donated property is delayed for any legal or administrative reasons; |
| 2. | Where a public-interest corporation, etc. is established by donating inherited property and where permission, etc. for the establishment of public-interest corporation, etc. is delayed for any legal or administrative reasons. |
| (2) | In order to exclude the value of property contributed to a public-interest corporation under Article 16 (1) of the Act from the taxable value of inherited property, the contribution must meet the following requirements that: <Amended on Dec. 31, 1998; Dec. 30, 2002; Feb. 15, 2013; Feb. 5, 2016; Feb. 17, 2021> |
| 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 the deadline specified in Article 16 (1) of the Act; |
| 2. | The number of heirs who become directors shall not exceed one-fifth of the number of current directors of the public-interest 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-interest corporation, such as appointment or dismissal of directors. |
| (3) | Whether a public-interest corporation, etc. does not exercise the voting rights of stocks, etc. contributed under Article 16 (2) 2 (a) (i) of the Act shall be determined based on whether the articles of incorporation of the public-interest corporation, etc. provide that it shall not exercise the voting rights of stocks contributed. <Newly Inserted on Feb. 13, 2018; Feb. 17, 2021> |
| (4) | Whether a public-interest corporation, etc. aims at charity, encouragement of learning or social welfare prescribed in Article 16 (2) 2 (a) (ii) of the Act shall be determined based on whether the relevant public-interest corporation, etc. falls under any of the following: <Newly Inserted on Feb. 13, 2018; Feb. 17, 2021> |
| 2. | A public-interest corporation, etc. which spent at least 80 percent of the average amount of money directly spent for public services in the three immediately preceding taxable periods of income tax or business years subject to corporate tax for charity, encouragement of learning or social welfare activities. |
| (5) | “Public-interest corporation, etc. which has a special relationship with a business group subject to limitations on cross shareholding under Article 31 of the Monopoly Regulation and Fair Trade Act” in Article 16 (2) 2 (b) of the Act means a public-interest corporation, etc. that is related to the same person as provided in the provisions, with the exception of the items, of subparagraph 1 of Article 3 of the Enforcement Decree of the Monopoly Regulation and Fair Trade Act with a corporation that belongs to a business group subject to limitations on cross shareholding designated under paragraph (1) of that Article (hereinafter referred to as “business group subject to limitations on cross shareholding”). <Newly Inserted on Feb. 17, 2021; Dec. 28, 2021> |
| (7) | "Domestic corporation which does not have a special relationship with a contributor to a public-interest corporation, etc.” in Article 16 (3) 1 of the Act means a domestic corporation not falling under any of the following: <Newly Inserted on Dec. 29, 2000; Dec. 30, 2002; Dec. 30, 2003; Aug. 5, 2005; Feb. 22, 2008; Feb. 4, 2009; Feb. 18, 2010; Dec. 30, 2010; Feb. 2, 2012; Feb. 15, 2013; Feb. 3, 2015; Feb. 7, 2017; Feb. 13, 2018; Feb. 17, 2021> |
| 1. | A domestic corporation, in which the donor (referring to the donor's heir if the donor is deceased; hereafter the same applies in this Article, Article 37 (2) and Article 38 (10)) or his/her specially related person (excluding the relevant public-interest 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 in this paragraph the same applies) of executive officers, and in which the sum of stocks and equity shares (hereinafter referred to as "stocks, etc."), held by the donor and his/her specially related person, is the greatest; |
| 2. | Where the sum of stocks, etc. in a domestic corporation, in which the contributor or his/her specially related person (excluding relevant public-interest 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-interest corporation, etc., (referring to a domestic corporation in which the relevant public-interest corporation, etc. holds in excess of 5/100 (10/100 in cases of a public-interest corporation, etc that fully satisfy the requirements provided in the subparagraphs of Article 48 (11) of the Act) of the total number of outstanding stocks, etc. of the domestic corporation; hereafter in this subparagraph the same applies) is the greatest, the corporation making an investment, such as the relevant public-interest corporation, etc. |
| (8) | "Value prescribed by Presidential Decree" in the provisions, with the exception of the subparagraphs, of Article 16 (4) of the Act means the value of property or profits classified as follows, assessed pursuant to the provisions of Chapter IV as of the date of commencement of inheritance: <Amended on Dec. 29, 2000; Feb. 22, 2008; Feb. 18, 2010; Dec. 30, 2010; Feb. 2, 2012; Feb. 7, 2017; Feb. 17, 2021> |
| 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 stocks, etc. contributed in excess of 10/100 of the total number of outstanding stocks, etc. |
| (9) | For the purposes of this Article, if the competent administrative agency or competent Minister is unknown, the head of the competent tax office shall be deemed the competent administrative agency or competent Minister. <Newly Inserted on Feb. 15, 2013; Feb. 17, 2021> |
[Title Amended on Feb. 5, 2016]
| Article 14 (Scope of Public Trust) |
| (1) | A public trust referred to in Article 17 (1) of the Act shall be one meeting all of the following requirements: <Amended on Feb. 22, 2008> |
| 1. | That the beneficiary of the public trust shall be a public-interest corporation, etc. prescribed in Article 12 or a beneficiary of the public-interest corporation, etc.; |
| 2. | That the public trust shall not be terminated in the middle-term or revoked by the expiration date; |
| 3. | Where the public trust is terminated in the middle-term or revoked, remaining property in the public trust shall escheat to the State, a local government or another public trust. |
| (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 filing deadline of the inheritance tax return: Provided, That where placement in a trust is delayed for a legal or administrative reason, 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 on Feb. 22, 2008; Feb. 2, 2012> |
SECTION 5 Inheritance Deduction
| Article 15 (Succession to Family Business) |
| (1) | "Small and medium enterprise prescribed by Presidential Decree" in the former part, with the exception of subparagraphs, of Article 18-2 (1) of the Act means an enterprise that fully meets the following requirements (hereafter in this Article referred to as "small and medium enterprise") as of the end of the taxable period of income tax or the business year of corporate tax immediately preceding the taxable period of income tax or the business year of corporate tax in which the date of commencement of inheritance falls: <Amended on Feb. 7, 2017; Feb. 13, 2018; Feb. 28, 2023> |
| 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) | "Middle-standing enterprise prescribed by Presidential Decree" in the former part, with the exception of subparagraphs, of Article 18-2 (1) of the Act means an enterprise that fully meets the following requirements (hereinafter referred to as "middle-standing enterprise") as of the end of the taxable period of income tax or the business year of corporate tax immediately preceding the taxable period of income tax or the business year of corporate tax in which the date of commencement of inheritance falls: <Amended on Feb. 7, 2017; Feb. 13, 2018; Feb. 11, 2020; Feb. 15, 2022; Feb. 28, 2023> |
| 1. | It shall mainly conduct business in the category of business prescribed in the attached Table; |
| 3. | The average amount of its sales (which shall be calculated, as prescribed by Ordinance of the Ministry of Strategy and Finance, and sales for the taxable period of income tax or the business year of corporate tax less than one year means its sales converted for one year) for the three taxable periods of income tax or business years of corporate tax immediately preceding the date of commencement of inheritance shall be less than 500 billion won. |
| (3) | Succession to a family business under the former part, with the exception of subparagraphs, of Article 18-2 (1) of the Act (hereinafter referred to as "succession to a family business") shall be applicable only where a decedent and an heir meet the following requirements. The same shall not apply where inheritance commences 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 succession to the family business after such succession was completed: <Amended on Feb. 4, 2009; Feb. 18, 2010; Feb. 15, 2013; Feb. 21, 2014; Feb. 5, 2016; Feb. 7, 2017; Feb. 13, 2018; Feb. 12, 2019; Feb. 15, 2022; Feb. 28, 2023> |
| 1. | Where the decedent meets all the following requirements: |
| (a) | The decedent is the largest stockholder, etc. of a small and medium enterprise or middle-standing enterprise, who shall own at least 40/100 [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 20/100] of the total number of outstanding stocks, etc. of the relevant enterprise totaling stocks, etc. of the decedent and persons who have a special relationship with him/her for at least ten consecutive years; |
| (b) | The decedent has been in service as a representative director (referring to a representative in cases of a sole proprietorship; hereafter in this Article, Article 16, and Article 69-3 referred to as "representative director") for any of the following periods during which the family business defined in the former part, with the exception of subparagraphs, of Article 18-2 (1) of the Act (hereinafter referred to as "family business") has been in operation [to add a period during which the decedent has operated a different type of business that belongs to the same sector under the standard classification prepared and publicly announced by the Commissioner of the Statistics Korea?under Article 22 of the Statistics Act (hereinafter referred to as “Korean Standard Industry Classification”), which is any of the types of business specified in the attached Table, by changing his or her main business]: |
| (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 decedent's position of representative director; |
| (iii) | A period of at least five out of ten years, retrospectively from the date of commencement of inheritance; |
| 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 of the date of commencement of inheritance; |
| (b) | The heir has directly engaged in the family business for at least two years out of the operation period specified in subparagraph 1 (b) 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 decedent 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; <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 filing a tax return on inheritance tax. |
| (4) | In applying paragraph (3), where a decedent has engaged in at least two independent enterprises as family businesses, the limitations of deductions for succession to a family business, the order of deduction, etc. shall be prescribed by Ordinance of the Ministry of Strategy and Finance. <Newly Inserted on Feb. 5, 2016> |
| (5) | "Value of inherited property on succession to the family business" in the former part, with the exception of the subparagraphs, of 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 in this Article referred to as "heir who succeeds to a family business" in this Article) inherit or will inherit, as determined in the following subparagraphs: <Amended on Feb. 2, 2012; Feb. 21, 2014; Feb. 5, 2016; Feb. 7, 2017; Feb. 13, 2018; Feb. 11, 2020; Feb. 28, 2023> |
| 1. | A family business to which the Income Tax Act is applicable: The value calculated 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 calculated 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 of the date of commencement of inheritance; hereafter in this Article and Article 68 referred to as "assets irrelevant to business") as of 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 of 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) | Stocks, 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 other than the inherited property on succession to the family business an heir inherits or is to inherit under Article 18-2 (2) of the Act shall be the amount calculated 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 on Feb. 13, 2018; Feb. 28, 2023> |
| 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 heir who succeeds to the family business inherits or is to inherit on succession to a family business according to the classification under the subparagraphs of paragraph (5). |
| (7) | "Amount to be paid by the heir as inheritance tax by the percentage prescribed by Presidential Decree " in 18-2 (2) of the Act means an amount of money calculated 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 heir who succeeds to the family business does not receive a deduction for succession to a family business under paragraph (1) of that Article. <Newly Inserted on Feb. 13, 2018; Feb. 28, 2023> |
| (8) | "Good cause prescribed by Presidential Decree" in the former part, with the exception of the subparagraphs, of Article 18-2 (5) of the Act means the following: <Amended on Feb. 29, 2008; Feb. 18, 2010; Feb. 2, 2012; Feb. 15, 2013; Feb. 21, 2014; Feb. 5, 2016; Feb. 7, 2017; Feb. 13, 2018; Feb. 12, 2019; Feb. 11, 2020; Feb. 28, 2023> |
| 1. | In any of the following cases for purposes of Article 18-2 (5) 1 of the Act: |
| (a) | Where assets for family business defined in paragraph (9) (hereafter in this Article referred to as "assets for family business") 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; |
| (f) | Where an asset is disposed of in relation to changing the main type of a family business under paragraph (11) 2 and an asset is acquired as replacement to engage in the changed type of business as a family business; |
| 2. | In any of the following cases for purposes of Article 18-2 (5) 2 of the Act: |
| (a) | Where the heir who succeeds to the family business is dead; |
| (b) | Where the inherited property on succession to a family business is 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; |
| 3. | In any of the following cases for purposes of Article 18-2 (5) 3 of the Act: |
| (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 family business" in Article 18-2 (5) 1 of the Act means the following: <Amended on Feb. 2, 2012; Feb. 21, 2014; Feb. 5, 2016; Feb. 13, 2018; Feb. 28, 2023> |
| 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. In such cases, where inheritance tax was imposed as Article 18-2 (5) 1 was applicable and inheritance tax is imposed as Article 18-2 (5) 1 is applicable again, the value of the asset previously disposed of is excluded from calculation: <Amended on Feb. 13, 2018; Feb. 12, 2019; Feb. 28, 2023> |
| 1. | The value of assets for family business as of 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 any of the following is applicable for purposes of Article 18-2 (5) 2 of the Act, the heir is deemed to cease to engage in the family business: <Amended on Feb. 21, 2014; Feb. 3, 2015; Feb. 5, 2016; Feb. 13, 2018; Feb. 11, 2020; Feb. 15, 2022; Feb. 28, 2023> |
| 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 type of the family business is changed: Provided, That the following cases are excluded: |
| (a) | Where a type of business is changed within the subsector under the Korean Standard Industrial Classification (limited to changing to any of the types of business specified in the attached Table); |
| (b) | Where the change of a type of business is approved after deliberation by the assessment deliberative committee under Article 49-2, other than cases provided in item (a); |
| 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 clause of Article 18-2 (5) 3 of the Act shall include any of the following cases: <Amended on Feb. 18, 2010; Feb. 2, 2012; Feb. 13, 2018; Feb. 28, 2023> |
| 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) | “Regular employees prescribed by Presidential Decree” in Article 18-2 (5) 4 (a) of the Act means employees who have signed a contract under the Labor Standards Act: Provided, That the following persons are excluded: <Newly Inserted on Feb. 11, 2020; Feb. 28, 2023> |
| 1. | Employees if the term of their employment contracts is less than one year (excluding employees if the total term of their employment contracts exceeds one year due to consecutive renewal of their employment contracts: |
| 3. | Persons in relation to whom the fact that they have withheld wage and salary tax based on the book for tax withholding for wage and salary income under Article 196 of the Income Tax Act is not verified and the fact that they have paid any of the following is not verified: |
| (15) | "Percentage prescribed by Presidential Decree" in the former part, with the exception of the subparagraphs, of Article 18-2 (5) of the Act means 100/100. <Amended on Feb. 28, 2023> |
| (16) | "Amount corresponding to interest calculated as prescribed by Presidential Decree" in the latter part, with the exception of the subparagraphs, of Article 18-2 (5) 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 on Feb. 7, 2017; Feb. 13, 2018; Feb. 11, 2020; Feb. 28, 2023> |
| 1. | The amount of inheritance tax determined under the former part, with the exception of the subparagraphs, of Article 18-2 (5) of the Act: |
| 2. | The period from the day after the filing deadline of an inheritance tax return on originally inherited property on succession to a family business to the day on which grounds prescribed in the subparagraphs of Article 18-2 (5) of the Act arise; |
| (17) | The average of numbers of regular employees referred to in Article 18-2 (5) 4 (a) the Act is calculated by dividing the sum of regular employees as of the last day of each month in the relevant periods, by the number of months in the relevant periods. <Amended on Feb. 28, 2023> |
| (18) | If a corporation that is recognized as a family business is divided or merges with another corporation for purposes of Article 18-2 (5) 4 of the Act, the number of regular employees and the amount of total salaries shall be calculated as follows: <Newly Inserted on Feb. 12, 2019; Feb. 11, 2020; Feb. 28, 2023> |
| 1. | If some of regular employees of the corporation that is recognized as a family business are succeeded to by, and work for, another corporation following the division, such regular employees shall be deemed the regular employees of the corporation that is recognized as a family business even after the division; |
| 2. | If regular employees of another corporation are succeeded to by, and work for, the corporation that is recognized as a family business following the merger, such regular employees shall be deemed the regular employees of the corporation that is recognized as a family business even before inheritance commences. |
| (19) | “Fine prescribed by Presidential Decree” in the provisions, with the exception of the subparagraphs, of Article 18-2 (8) of the Act means any of the following fines: <Amended on Feb. 28, 2023> |
| (20) | “Amount corresponding to interest calculated as prescribed by Presidential Decree” in the latter part of Article 18-2 (8) 2 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 on Feb. 28, 2023> |
| 1. | The amount of inheritance tax determined under the former part of Article 18-2 (8) 2 of the Act: |
| 2. | The period from the day after the filing deadline of an inheritance tax base return on originally inherited property on succession to a family business to the day on which grounds prescribed in the former part of Article 18-2 (8) 2 of the Act arise; |
| (21) | "Amount corresponding to the capital gains tax calculated as prescribed by Presidential Decree" in the main clause of Article 18-2 (10) of the Act means the amount of capital gains tax calculated under Article 97-2 (4) of the Income Tax Act on the inherited property on succession to a family business, which is transferred after granted a deduction for succession to a family business under paragraph (1) of that Article, less the amount of capital gains tax calculated under Article 97 of that Act. <Newly Inserted on Feb. 21, 2014; Feb. 7, 2017; Feb. 13, 2018; Feb. 12, 2019; Feb. 11, 2020; Feb. 28, 2023> |
| (22) | A person who intends to receive a deduction for succession to a family business under Article 18-2 (1) of the Act shall submit a statement of property inherited through succession to a family business and documents supporting the fact of succession to a family business 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 of tax payment. <Amended on Feb. 29, 2008; Feb. 15, 2013; Feb. 21, 2014; Feb. 7, 2017; Feb. 13, 2018; Feb. 12, 2019; Feb. 11, 2020; Feb. 28, 2023> |
| (23) | A person liable to pay inheritance tax who intends to pay the inheritance tax and an amount corresponding to interest under the main clause of Article 18-2 (9) of the Act shall submit a report on the reason for additional collection of a deduction for succession to a family business and calculation of voluntary payment prescribed by Ordinance of the Ministry of Finance and Strategy to the head of the tax office having jurisdiction over the place of tax payment when filing a return under the main clause of that paragraph. <Newly Inserted on Feb. 13, 2018; Feb. 12, 2019; Feb. 11, 2020; Feb. 28, 2023> |
| (24) | The head of a tax office having jurisdiction over the place of tax payment shall annually verify and manage whether heirs fall under the subparagraphs of Article 18-2 (5) of the Act and paragraph (8) 2 of that Article. <Newly Inserted on Feb. 28, 2023> |
[This Article Wholly Amended on Feb. 22, 2008]
| Article 16 (Succession to Farming) |
| (1) | “Farming prescribed by Presidential Decree” in Article 18-3 (1) of the Act means engaging in agriculture, forestry, or fishery under the Korean Standard Industrial Classification as main business. <Amended on Feb. 28, 2023> |
| (2) | Succession to farming under Article 18-3 (1) of the Act (hereinafter referred to as "succession to farming") applies only where the decedent meets all the following requirements: Provided, That this does not apply to cases falling under subparagraph 2 where inheritance commences upon the death of the largest stockholder or investor at the time of succession to farming (excluding a heir who has succeeded to farming) after such succession is completed: <Amended on Feb. 12, 2019; Feb. 11, 2020; Feb. 28, 2023> |
| 1. | Farming subject to the Income Tax Act: Where all the following requirements are met: |
| (a) | The decedent shall directly engage in farming continuously for eight years before the date of commencement of inheritance: Provided, That if the decedent is unable to directly engage in farming for a certain period (limited to a period not exceeding one year) to take medical treatment for a disease or due to sale through negotiation or expropriation under the Act on Acquisition of and Compensation for Land for Public Works Projects or other statutes (hereafter in this Article referred to as “expropriation or similar procedure”) during the period that begins retroactively on the first day of the eight-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 eight years before the date of commencement of inheritance, the decedent shall be deemed to have directly engaged in farming even during such period; |
| (b) | The decedent has resided in a Si (including a Special Self-Governing City and 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 applies in this Article), Gun, or Gu (referring to an autonomous Gu; hereinafter the same applies in this Article) in which farmland, grassland, or forest (hereafter in this Article referred to as "farmland") is located or a Si/Gun/Gu adjacent to that 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 subject to the Corporate Tax Act: Where all the following requirements are met: |
| (a) | The decedent shall operate the relevant enterprise continuously for eight years before the date of commencement of inheritance (if the decedent 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 eight-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 eight years before the date of commencement of inheritance, the decedent shall be deemed to have operated such enterprise even during such period); |
| (b) | The decedent 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) | Succession to farming applies where the heir is at least 18 years of age as of the date of commencement of inheritance and meets the following requirements or where the heir is a successor to agriculture, fishery, or forestry prescribed by Ordinance of the Ministry of Strategy: <Amended on Feb. 12, 2019; Feb. 11, 2020> |
| 1. | Farming subject to the Income Tax: 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 (limited to a period not exceeding one year) for any reason prescribed in Article 15 (8) 2 (c) or due to expropriation or similar procedure 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 decedent 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 subject to the Corporate Tax Act: 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 decedent 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 that 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 decedent or heir and the total amount of wages prescribed Article 20 (2) of that Act for a certain taxable period is at least 37 million won, the decedent or heir shall not be deemed to have engaged in the farming business during the relevant taxable period: <Amended on Feb. 13, 2018; Aug. 26, 2020> |
| 1. | Where the decedent 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 decedent 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 decedent or heir engages in fishery regularly using his/her own fishing vessel or other assets such as a fishery right or an aquaculture license with a permit issued under the Inland Water Fisheries Act or the Fisheries Act or performs at least 1/2 of fishing works directly; |
| 4. | Where the decedent or heir engages in creating a forest on a regular basis 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 that Act, using his/her own forest and other assets or performs at least 1/2 of works for creating the forest directly. |
| (5) | "Value of the inherited property on succession to farming” in Article 18-3 (1) 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: <Amended on Feb. 11, 2020; Aug. 26, 2020; Jan. 10, 2023; Feb. 28, 2023> |
| 1. | Farming subject to the Income Tax Act: The value of assets that the decedent has used for farming 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 that 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 that Act; the same applies 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; hereafter in this Article the same applies); |
| (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 calculated 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 subject to the Corporate Tax Act: 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) | "Good cause prescribed by Presidential Decree" in the former part, with the exception of the subparagraphs, of Article 18-3 (4) of the Act means any of the following cases: <Amended on Feb. 13, 2018; Feb. 28, 2023> |
| 1. | Where the heir who has succeeded to farming dies; |
| 2. | Where the heir who has succeeded to farming emigrates abroad under the Emigration Act; |
| 4. | Where the inherited property on succession to farming 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; |
| 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) | “Percentage prescribed by Presidential Decree” in the former part, with the exception of the subparagraphs, of Article 18-3 (4) of the Act means 100/100. <Newly Inserted on Feb. 28, 2023> |
| (8) | “Amount corresponding to interest calculated as prescribed by Presidential Decree” in the latter part, with the exception of the subparagraphs, of Article 18-3 (4) 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: <Amended on Feb. 28, 2023> |
| 1. | The amount of inheritance tax determined under the former part, with the exception of the subparagraphs, of Article 18-3 (4) of the Act: |
| 2. | The period from the day after the filing deadline of an inheritance tax return on originally inherited property on succession to farming to the day on which any cause prescribed in the subparagraphs of Article 18-3 (4) of the Act arises; |
| (9) | “Fine prescribed by Presidential Decree” in the provisions, with the exception of the subparagraphs, of Article 18-3 (6) of the Act means any of the fines prescribed in the subparagraphs of Article 15 (9). <Newly Inserted on Feb. 28, 2023> |
| (10) | “Amount corresponding to interest calculated as prescribed by Presidential Decree” in the latter part of Article 18-3 (6) 2 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 on Feb. 28, 2023> |
| 2. | The period from the day after the filing deadline of an inheritance tax return on originally inherited property on succession to farming to the day on which the cause prescribed in Article 18-3 (6) 2 of the Act arises; |
| (11) | A person who intends to receive a deduction for succession to farming under Article 18-3 (1) of the Act shall submit a statement of inherited property on succession to farming and documents substantiating the fact of succession to farming prescribed by Ordinance of the Ministry of Strategy and Finance, along with a tax return on the inheritance tax base, to the head of the tax office having jurisdiction over the place of tax payment. <Amended on Feb. 13, 2018; Feb. 28, 2023> |
| (12) | A person liable to pay inheritance tax who intends to pay the inheritance tax and an amount corresponding to interest under the main clause of Article 18-3 (7) of the Act shall submit a report on the reason for additional collection of a deduction for succession to farming and calculation of voluntary payment prescribed by Ordinance of the Ministry of Finance and Strategy to the head of the tax office having jurisdiction over the place of tax payment when filing a return under the main clause of that paragraph. <Newly Inserted on Feb. 28, 2023> |
| (13) | The head of a tax office having jurisdiction over the place of tax payment shall annually verify and manage whether heirs fall under the subparagraphs of Article 18-3 (4) of the Act and paragraph (6) 2 of that Article. <Newly Inserted on Feb. 28, 2023> |
[This Article Wholly Amended on 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 formula prescribed in Article 19 (1) 1 of the Act means the value calculated by subtracting the value of the following property from the total assets obtained from inheritance: <Newly Inserted on Dec. 30, 2002; Feb. 7, 2017> |
| 3. | Property contributed to public-interest corporations, etc., excluded from the taxable value of inherited property prescribed in Article 16 of the Act; |
| 4. | Property trusted for public interest, excluded from the taxable value of inheritance prescribed in Article 17 of the Act. |
| (2) | "Unavoidable reason prescribed by Presidential Decree" in the main clause of Article 19 (3) of the Act means any of the following cases: <Amended on Feb. 18, 2010; Feb. 21, 2014> |
| 1. | Where an heir, etc. brings an action claiming for recovery of succession to inheritance, or requests a determination as to 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 the reason for which inheritance is indivisible pursuant to the proviso of Article 19 (3) of the Act shall report along with a supporting document showing the reason falling under any of the subparagraphs of Article 19 (2) of the Act, 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. <Amended on Dec. 31, 1998; Dec. 30, 2002; Feb. 29, 2008; Feb. 18, 2010; Dec. 30, 2010> |
[Title Amended on Dec. 30, 2002]
| Article 18 (Other Personal Deduction) |
| (1) | Family members residing together under Article 20 (1) of the Act mean lineal ascendants (including a spouse's lineal ascendants), lineal descendants, brothers and sisters whose livelihood is actually supported by a decedent as of the date of commencement of inheritance. |
| (2) | Where a person who wishes to get a deduction for a fetus under Article 20 (1) 1 and 2 of the Act shall submit a pregnancy certificate form prescribed by Ordinance of the Ministry of Strategy and Finance to the head of the tax office having jurisdiction over the place of tax payment when filing the inheritance tax base return. <Newly Inserted on Feb. 28, 2023> |
| Article 19 (Inheritance Tax Deductions for Financial Property) |
| (1) | "Financial property prescribed by Presidential Decree" in the provisions, with the exception of the subparagraphs, of Article 22 (1) of the Act 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, equity shares, bills, etc., handled by financial companies, etc., and other property prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended on Dec. 31, 1997; Dec. 31, 1998; Aug. 5, 2005; Feb. 29, 2008; Feb. 18, 2010; Feb. 3, 2015> |
| (2) | "Largest shareholder or largest investor prescribed by Presidential Decree" in Article 22 (2) of the Act means the whole of that 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 on 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 along with an inheritance tax base return, to the head of a tax office having jurisdiction over the place of tax payment. <Amended on Dec. 31, 1998; Feb. 29, 2008> |
| (4) | "Financial debt prescribed by Presidential Decree" in the main clause, with the exception of the subparagraphs, of Article 22 (1) of the Act means a debt owed to a financial company, etc. verified pursuant to Article 10 (1) 1. <Newly Inserted on Dec. 31, 1998; Feb. 18, 2010; Feb. 3, 2015> |
| Article 20 (Scope of Disaster) |
| (1) | "Disaster prescribed by Presidential Decree" in the main clause of Article 23 (1) of the Act means a disaster due to fire, collapse, explosion, environmental pollution incident, natural calamity, etc. <Amended on 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 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 along with an inheritance tax base return to the head of a tax office having jurisdiction over the place of tax payment. <Amended on Dec. 31, 1998; Feb. 29, 2008> |
| Article 20-2 (Scope of Acknowledging House as One Where Heir and Decedent Have Resided Together) |
| (1) | "One house for one 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 on Dec. 30, 2010; Feb. 2, 2012; Feb. 15, 2013; Feb. 21, 2014; Feb. 7, 2017; Dec. 31, 2019; Feb. 11, 2020> |
| 1. | Where a decedent 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 date of commencement of inheritance: 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 decedent, is transferred to a third party within five years from the date households are combined; |
| 7. | Where a decedent temporarily owns two houses as he/she marries a person who owns a house before the date of commencement of inheritance: Provided, That this shall apply only where a house owned by the decedent's spouse is transferred to a third party within five years from the date of marriage; |
| 8. | Where a decedent or his or her heir owns a house jointly owned by several persons due to inheritance from a third person that commenced before the decedent’s death: Provided, That the same does not apply where the decedent or his or her heir holds the largest inheritance share among the co-owners of the house (if the co-owners with the largest inheritance share are 2 or more persons, the persons referred to in the following items in the following order among the 2 or more persons deemed to have owned the largest inheritance share): |
| 1. | A person residing in that house; |
| (2) | "Ground prescribed by Presidential Decree" in Article 23-2 (2) of the Act means any of the following cases: <Amended on 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) | For the purposes of paragraph (1) 1, a house where a decedent lives together with his/her heir on the date of commencement of inheritance shall be deemed a house where they live together. <Newly Inserted on Feb. 7, 2017> |
[This Article Newly Inserted on Feb. 4, 2009]
[Previous Article 20-2 moved to Article 20-3 <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 on Aug. 5, 2005; 19333, Feb. 9, 2006; Feb. 18, 2010; Feb. 21, 2014; Feb. 3, 2015; Feb. 5, 2016; Aug. 31, 2016; Feb. 11, 2020; Jan. 21,2022> |
| 3. | An appraisal fee for tangible property defined in Article 52 (2) 2. |
| (2) | Paragraph (1) 1 shall only apply to cases where inheritance tax is filed and paid, based on the price assessed under that subparagraph. <Amended on 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 that paragraph shall be limited to ten million won for each corporation to be assessed and for each credit rating agency that requests appraisal. <Amended on Feb. 9, 2006; Feb. 21, 2014> |
| (4) | A person who intends to obtain deduction for a fee prescribed in 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 of tax payment. |
[This Article Newly Inserted on Dec. 30, 2003]
[Title Amended on Feb, 18, 2010]
[Moved from previous Article 20-2; previous Article 20-3 moved to Article 20-4 <Feb. 4, 2009>]
| Article 20-4 (Gift Tax Credit) |
"Tax base calculated, as prescribed by Presidential Decree" in the latter part of Article 28 (2) of the Act means an amount corresponding to inheritance tax base for each heir defined in Article 3 (1) 1. <Amended on Feb. 18, 2010; Feb. 5, 2016> [This Article Newly Inserted on Dec. 29, 2000]
[Title Amended on Feb, 18, 2010]
[Moved from Article 20-3 <Feb. 4, 2009>]
| Article 21 (Foreign Tax Credit) |
| (1) | An amount calculated according to the following 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 on 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 | (2) | A person who intends to obtain a credit for tax 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 along with an inheritance tax base return to the head of a tax office having jurisdiction over the place of tax payment. <Amended on Dec. 31, 1998; 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 on Dec. 31, 1998>
CHAPTER III CALCULATION OF BASE AND AMOUNT OF GIFT 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 clause 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: <Amended on Jan. 5, 2021> |
| 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 corresponding 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 of Article 31 (1) 3 of the Act means an aggregate of the amounts defined in paragraph (1) 2 through 4. |
[This Article Wholly Amended on Feb. 5, 2016]
[Moved from Article 24-2; previous Article 23 moved to Article 24 <Feb. 5, 2016>]
| Article 24 (Time of Acquisition of Donated Property) |
| (1) | "Date prescribed by Presidential Decree, such as the date on which the property is transferred or actually used" in Article 32 of the Act means any of the following dates: <Amended on Dec. 31, 1998; 18177, Dec. 30, 2003; Aug. 5, 2005; Feb. 2, 2012; Feb. 15, 2013; Feb. 3, 2015; Feb. 5, 2016; Feb. 28, 2023> |
| 1. | The date of receipt of registration or entry in a register for property which requires registration or entry 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 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 on Aug. 5, 2005; Feb. 15, 2013; 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 on Feb. 15, 2013> |
[Moved from Article 23; previous Article 24 moved to Article 3-2 <Feb. 5, 2016>]
| Article 25 (Methods of Calculating Profits from Trust) |
| (1) | "Date prescribed by Presidential Decree, such as the date on which the principal and profits are actually paid to the beneficiary" in the provisions, with the exception of the subparagraphs, of Article 33 (1) of the Act means the date on which the principal or profits are actually paid to the beneficiary, except the following dates: <Amended on Dec. 31, 1999; Dec. 30, 2003; Feb. 5, 2016; Feb. 17, 2021> |
| 1. | Where the trustor of the trust property dies before the person designated as a beneficiary receives the profits: The date of death of the trustor; |
| 2. | Where the principal or profits have not been paid to a beneficiary by the date on which it was agreed under a trust agreement to pay the principal or profits to the beneficiary: The date on which it was agreed to pay principal or profits; |
| 3. | Where the principal or profits are paid in installments: The date on which the first installment of the principal or profits is paid: Provided, That it means the date on which the principal or profits are actually paid in any of the following cases: |
| (a) | Where the principal or profits are not fixed on the date the trust agreement was signed; |
| (b) | Where the trustor substantially manages and controls trust property by such means as holding a right to terminate the trust, a right to designate or change a beneficiary, and a right to be vested with a residuary after the end of the trust. |
| (2) | For purposes of Article 33 (1) of the Act, the profits from a trust when the principal and profits are paid in several installments mean the value assessed by applying mutatis mutandis Article 61 as of the date of donation specified in paragraph (1). <Newly Inserted on Dec. 30, 2003; Feb. 5, 2016; Feb. 11, 2020> |
[Title Amended on Dec. 30. 2003]
| Article 26 (Methods of Calculating Profit 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 on Nov. 10, 1997; Dec. 31, 1998; Dec. 29, 2000; Dec. 30, 2002; Dec. 30, 2003; Aug. 5, 2005; Feb. 22, 2008; Feb. 18, 2010; Feb. 3, 2015; 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 on 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 in this Article referred to as "market value"); |
| (3) | "Standard amount prescribed by Presidential Decree" in Article 35 (2) of the Act means the amount corresponding to 30/100 of the market value of the property transferred or acquired. <Amended on Feb. 5, 2016> |
| (4) | "Amount prescribed by Presidential Decree" in Article 35 (2) of the Act in the Act means 300 million won. <Amended on 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 in this paragraph referred to as "date of clearance of payment"): 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 on Feb. 5, 2016> |
[Title Amended on Feb. 5, 2016]
| Article 26-2 (Time of Donation of Profit from Exemption from Financial Obligation) |
The date on which a person is exempted from a financial obligation under 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 on Feb. 5, 2016]
| Article 27 (Methods of Calculating Profit 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 on Feb. 2, 2012; Feb. 5, 2016; Feb. 12, 2019> |
| 1. | Deleted; <Feb. 12, 2019> |
| 2. | Deleted. <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 on Feb. 12, 2019> |
| (3) | Profits from the gratuitous use of real estate under Article 37 (1) of the Act shall be calculated by converting the profits 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 on Feb. 5, 2016; Feb. 12, 2019; Jan. 5, 2021> |
Value of real estate (referring to the value assessed under Chapter IV of the Act x Rate prescribed by Ordinance of the Ministry of Strategy and Finance, based upon use charges for one year
| (4) | "Standard amount prescribed by Presidential Decree" in the proviso of Article 37 (1) of the Act means 100 million won. <Newly Inserted on Feb. 5, 2016; Feb. 12, 2019> |
| (5) | The profits 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 clause 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 on Feb. 5, 2016; Feb. 12, 2019> |
| (6) | "Standard amount prescribed by Presidential Decree" in the proviso of Article 37 (2) of the Act means ten million won. <Newly Inserted on Feb. 5, 2016; 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 on Feb. 5, 2016; Feb. 12, 2019> |
[This Article Wholly Amended on Dec. 30, 2003]
[Title Amended on Feb. 5, 2016]
| Article 28 (Methods of Calculating Profit from Merger) |
| (1) | "Merger between corporations in a special relationship prescribed by Presidential Decree" in the main clause 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 that Act and Article 176-5 of the Enforcement Decree of that Act: <Amended on Dec. 31, 1998; Dec. 29, 2000; Dec. 31, 2001; Dec. 30, 2002; Aug. 5, 2005; Feb. 22, 2008; Feb. 18, 2010; Feb. 2, 2012; Feb. 5, 2016; 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 applies 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 clause 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 in this Article and Article 29-2 referred to as "large shareholder"), if the shares held by the relevant shareholder and his/her specially related persons are aggregated. <Amended on Feb. 18, 2010; Feb. 2, 2012; 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 calculated 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 of Article 38 (1) of the Act means either of the following amounts: <Amended on Feb. 5, 2016> |
| 1. | In cases falling under paragraph (3) 1: The smaller amount of the value corresponding 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 that 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 on Dec. 29, 2000; Dec. 31, 2004; Aug. 5, 2005; Feb. 22, 2008; Feb. 18, 2010; Feb. 5, 2016; Feb. 7, 2017> |
| 2. | The value calculated 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 that 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 in this paragraph the same applies) 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 on Dec. 31, 1998; Dec. 31, 1999; Dec. 30, 2003; Dec. 31, 2004; Feb. 5, 2016; 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 on Feb. 5, 2016; Feb. 7, 2017> |
| Article 29 (Methods of Calculating Profit from Capital Increase) |
| (1) | "Date prescribed by Presidential Decree, such as the date on which the price of stocks is paid, etc." in the provisions, with the exception of the subparagraphs, of Article 39 (1) of the Act means either of the following days: <Newly Inserted on Dec. 30, 2002; Dec. 30, 2003; Feb. 3, 2015; Feb. 5, 2016; 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 on Dec. 30, 2002; Dec. 30, 2003; Dec. 31, 2004; Feb. 2, 2012; Feb. 5, 2016; Feb. 7, 2017> |
| 1. | Profits defined in Article 39 (1) 1 (a), (c), and (d) of the Act: Multiple of the amount calculated 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)
| (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 calculated 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 calculated 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)
| (b) | Acquisition price of a new stock; |
| (c) | 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) |
| 3. | Profits prescribed in Article 39 (1) 2 (a) of the Act: The multiple of the amount calculated 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 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 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)
| (c) | 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) |
| 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 calculated 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)
| 5. | Profits defined in Article 39 (1) 2 (c) and (d) of the Act:[(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 calculated 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)] |
| 6. | Profits prescribed in Article 39 (1) 3 of the Act: Amount calculated 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 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 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 on Feb. 7, 2017> |
| (5) | "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 on Feb. 5, 2016; Feb. 7, 2017> |
[This Article Wholly Amended on Dec. 29, 2000]
[Title Amended on Dec. 30, 2003]
| Article 29-2 (Methods of Calculating Profit from Capital Reduction) |
| 1. | Where stocks, etc. are retired at a price below market value (referring to the value assessed under Article 60 or 63; hereafter in this Article the same applies): |
(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)
| 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 applies 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
| (2) | "Standard amount prescribed by Presidential Decree" in the proviso, with the exception of the subparagraphs, of Article 39-2 (1) of the Act means the lesser of the following amounts: <Newly Inserted on Feb. 5, 2016> |
| 1. | The amount corresponding to 30/100 of the assessed value of stocks, etc. after capital reduction; |
| (3) | Deleted. <Feb. 5, 2016> |
[This Article Wholly Amended on Dec. 29, 2000]
[Title Amended on Dec. 30, 2003]
| Article 29-3 (Methods of Calculating Profits from Investment in Kind) |
| (1) | Profits under Article 39-3 (1) of the Act are calculated as follows: Provided, That if the value of each stock before and after investment in kind is less than zero, profits are deemed nil: <Amended on Feb. 2, 2012; Feb. 15, 2013; Jun. 11, 2013; Feb. 5, 2016; Feb. 15, 2022> |
| 2. | Profits under Article 39-3 (1) 2 of the Act: The amount calculated 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 cases in which a listed corporation prescribed by the Financial Investment Services and Capital Markets Act receives stocks allotted in the manner provided in Article 165-6 (1) 3 of that Act) 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) is deemed "investment in kind," respectively. |
| (2) | For the purpose of paragraph (1), profits defined in subparagraph 2 of that paragraph shall apply only where the amount calculated 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 on Feb. 15, 2013; Feb. 5, 2016> |
[This Article Newly Inserted on Dec. 30, 2003]
| Article 30 (Methods of Calculating Profit from Conversion of Convertible Bonds into Stocks) |
| 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 in this Article referred to as "convertible bonds, etc.") 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 calculated 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 in this paragraph referred to as "conversion price"); |
| (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 calculated 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, with the exception of the subparagraphs, of Article 40 (1) of the Act means any of the following amounts: <Newly Inserted on Feb. 5, 2016> |
| 1. | In cases falling under paragraph (1) 1 and 4: The lesser of the following amounts: |
| (a) | The amount corresponding 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 on 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 on Dec. 31, 2004; Feb. 18, 2010; 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 in this paragraph 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 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.)
| 2. | Value of the stocks to be received: Where convertible bonds, etc. that can be converted, etc. into stocks as of 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 of 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)
[This Article Wholly Amended on Dec. 29, 2000]
[Title Amended on Dec. 30, 2003]
| Article 31 Deleted. <Feb. 5, 2016> |
| Article 31-2 (Methods of Calculating Profits from Excess Dividends) |
| (1) | "Largest shareholder or largest investor prescribed by Presidential Decree in this corporation" in Article 41-2 (1) of the Act means the largest shareholder, etc. of that 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 in this Article referred to as "excess dividends”): |
| 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 allotted or distributed (hereafter in this paragraph referred to as "dividends"); |
| 2. | The ratio of the amount of dividends distributed to the largest shareholder, etc. less than the normal dividends (hereafter in this paragraph referred to as "deficient dividends"), 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) | An amount corresponding to income tax on the excess dividends referred to in Article 41-2 (1) of the Act means an amount in the following classification: <Amended on Feb. 17, 2021> |
| 1. | Where the filing deadline of a gift tax base return on the excess dividends under Article 68 (1) of the Act is later than June 1 of (or July 1 in cases falling under paragraph (5)) the year following the year in which such excess dividends accrue: The amount under paragraph (4) 2; |
| 2. | In other cases: the excess dividends multiplied by the percentage prescribed by Ordinance of the Ministry of Strategy and Finance in consideration of the amount of such excess dividends, the income tax rate, etc. |
| (4) | The adjusted value of donated property under Article 41-2 (2) 2 of the Act means the amount under subparagraph 1 less the amount under subparagraph 2: <Newly Inserted on 17, 2021> |
| 2. | An amount of income tax on the excess divides, which is calculated as prescribed by Ordinance of the Ministry of Strategy and Finance. |
| (5) | Deleted. <Feb. 15, 2022> |
[This Article Newly Inserted on Feb. 5, 2016]
| Article 31-3 (Methods of Calculating Profit from Listing of Stocks) |
| (1) | The profits defined in the main clause, with the exception of the subparagraphs, of Article 41-3 (1) of the Act 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 calculated by subtracting the amounts defined in subparagraphs 2 and 3 from the amount defined in subparagraph 1: <Amended on Feb. 5, 2016> |
| 1. | The assessed value (referring to the value assessed in accordance with Article 63 of the Act) of each stock as of the adjustment base date defined in Article 41-3 (3) of the Act (hereafter in this Article referred to as "adjustment base date"); |
| 2. | The taxable value of gift tax per stock as of the date on which a person receives stocks, etc. as a gift (or the acquisition value per stock as of 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 clause, with the exception of the subparagraphs, of Article 41-3 (1) of the Act means the securities market and KOSDAQ. <Newly Inserted on Feb. 7, 2017> |
| (3) | "Standard amount prescribed by Presidential Decree" in the proviso, with the exception of the subparagraphs, of Article 41-3 (1) means the lesser of the following: <Amended on Feb. 5, 2016; Feb. 7, 2017> |
| 1. | The amount corresponding 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 on Dec. 30, 2003; Feb. 18, 2010; Feb. 2, 2012; Feb. 5, 2016; 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 on Feb. 29, 2008; Feb. 5, 2016; 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 stocks, 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 of 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 on Feb. 5, 2016; Feb. 7, 2017; Feb. 12, 2019> |
| (7) | In applying paragraphs (1) through (6), the number of outstanding stocks shall be determined in accordance with the proviso of 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 on Jul. 25, 2011; Feb. 5, 2016; Feb. 7, 2017> |
[This Article Newly Inserted on Dec. 31, 1999]
[Title Amended on Feb. 5, 2016]
[Moved from Article 31-6 <Feb. 5, 2016>]
| Article 31-4 (Methods of Calculating Profit from Gratuitous Loans of Money) |
| (1) | "Fair interest rate" in the main clause, with the exception of the subparagraphs, of Article 41-4 (1) of the Act means the interest rate specified by the Minister of Strategy and Finance based on 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 on Feb. 21, 2014; Feb. 5, 2016> |
| (2) | "Standard amount prescribed by Presidential Decree" in the proviso, with the exception of the subparagraphs, of Article 41-4 (1) of the Act means 10 million won. <Newly Inserted on Feb. 5, 2016> |
| (3) | The earnings defined in Article 41-4 (1) of the Act shall be calculated as of the date on which a person takes a loan (referring to the date on which a person takes each loan, if the person takes a loan in installments). |
| (4) | Deleted. <Feb. 5, 2016> |
[This Article Wholly Amended on Feb. 15, 2013]
[Moved from Article 31-7, <Feb. 5, 2016>]
| Article 31-5 (Methods of Calculating Profit from Listing of Stocks Following Merger) |
| (1) | The profits defined in the main clause, with the exception of the subparagraphs, of Article 41-5 (1) of the Act shall be calculated in accordance with Article 31-3 (1). <Amended on Feb. 5, 2016> |
| (2) | "Standard amount prescribed by Presidential Decree" in the proviso, with the exception of the subparagraphs, of Article 41-5 (1) of the Act means the amount specified in Article 31-3 (3). <Amended on Feb. 5, 2016; 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 on Feb. 22, 2008; Feb. 18, 2010; Feb. 2, 2012; Feb. 3, 2015; Feb. 5, 2016; 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 on Dec. 30, 2002]
[Title Amended on Dec. 30, 2003]
[Moved from Article 31-8 <Feb. 5, 2016>]
| Article 32 (Methods of Calculating Profit from Use of Property or Provision of Service) |
| (1) | The profits under the main clause, with the exception of the subparagraphs, of Article 42 (1) of the Act shall be calculated as follows: <Amended on Feb. 18, 2010; Feb. 2, 2012; Feb. 3, 2015; 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 calculated 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 clause 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. | Deleted; <Feb. 5, 2016> |
| 5. | Deleted. <Feb. 5, 2016> |
| (2) | "Standard amount prescribed by Presidential Decree" in the proviso, with the exception of the subparagraphs, of Article 42 (1) of the Act means either of the following: <Amended on 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 corresponding to 30/100 of the market value. |
| (3) | For purposes of paragraph (1), the market value of service shall be determined with the price ordinarily 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 on Feb. 5, 2016; Jan. 5, 2021> |
| 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 percentage specified by Ordinance of the Ministry of Strategy and Finance in consideration of the annual rent for real estate; |
| (4) | Deleted. <Feb. 5, 2016> |
| (5) | Deleted. <Feb. 5, 2016> |
| (6) | Deleted. <Feb. 5, 2016> |
| (7) | Deleted. <Feb. 5, 2016> |
| (8) | Deleted. <Feb. 5, 2016> |
| (9) | Deleted. <Feb. 5, 2016> |
[This Article Newly Inserted on Dec. 30, 2003]
[Title Amended on Feb. 25, 2016]
[Moved from Article 31-9 <Feb. 5, 2016>]
| Article 32-2 (Methods of Calculating Profit from Corporate Reorganization) |
| 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 of Article 42-2 (1) of the Act means the lesser of the following amounts: |
| 1. | The amount corresponding to 30/100 of the value of the relevant property before the change; |
[This Article Newly Inserted on Feb. 5, 2016]
| Article 32-3 (Methods of Calculating Profit from Increase in Value of Property After Acquisition of Property) |
| (1) | "Reason prescribed by Presidential Decree" in the main clause, with the exception of the subparagraphs, of Article 42-3 (1) of the Act 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, with the exception of the subparagraphs, of Article 42-3 (1) of the Act means the lesser of the following: |
| 1. | The amount corresponding 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 specified in subparagraphs 2 through 4 from the amount specified in subparagraph 1: <Amended on Feb. 7, 2017; Jan. 5, 2021> |
| 1. | The value of the relevant property: The value as of 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 corresponding 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 on Feb. 5, 2016]
| Article 32-4 (Methods of Calculating Profits) |
Where any of the following profits 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 on Feb. 15, 2013; Feb. 5, 2016; Feb. 11, 2020; Feb. 28, 2023> | 10. | Profits from use of property, provision of services, etc. under Article 42 (1) of the Act (referring to profits classified into each category of profits from a transaction under the subparagraphs of that paragraph); |
| 11. | Profits from the transaction with a specific corporation under Article 45-5 (1) of the Act (referring to the profits classified into each category of profits from a transaction under the subparagraphs of that paragraph). |
[This Article Wholly Amended on Dec. 30, 2010]
[Moved from Article 31-10 <Feb. 5, 2016>]
SECTION 2 Presumption and Legal Fiction of Donation
| Article 33 (Presumption of Donation of Property Transferred to Spouse) |
| (1) | Deleted. <Feb. 5, 2016> |
| (3) | "Cases prescribed by Presidential Decree" in Article 44 (3) 5 of the Act means any of the following cases: <Amended on 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 on Dec. 30, 2003]
[Title Amended on Feb. 18, 2010]
| Article 34 (Presumption of Donation of Fund to Acquire 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 corresponding 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 on Feb. 18, 2010> |
| 1. | Amount of income reported or taxed (including cases of non-taxation or tax reduction or exemption; hereafter the same applies 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, which 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 funds for acquisition of property or funds for repayment of debts within ten years before the date of acquisition of the property or the date of repayment of the debts, and is determined by the Commissioner of the National Tax Service in consideration of age, occupation, financial conditions, social and economic status, etc. <Amended on Feb. 18, 2010; Feb. 21, 2014; Feb. 11, 2020> |
[This Article Newly Inserted on Dec. 30, 2003]
[Title Amended on Feb. 18, 2010]
| Article 34-2 (Legal Fiction of Property Registered in Name of Another Person as Donation) |
“Date of donation means the date prescribed by Presidential Decree, such as the date of ownership transfer stated in the gift tax base return or capital gains tax base return” in the latter part of Article 45-2 (4) of the Act means the date determined in the following order: | 1. | The date of ownership transfer stated in the gift tax base return or capital gains tax base return; |
| 2. | The date of transaction stated in a report on changes in the ownership of stocks, etc. referred to in the former part of Article 45-2 (4) of the Act. |
[This Article Newly Inserted on Feb. 11, 2020]
[Previous Article 34-2 moved to Article 34-3 <Feb. 11, 2020>]
| Article 34-3 (Legal Fiction of Profits through Transactions with Specially Related Corporation as Donation) |
| (1) | The controlling shareholder referred to in Articles 45-3 through 45-5 of the Act means any of the following persons (hereafter in this Article and Article 34-4 referred to as "controlling shareholder"), but if there are two or more controlling shareholders, the person specified by Ordinance of the Ministry of Strategy and Finance who holds the greater de facto control over the management of the relevant corporation [excluding 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 subparagraph 1 of that paragraph 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 cases, 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 is not deemed to be a foreigner)] by exercising the authority to appoint or dismiss executive officers of the beneficiary corporation, making decisions on business policies, etc. shall be deemed the controlling 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 in this paragraph referred to as "principal's relatives, etc.") among the largest shareholder, etc. of that corporation, exceeds the ratio of stocks held be employees, the controlling shareholder shall be designated among the principal and his/her relatives, etc.: <Amended on Feb. 15, 2013; Jun. 11, 2013; Feb. 21, 2014; Feb. 3, 2015; Feb. 5, 2016; Feb. 12, 2019; Feb. 11, 2020> |
| 1. | Where a person who has the highest direct shareholding ratio (referring to the rate calculated by dividing the stocks, etc. of the corporation in possession by the total number of outstanding stocks, etc. of the corporation (excluding treasury stocks and treasury equity shares of the corporation); hereinafter the same applies) of the corporation from among the largest shareholders etc., of the corporation is an individual, the individual; |
| 2. | Where a person who has the highest direct shareholding ratio in the corporation among the largest shareholders etc. of the corporation is a corporation, the individual who has the highest percentage calculated by aggregating the direct shareholding ratio and the indirect shareholding ratio in the corporation: Provided, That the following shall be excluded: |
| (a) | A shareholder etc. of the corporation, but is not the largest shareholder etc. of that corporation; |
| (b) | A shareholder etc. of a corporation whose direct shareholding ratio in the corporation is the highest among the largest shareholders, etc. of the corporation, but is not the largest shareholder etc. |
| (2) | The indirect shareholding ratio referred to in paragraph (1) 2 means the percentage calculated by multiplying all the direct shareholding ratio at each stage where at least one corporation (hereafter in this Article referred to as "indirectly-invested corporation") interposes between an individual and a corporation (hereafter in this Article referred to as "indirect investment relationship"). In such cases, where at least two indirect investment relationships interpose between an individual and a corporation, the individual's indirect shareholding ratio in the corporation shall be calculated by aggregating all the rates calculated from respective indirect investment relationships. <Amended on Feb. 11, 2020> |
| (3) | “Where the beneficiary corporation satisfies requirements prescribed by Presidential Decree, such as keeping accounting separately for each business division” in the latter part, with the exception of the subparagraphs, of Article 45-3 (1) of the Act means satisfying all of the following requirements: <Newly Inserted on Feb. 28, 2023> |
| 1. | To keep assets, liabilities, profits and losses separate under an independent account title for each business division, as prescribed by Ordinance of the Ministry of Strategy and Finance; |
| 2. | To classify business divisions into the industry level or more detailed level under the Korean Standard Industrial Classification. |
| (4) | The ratio of transactions made by a corporation that satisfies all of the requirements specified in the subparagraphs of paragraph (3) with a specially related corporation and the net operating profit less adjusted taxes can be calculated for each business division under the latter part, with the exception of subparagraphs, of Article 45-3 (1) of the Act. In such cases, if the corporation has two or more business divisions falling under Article 45-3 (1) 1 of the Act, the ratio of transactions with a specially related corporation and net operating profit less adjusted taxes shall be calculated deeming the two or more business divisions to be one business division. <Newly Inserted on Feb. 28, 2023> |
| (5) | "Corporation in a special relationship prescribed by Presidential Decree" in??(hereafter in this Article referred to as "specially related corporation”) means a person in a relationship defined in??(1) 3 through 8 with the controlling shareholder defined in paragraph (1).?<Amended on Feb. 21, 2014; Feb. 5, 2016; Feb. 13, 2018; Feb. 28, 2023> |
| (6) | "Corporation in a special relationship prescribed by Presidential Decree" in Article 45-3 (1) 1 (a) of the Act (hereafter in this Article referred to as "specially related corporation") means a small and medium enterprise as provided in the provisions, with the exception of the subparagraphs, of Article 6 (1) of the Act on Restriction on Special Cases concerning Taxation, which is an enterprise that does not belong to a business group subject to disclosure under Article 31 of the Monopoly Regulation and Fair Trade Act (hereafter in this Article referred to as “small and medium enterprise”), and “middle-standing enterprise prescribed by Presidential Decree” means an enterprise as provided in Article 9 (4) of the Act on Restriction on Special Cases concerning Taxation, which does not belong to a business group subject to disclosure under Article 31 of the Monopoly Regulation and Fair Trade Act (hereafter in this Article referred to as “middle-standing enterprise”). <Amended on Feb. 13, 2018; Feb. 11, 2020; Feb. 17, 2021; Dec. 28, 2021; Feb. 15, 2022; Feb. 28, 2023> |
| (7) | "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 and medium enterprise or 40/100 where it falls under a middle-standing enterprise). <Amended on Feb. 21, 2014; Feb. 7, 2017; Feb. 13, 2018; Feb. 28, 2023> |
| (8) | "Relatives of the controlling shareholder" in the former part, with the exception of the subparagraphs, of Article 45-3 (1) of the Act means the relatives of the controlling shareholder defined in paragraph (1) whose shareholding ratio calculated by aggregating the direct shareholding ratio and the indirect shareholding ratio (referring to the indirect shareholding ratio in cases where indirect investment in a beneficiary corporation is made through an indirectly-invested corporation that falls under any of the subparagraphs of paragraph (19); hereafter in this Article the same applies) in the beneficiary corporation (referring to the beneficiary corporation as provided in Article 45-3 (1) of the Act; hereinafter the same applies) at the end of the business year of the beneficiary corporation exceeds the minimum shareholding ratio. <Amended on Feb. 21, 2014; Feb. 13, 2018; Feb. 12, 2019; Feb. 11, 2020; Feb. 28, 2023> |
| (9) | "Shareholding ratio prescribed by Presidential Decree" in the former part, with the exception of the subparagraphs, of Article 45-3 (1) of the Act means 3/100 (or 10/100 where the beneficiary corporation is a small and medium enterprise or a middle-standing enterprise; hereafter in this Article referred to as "minimum shareholding ratio"). <Amended on Feb. 21, 2014; 2018; Feb. 28, 2023> |
| (10) | "Sales prescribed by Presidential Decree, such as sales arising from transactions between the beneficiary corporation that is a small and medium enterprise and the specially related corporation that is a small and medium enterprise" in Article 45-3 (4) of the Act means any of the following amounts (hereafter in this Article referred to as "sales excluded from taxation"). In such cases, such sales mean the larger amount if at least two of the following subparagraphs apply simultaneously: <Newly Inserted on Feb. 21, 2014; Feb. 3, 2015; Feb. 11, 2020; Dec. 28, 2021; Feb. 28, 2023> |
| 1. | Sales from transactions between the beneficiary corporation that is a small and medium enterprise and the specially related corporation that is a small and 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 calculated 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 ratio in the specially related corporation; |
| 4. | Sales of the beneficiary corporation, which is a holding company as defined in subparagraph 7 of Article 2 of the Monopoly Regulation and Fair Trade Act (hereafter in this Article referred to as "holding company"), from transactions with a subsidiary as defined in subparagraph 8 of Article 2 of that Act (hereafter in this Article referred to as "subsidiary") and a second-tier subsidiary as defined in subparagraph 1-4 of Article 2 of that Act (including a third-tier subsidiary as defined in Article 18 (5) of that Act; hereafter in this Article referred to as "second-tier subsidiary"); |
| 5. | Sales of the beneficiary corporation from transactions with a specially related corporation for the purpose of exporting (meaning export under Article 21 (2) of the Value-Added Tax Act) products and goods; |
| 5-2. | Sales of the beneficiary corporation from transactions with a specially related corporation for the purpose of supplying (meaning supply of services subject to zero tax rate under Article 22 of the Value-Added Tax Act) services overseas; |
| 5-3. | Sales of the beneficiary corporation from transactions with a specially related corporation for the purpose of supplying services subject to zero tax rate under Article 24 (1) of the Value-Added Tax Act), which are services referred to in Article 33 (2) 1 (c) or (f) of the Enforcement Decree of that Act (excluding where the non-resident or foreign corporation supplied with such services re-supplies the same services as the supplied services to a resident or domestic corporation); |
| 6. | Sales of the beneficiary corporation from mandatory transactions with a specially related corporation under other statutes; |
| 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; |
| (11) | 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 on Feb. 15, 2013; Feb. 21, 2014; Feb. 5, 2016; Feb. 28, 2023> |
| (12) | "Net operating profit less adjusted taxes 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 calculated by subtracting the amount defined in subparagraph 2 from the amount prescribed in subparagraph 1 by the proportion of taxable sales: <Amended on Feb. 15, 2013; Feb. 21, 2014; Feb. 13, 2018; Feb. 28, 2023> |
| 1. | Amount calculated 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 that Act in the business profit or loss (referring to the business profit or loss calculated by subtracting sales costs, distribution costs and administration costs, from the sales calculated according to the corporate accounting standards defined in Article 43 of the Corporate Tax Act; hereafter the same applies in this paragraph) of the beneficiary corporation; |
| 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 that 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. | Percentage of taxable sales: |
1? (Sales excluded from taxation ÷ Sales for the business year in which sales excluded from taxation are included)
| (13) | 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 ratio is less than 1/1000, relevant investment relationship shall be excluded) of the controlling shareholder under that paragraph, with the exception of its subparagraphs, and his/her relatives (hereafter in this Article referred to as "controlling shareholder, etc.") in the beneficiary corporation as of the last day of business year. In such cases, where, in calculating "shareholding ratio in excess of the minimum shareholding ratio" or "shareholding ratio in excess of 50 percent of the minimum shareholding ratio" in the formulas provided for in Article 45-3 (1) 2 (a) and (b) of the Act, indirect shareholding ratio in the beneficiary corporation exists, each minimum shareholding ratio or 50 percent of the minimum shareholding ratio shall be subtracted first from the relevant indirect shareholding ratio, and where at least two indirect investment relationships exist, subtraction shall be made from the smaller one of the respective indirect shareholding ratio: <Amended on Feb. 15, 2013; Feb. 21, 2014; Feb. 7, 2017; Feb. 13, 2018; Feb. 28, 2023> |
| 1. | Deleted; <Feb. 21, 2014> |
| 2. | Deleted. <Feb. 21, 2014> |
| (14) | Where, in calculating profits deemed donated under paragraph (13), any of the subparagraphs of paragraph (10) does not apply, the profits shall be calculated by including any of the following amounts in the sales excluded from taxation according to the investment relationships of a controlling shareholder etc. In such cases, where following subparagraphs apply simultaneously, the larger amount shall apply: <Newly Inserted on Feb. 21, 2014; Feb. 12, 2019; Feb. 11, 2020; Feb. 28, 2023> |
| 1. | Turnover from transactions of the beneficiary corporation with a specially related corporation that is an indirectly-invested corporation prescribed in paragraph (18); |
| 2. | An amount calculated 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 ratio in the specially related corporation: Provided, That this shall be limited to cases where the controlling shareholder etc. is in an indirect investment relationship with the beneficiary corporation and the specially related corporation through the holding company; |
| 3. | An amount calculated by multiplying sales of a beneficiary corporation from transactions with a specially related corporation by the shareholding ratio of controlling shareholder etc. in the specially related corporation; |
| 4. | Where a beneficiary corporation, being a daughter company (if a specific corporation is the largest shareholder, etc. of a corporation, the corporation is referred to as a daughter company of that specific corporation; hereafter in this subparagraph the same applies) of an indirectly-invested corporation under paragraph (18) make a transaction with a specially related corporation, being another daughter company of the indirectly-invested corporation and fully satisfies the following items, it means the sales from the transaction multiplied by the shareholding ratio of the indirectly-invested corporation in the specially related corporation; |
| (a) | The controlling shareholder, etc. and specially related persons (excluding the indirectly-invested corporation) to the controlling shareholder shall not hold the stocks, etc. of the beneficiary corporation and the specially related corporation; |
| (b) | The specially related corporation shall not hold directly or indirectly the stocks, etc. of the beneficiary corporation, and the beneficiary corporation shall not hold directly or indirectly the stocks, etc. of the specially related corporation; |
| (c) | The beneficiary corporation and the specially related corporation shall not hold directly or indirectly the stocks, etc. of a corporation that interposes among the controlling shareholder, etc., beneficiary corporation, and the specially related corporation by holding stocks. |
| (15) | Where a controlling shareholder etc. have a dividend income distributed by a beneficiary corporation or an indirectly-invested corporation during the period from the end the deadline by which the beneficiary corporation shall file the gift tax base return for the immediately preceding business year under the proviso of Article 68 (1) of the Act to the deadline for filing the gift tax base return for the pertinent business year under the proviso of that paragraph in the application of paragraph (13), the following amounts shall be subtracted from the profits deemed donated from the relevant investment relationship:?Provided, That where the amount after subtraction is a negative number, it is deemed zero: <Amended on Feb. 21, 2014; Feb. 15, 2022; Feb. 28, 2023> |
| 1. | Dividend income distributed by the beneficiary corporation: An amount calculated according to the following formula. In such cases, the distributable profits defined in Article 86-3 (1) of the Enforcement Decree of the Corporate Tax Act (hereafter in this paragraph referred to as "distributable profits") shall be the profits available for distribution: |
Dividend income × [Profits deemed donated from direct investment relationship calculated pursuant to paragraph (11) ÷ (Beneficiary corporation's distributable profits at business year × Rate of direct ownership of controlling shareholder etc. in beneficiary corporation]
| 2. | Dividend income obtained from the indirect investment corporation: An amount calculated according to the following formula: |
Dividend income × {Profits deemed donated from indirect investment relationship calculated pursuant to paragraph (11) ÷ [Indirect investment corporation's distributable profits as of the last day of business year + (Beneficiary corporation's distributable profits at business year × Shareholding ratio of indirect investment corporation in beneficiary corporation)] × Rate of direct ownership of controlling shareholder etc. in corporation in which investment is made indirectly}
| (16) | "Sales made in transactions prescribed by Presidential Decree, which are cross transactions between business groups subject to disclosure under Article 31 of the Monopoly Regulation and Fair Trade Act" in Article 45-3 (1) 1 (a) of the Act means the sales of a beneficiary corporation generated by indirect methods through a third party or methods of conducting at least two transactions in accordance with a contract, agreement, resolution, etc. between business groups subject to disclosure under Article 31 of the Monopoly Regulation and Fair Trade Act for any of the following purposes: <Newly Inserted on Feb. 13, 2018; Dec. 28, 2021; Feb. 28, 2023> |
| (17) | "Amount prescribed by Presidential Decree" in Article 45-3 (1) 1 (b) (ii) of the Act means 100 billion won: Provided, That if a beneficiary corporation falls under the latter part, with the exception of the subparagraphs, of Article 45-3 (1) of the Act, it means an amount calculated according to the following formula: <Amended on Feb. 28, 2023> |
100 billion won x (sales for each business division in the relevant business year / total sales in the relevant business year
| (18) | "Corporation prescribed by Presidential Decree" in Article 45-3 (2) of the Act means any of the following indirectly-invest corporations: <Amended on Feb. 15, 2013; Feb. 21, 2014; Feb. 13, 2018; Feb. 28, 2023> |
| 1. | A corporation, at least 30/100 of the total number of outstanding stocks, etc. of which are invested by the controlling shareholder etc.; |
| 2. | A corporation, at least 50/100 of the total number of outstanding stocks, etc. of which are invested by the controlling 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 by holding the stocks, etc., such corporations. |
| (19) | Even where there are two or more specially related corporations, profits shall be deemed to have been accrued from one corporation. <Amended on Feb. 21, 2014; 28638, Feb. 13, 2018; Feb. 28, 2023> |
[This Article Newly Inserted on Feb. 2, 2012]
[Moved from Article 34-2; previous Article 34-3 moved to Article 34-4 <Feb. 11, 2020>]
| Article 34-4 (Legal Fiction of Profit from Business Opportunity Provided by Specially Related Corporation as Donation) |
| (1) | "Corporation having a special relationship prescribed by Presidential Decree" 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 controlling shareholder. |
| (2) | "Where a corporation … is provided with business opportunities in the manner 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, "profits 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 that 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 applies 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 on 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 on Feb. 7, 2017> |
| 1. | The tax amount calculated by subtracting the amount of credits and reductions of corporate tax from the calculated tax amount (excluding the amount of corporate tax on capital gains on land, etc. prescribed in Article 55-2 of the Corporate Tax Act) prescribed in Article 55 of that Act of a beneficiary corporation (hereafter in this Article referred to as "beneficiary corporation") prescribed in Article 45-4 (1) of the Act; |
| 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 controlling shareholder, etc. as prescribed in Article 45-4 (1) of the Act (hereafter in this Article and Article 34-5 referred to as "controlling shareholder, etc.") has income distributed by the beneficiary corporation from the last day of the business year of the beneficiary corporation to the filing deadline of the gift tax base return specified in Article 68 (1) of the Act, the amount calculated in accordance with the following formula shall be deducted from the profits deemed donated (if the amount after deduction is a negative number, it is deemed nil): <Amended on Feb. 11, 2020> |
| (6) | Where a controlling shareholder, etc. has income distributed from a beneficiary corporation from the last day 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 that 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 that Article (where the amount of money after the deduction is a negative number, the amount shall be deemed zero): <Newly Inserted on Feb.13, 2018> |
(Total dividend income he/she has received from the beneficiary corporation from the last day of the business year in which the beneficiary corporation commenced business pursuant to Article 45-4 (1) of the Act to the filing deadline of the tax base return prescribed in paragraph (5) of that 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 that Article) × (Shareholding ratio of the controlling shareholder, etc. in the beneficiary corporation)] | (7) | "Small and medium enterprise prescribed by Presidential Decree" in Article 45-4 (1) of the Act means any small and medium enterprise prescribed in the provisions, with the exception of the subparagraphs, of Article 6 (1) of the Regulation of Special Taxation Act. <Newly Inserted on Feb. 7, 2017; Feb. 13, 2018; Feb. 17, 2021> |
| (8) | "Corporation prescribed by Presidential Decree" in Article 45-4 (1) of the Act means a corporation which holds at least 50/100 of the stocks of a beneficiary corporation. <Newly Inserted on Feb. 7, 2017; Feb. 13, 2018> |
[This Article Newly Inserted on Feb. 5, 2016]
[Moved from Article 34-3; previous Article 34-4 moved to Article 34-5 <Feb. 11, 2020>]
| Article 34-5 (Legal Fiction of Profit through Transaction with Specific Corporation as Donation) |
| (1) | Deleted. <Feb. 11, 2020> |
| (2) | Deleted. <Feb. 11, 2020> |
| (3) | Deleted. <Feb. 11, 2020> |
| (4) | "Profits 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 corresponding 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 corresponding 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): |
| (a) | The amount calculated by subtracting the amount deducted or exempted from the corporate tax amount from the calculated tax amount of the specific corporation defined in Article 55 (1) of the Corporate Tax Act (excluding the corporate tax amount on capital gains on land, etc. prescribed in Article 55-2 of that Act); |
| (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) | Cases where shareholders, etc. of a specific corporation is deemed to have received a donation for purposes of applying Article 45-5 (1) of the Act is limited to cases where profits deemed to have been donated under that paragraph is at least 100 million won. <Amended on Feb. 11, 2020> |
| 1. | Deleted; <Feb. 11, 2020> |
| 2. | Deleted. <Feb. 11, 2020> |
| (6) | "Other transactions prescribed by Presidential Decree" in Article 45-5 (1) 4 of the Act means the following transactions: <Amended on Feb. 11, 2020> |
| 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; |
| 2. | Transactions for investment in kind in the relevant corporation at below market value. |
| (7) | "Substantially low price" and "substantially high price" in Article 45-5 (1) 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, profits shall be calculated by applying Article 41-4 of the Act mutatis mutandis. <Amended on Feb. 11, 2020> |
| (9) | For purposes of Article 45-5 (2) of the Act, a corresponding amount of gift tax means gift tax when the amount referred to in paragraph (4) 1 multiplied by the shareholding ratio of the relevant controlling shareholder, etc. is deemed to have been directly donated to the relevant controlling shareholder, etc. on the date of donation referred to in paragraph (1) of that Article, and a corresponding amount of corporate tax means the amount referred to in paragraph (4) 2 multiplied by the shareholding ratio of the relevant controlling shareholder, etc. <Newly Inserted on Feb. 11, 2020; Feb. 15, 2022> |
[This Article Newly Inserted on Feb. 5, 2016]
[Moved from Article 34-4 <Feb. 11, 2020>]
SECTION 3 Taxable Value of Donated Property
| Article 35 (Scope of Donated Property Not Subject to Taxation) |
| (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 on Dec. 31, 1998; Dec. 31, 2001; Feb. 18, 2010; 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 on Dec. 31, 2001; Aug. 5, 2005; Feb. 18, 2010; Dec. 7, 2010; 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 on Dec. 30, 2003; Feb. 18, 2010; Feb. 12, 2019> |
| 1. | Deleted; <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 the following organizations: <Newly Inserted on Dec. 31, 1997; Dec. 5, 2002; Aug. 5, 2005; Feb. 28, 2007; Feb. 18, 2010; Jul. 25, 2011; May 31, 2016; Feb. 17, 2021> |
| (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 on Dec. 29, 2000; Aug. 5, 2005; Oct. 15, 2007; Feb. 18, 2010; 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 on 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 of Article 47 (3) of the Act means cases verified by any of the subparagraphs of Article 10 (1). <Amended on Feb. 18, 2010> |
[This Article Wholly Amended on 17828, Dec. 30, 2002]
SECTION 4 Non-Inclusion in Taxable Value of Property Contributed for Public Interest
| Article 37 (Methods for Calculating Stocks of Domestic Corporations Held in Excess) |
| (1) | Stocks, etc. held in excess under the proviso, with the exception of the subparagraphs, of Article 48 (1) of the Act and the main clause of paragraph (2) 2 of that Article shall be calculated as of the following relevant date: <Amended on Dec. 30, 2002; Aug. 5, 2005; Feb. 18, 2010; Feb. 15, 2013; Feb. 28, 2023> |
| 1. | Where a public-interest corporation, etc. acquires stocks, etc. by transactions or contribution, the date of acquisition; |
| 2. | Where a public-interest 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 stocks, etc., which are held by the public-interest 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 stocks, etc. of which are held by a public-interest corporation, etc. decreases its capital or investments, the book closure date (in cases of a non-stock company, referring to the last day 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; |
| 4. | Where a domestic corporation that issued stocks, etc. held by a public-interest corporation, etc. merges with another company and the public-interest corporation, etc. accordingly acquires stocks, etc. of the merged company, the book closure date or record date specified in Article 354 of the Commercial Act (in cases of a non-stock company, referring to the last day of the taxable period or business year) during the taxable period or business year in which the registration date of the merger falls. |
| (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 on Feb. 18, 2010; Dec. 30, 2010; Feb. 2, 2012; Feb. 5, 2016; Feb. 7, 2017> |
| (3) | Deleted. <Feb. 17, 2021> |
| (4) | Deleted. <Feb. 7, 2017> |
| (5) | Deleted. <Feb. 7, 2017> |
| (6) | "Cases where a public-interest corporation, etc. meets requirements prescribed by Presidential Decree" in the proviso, with the exception of the items, of Article 48 (2) 2 of the Act means cases where the public-interest corporation, etc. meets all of the following requirements: <Newly Inserted on Feb. 22, 2008; Jan. 25, 2012; Feb. 7, 2017; Feb. 13, 2018> |
| 2. | The stocks, etc. acquired as investments made by an industry-academic cooperation foundation, must be at least 50/100 of the total number of outstanding stocks 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 number of outstanding stocks acquired by each industry-academia cooperation group by making investments are at least 50/100 of the total number of outstanding stocks) 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 stocks, etc. of a company, other than a subsidiary. |
| (7) | Deleted. <Feb. 7, 2017> |
| Article 38 (Post-Management of Property Contributed to Public-Interest Corporations) |
| (1) | "Property prescribed by Presidential Decree" in the proviso, with the exception of the subparagraphs, of Article 48 (2) of the Act means cash (excluding contribution with real estate, stocks, etc.) contributed to a religious project defined in subparagraph 1 of Article 12. <Amended on Feb. 18, 2010; Feb. 3, 2015> |
| (2) | Those used for a direct public-interest project defined in Article 48 (2) 1 and 7 of the Act and paragraph (11) 1 and 2 of that Article shall be deemed used for a specific purpose project in the articles of incorporation of a public-interest corporation, etc.: Provided, That where the property received as a contribution is contributed to another public-interest 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 on Dec. 31, 1999; Dec. 29, 2000; Feb. 29, 2008; Feb. 2, 2012; Feb. 15, 2013; Feb. 7, 2017; Feb. 17, 2021> |
| 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-interest corporation, etc. |
| (3) | "Unavoidable reason prescribed by Presidential Decree, such as taking a long time for the public-interest corporation, etc. to use it for direct public-interest projects, etc." in the proviso of Article 48 (2) 1 of the Act means cases where it is difficult to use all of the contributed property for the direct public-interest projects, etc. within three years or to continue to use the contributed property for the direct public-interest projects, etc. three years after the date of contribution for any of the following reasons: <Amended on Feb. 17, 2021> |
| 1. | Where it is difficult to use the contributed property for such avoidable reasons as legal or administrative reasons, which are acknowledged by the relevant Minister (including a person entrusted with the authority of such Minister); |
| 2. | Where it is difficult to use the contributed property for such reasons, as a lawsuit related to authorization, permission, etc. for the public-interest projects. |
| (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 4 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 31 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 applies 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 applies in this paragraph and paragraph (7)) from among the proceeds from sale falls short of the amount corresponding to the standard for use of the proceeds from sale, this shall apply to the difference. <Newly Inserted on Dec. 29, 2000; Feb. 18, 2010; Feb. 7, 2017; Feb. 13, 2018; Feb. 12, 2019; Dec. 28, 2021> |
| (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 in this paragraph referred to as "standard amount of use") corresponding to 80/100 of the amount (hereafter in this paragraph referred to as "operating income") calculated 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 calculated 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 on Dec. 29, 2000; Aug. 5, 2005; Feb. 18, 2010; Feb. 2, 2012; Feb. 15, 2013; Feb. 17, 2021> |
| 1. | The sum of the income accruing from a profit-making project (including reserve funds for proper-purpose projects defined in the provisions, with the exception of the subparagraphs, 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, but excluding the following amounts) and the income accrued by using the contributed property as the source of revenues during the relevant taxable year or business year; |
| (a) | The income accruing from a profit-making project not related to the contributed property; |
| 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 means 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 on Dec. 29, 2000; 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 on Dec. 29, 2000; Feb. 18, 2010> |
| (8) | "Where ... fails to operate the contributed property ... as prescribed by Presidential Decree" in Article 48 (2) 8 of the Act means any of the following cases: <Amended on Dec. 31, 1998; Feb. 29, 2008; Feb. 18, 2010; Feb. 15, 2013; Feb. 13, 2018; Feb. 12, 2019> |
| 1. | Where the public-interest corporation, etc. fails to deliver remaining property after completion of a project to the State, local government, public-interest corporation, etc. the same as such public-interest corporation, etc. or recognized by the competent Minister as similar to such public-interest 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-interest 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-interest corporation, etc.) and determines a separate scope of beneficiaries, making it any of the following conditions, such case shall be excluded: |
| (a) | Where it is attached as a condition to permission for incorporation of the relevant public-interest 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) | For purposes of 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 in this paragraph referred to as "contributed property, etc.") 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-interest corporation, etc. defined in paragraph (8) 1 due to any of the following causes and events: <Newly Inserted on Dec. 30, 2003; Feb. 4, 2009; Feb. 18, 2010; Jun. 11, 2013; Feb. 5, 2016; Feb. 7, 2017; Feb. 13, 2018> |
| 1. | Where the contributed property, etc. has depreciated due to illegal acts by directors or employees of the public-interest 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 corresponding of 1/100 of the total amount of contributed property of relevant public-interest corporation, etc. or 20 million won, whichever is lesser, as of the date of contribution of property. <Amended on Feb. 2, 2012> |
| (11) | "Public-interest corporation, etc. prescribed by Presidential Decree" in Article 48 (8) of the Act means a corporation (excluding a public-interest corporation falling under subparagraph 4 of Article 12) in the following subparagraphs: <Newly Inserted on Dec. 31, 1999; Dec. 29, 2000; Feb. 18, 2010; Feb. 2, 2012; 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) | "Unavoidable reason prescribed by Presidential Decree, such as death" in the proviso of Article 48 (8) of the Act means any of the following events: <Newly Inserted on 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 clause of Article 48 (9) of the Act and the main clause of paragraph (10) of that 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 stocks, etc. of which are contributed or held by any of the following persons: <Newly Inserted on Dec. 31, 1999; Dec. 29, 2000; Feb. 2, 2012; Feb. 15, 2013; Feb. 5, 2016; 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 the provisions, with the exception of the items, of subparagraph 1, 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 corresponding to 30/100 (referring to 50/100 if it corresponds to a public-interest corporation, etc. that undergoes an external audit under Article 50 (3) of the Act, opens and uses an exclusive account under Article 50-2 of the Act and discloses closing documents, etc. under Article 50-3 of the Act) of the value defined in subparagraph 2 from the value defined in subparagraph 1 as of the last day of each business year: <Newly Inserted on Dec. 29, 2000; Aug. 5, 2005; Feb. 22, 2008; Feb. 15, 2013; Feb. 5, 2016 Feb. 15, 2022> |
| 2. | An amount calculated by adding the amount defined in subparagraph 1 to the value of total property (excluding stocks, etc. in the relevant domestic corporation) of the public-interest corporation, etc. on the statement of financial position. |
| (15) | The advertisements and publicity on which additional tax is imposed pursuant to Article 48 (10) of the Act means any of the following acts: <Newly Inserted on Dec. 31, 1999; Dec. 31, 2004; Feb. 15, 2013; Feb. 5, 2016; Feb. 15, 2022> |
| 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. <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 on Feb. 15, 2013; Feb. 5, 2016> |
| (17) | “Utility bills, etc. prescribed by Presidential Decree" in the main clause, with the exception of the items, of Article 48 (2) 2 of the Act means national taxes and local taxes to be paid as a result of the sale of donated property. <Newly Inserted on Feb. 7, 2017> |
| (18) | "Public-interest corporations, etc. prescribed by Presidential Decree" in Article 48 (2) 7 of the Act means the following: <Newly Inserted on Feb. 11, 2020; Feb. 17, 2021; Feb. 15, 2022> |
| 1. | Public-interest corporations, etc. referred to in Article 43-5 (1) and (2); |
| (19) | “Value of contributed property prescribed by Presidential Decree” in Article 48 (2) 7 of the Act means the value calculated in accordance with the following formula based on a statement of financial position and a statement of operating performance as of the last day of the taxable period or business year immediately preceding the taxable period or business year during which a public-interest corporation, etc. must use such property directly for a public-interest project: Provided, That where the public-interest corporation, etc. falls within public-interest corporations, etc. provided in Article 41-2 (6) or ceases to fall within public-interest corporations, etc. provided in Article 43 (3), and the value of its property on its statement of financial position is not more than 70/100 of the value appraised under Chapter 4 of the Act, such value means the value calculated in accordance with the following formula based on the value appraised under that Chapter: <Amended on Feb. 11, 2020; Feb. 17, 2021; Feb. 15, 2022> |
Total value of property managed for profit or profit-making projects (excluding property directly used for public-interest projects) ? (liabilities + current net profits)
* The value of stocks of listed companies on the securities market or KOSDAQ market, which are held by the public-interest corporation, etc. for three or more years is an average of the values based on the financial statements and operating performance statements as of the last day of the immediately preceding three taxable periods or business years.
| (20) | Deleted. <Feb. 17, 2021> |
| Article 39 (Imposition of Gift Tax on Internal Transactions within Public-Interest Corporation) |
| (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 on Dec. 30, 2002; Aug. 5, 2005; Feb. 22, 2008; Feb. 4, 2009; Dec. 30, 2010; Feb. 2, 2012; Feb. 15, 2013; 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-interest 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-interest corporation, etc. is provided with services in connection with direct public-interest projects and pays normal prices therefor, etc." in the proviso, with the exception of the subparagraphs, of Article 48 (3) of the Act means any of the following cases: <Amended on Dec. 31, 1998; Feb. 29, 2008; Feb. 18, 2010; Feb. 15, 2013; Feb. 13, 2018; 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 corresponding to any of the following and uses real estate contributed to the public-interest 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 that 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-interest 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 clause, with the exception of the subparagraphs, of Article 48 (3) of the Act means the value of relevant contributed property where a person falling under any of the subparagraphs of that 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 on Dec. 31, 1998; Feb. 18, 2010; Feb. 15, 2013; Sep. 9, 2013; Feb. 5, 2016; 13, 2018> |
| Article 40 (Calculation of Taxable Value of Gift Tax Imposed on Public-Interest Corporation) |
| (1) | "Value prescribed by Presidential Decree" in the main clause, with the exception of the subparagraphs, of Article 48 (2) of the Act means any of the following: <Amended on Dec. 31, 1998; Dec. 31, 1999; Dec. 29, 2000; Dec. 30, 2003; Feb. 29, 2008; Feb. 18, 2010; Feb. 13, 2018; Feb. 17, 2021> |
| (a) | Where the property is used for purposes, other than a direct public-interest project, etc., the value of the 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; |
| (c) | Where the property does not continued to be used for a direct public-interest project, etc. after the three-year period, the value of the property not used. |
| 2-2. | Where Article 48 (2) 3 is applicable, 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 corresponding 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-interest corporation falls under Article 48 (2) 6 of the Act, the value of stocks, etc. the relevant public-interest corporation holds in excess of 10/100 of the total number of outstanding stocks, etc. on the date it exercises the voting right of stocks, etc. contributed to it; |
| 4. | Where Article 38 (8) 1 is applicable, the value of property that is not delivered to the State, a local government, or a public-interest corporation, etc. that is at least similar to the relevant public-interest corporation, etc.; |
| 5. | Where the main clause of Article 38 (8) 2 is applicable, the value of property provided to some of the privileged or the value corresponding to economic profits. |
| (2) | Where an amount shall be included in the taxable value of inherited or donated property, or gift tax shall be immediately imposed under Article 48 (11) of the Act, the amount shall be based on the value of stocks, etc. held in excess by the relevant public-interest corporation, etc. as of the date on which the reason for including in the taxable value or for imposing gift tax occurs. In such cases, "date on which the reason for imposing gift tax occurs" means any of the following dates: <Newly Inserted on Dec. 29, 2000; Feb. 22, 2008; Feb. 17, 2021> |
| 1. | Where a public-interest corporation, etc. fails to satisfy any of the requirements provided in the subparagraphs of Article 48 (11) of the Act, the last day of the taxable period or business year during which it fails to satisfy the relevant requirement; |
| 2. | Where a public-interest corporation, etc. becomes ineligible for public-interest corporations, etc. provided in Article 48 (12) of the Act, the last day of the taxable period or business year during which it becomes ineligible for public-interest corporations, etc.; |
| 3. | The date on which a public-interest corporation, etc. holds stocks, etc. of the relevant corporation in excess of 5/100 of the total number of outstanding stocks, etc. of that domestic corporation. |
[Title Amended on Feb. 18, 2010]
| Article 41 (Reporting on Details of Contributed Property) |
| (1) | Pursuant to Article 48 (5) of the Act, a public-interest corporation, etc. in receipt of a contribution of property shall submit closing documents [limited to a statement of financial position and income statement (including a statement of receipts and disbursements corresponding to an income statement) that a public-interest corporation, etc. submits to the competent authority pursuant to the Act on the Establishment and Operation of Public Interest Corporations and other statutes and regulations] 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 of tax payment within four months from the end of the business year: <Amended on Dec. 31, 1998; Dec. 29, 2000; Feb. 28, 2007; Feb. 29, 2008; Dec. 31, 2008; Feb. 18, 2010; Feb. 15, 2022> |
| 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 on Dec. 31, 1998; 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 on Dec. 31, 1998; Feb. 29, 2008> |
| Article 41-2 (Shareholding Requirements for, and Reporting on Fulfillment of Obligation by, Public-Interest Corporation) |
| (3) | “Requirements prescribed by Presidential Decree, such as the composition of directors in a public-interest corporation” in Article 48 (11) 3 means the following requirements: |
| 1. | That contributors (excluding persons who have contributed not more than an amount corresponding to 1/100 of the total value of the property contributed to the relevant public-interest corporation, etc. or 20 million won, whichever is lesser as of the date of contribution of property) or their related persons shall not exceed 1/5 of the number of directors in the public-interest corporation, etc. (5 persons if the current directors are less than 5 persons): Provided, That the requirement of the main clause is deemed to be satisfied if a contributor or his or her related person has become a director in excess of 1/5 of the number of directors for any of the reasons provided in the subparagraphs of Article 38 (12) and the director who is a contributor or his or her related person does not exceed 1/5 of the number of directors by appointing or replacing with a new director within two months from the date on which the reason arises; |
| 3. | That the public-interest corporation, etc. shall not advertise or publicize as provided in the former part of Article 48 (10) of the Act. |
| (4) | Article 38 (5) and (6) shall apply mutatis mutandis to the performance used for a direct public-interest project, the operating income and the standard amount for purposes of Article 48 (11) 1. |
| (5) | Whether a public-interest corporation, etc. satisfies all of the requirements provided in the subparagraphs of Article 48 (11) of the Act is determined based on the entire duration of the relevant taxable period or business year. |
| (6) | “Public-interest corporation, etc. prescribed by Presidential Decree, such as one that receives a contribution of the stocks, etc. of a domestic corporation in excess of 5/100 of the total number of outstanding stocks, etc.” in Article 48 (13) of the Act means a public-interest corporation, etc. prescribed by Ordinance of the Ministry of Strategy and Finance, which is excluded from those subject to gift tax and additional tax for contributing, acquiring or holding stocks, etc. under Article 16 (2) of Act, Article 48 (1) of the Act, paragraph (2) 2 of that Article, paragraph (9) of that Article and Article 49 (1) of the Act by satisfying all the requirements provided in the subparagraphs of Article 48 (11) of the Act. <Amended on Feb. 28, 2023> |
| (7) | A public-interest corporation, etc. that intends to report matters concerning whether it has fulfilled its obligation under Article 48 (13) of the Act shall submit a Report Form prescribed by Ordinance of the Ministry of Strategy and Finance and relevant documents to the commissioner of a regional tax office having jurisdiction over the place of tax payment within four months from the last day of the relevant taxable period or business year. |
| (8) | The commissioner of a regional tax offices having jurisdiction over the place of tax payment shall verify the details of the report submitted under paragraph (7) and report to the Commissioner of the National Tax Service whether the requirements of the subparagraphs of Article 48 (11) of the Act are satisfied, and the Commissioner of the National Tax Service shall notify the relevant public-interest corporation, etc. and the competent authority of his or her findings. |
| (9) | Submission of additional information to verify whether public-interest corporations, etc. satisfy the requirements of the subparagraphs of Article 48 (11) of the Act and other necessary matters shall be prescribed by Ordinance of the Ministry of Strategy and Finance. |
[This Article Newly Inserted on Feb. 17, 2021]
| Article 42 (Public-Interest Corporation Excluded from Application of Holding Limits of Stocks) |
| (1) | Deleted. <Feb. 17, 2021> |
| (2) | "Public-interest corporation, etc. prescribed by Presidential Decree" in the former part of Article 48 (9) of the Act and "public-interest corporation, etc. prescribed by Presidential Decree" in the proviso, with the exception of the subparagraphs, of Article 49 (1) of the Act means any of the following: <Amended on Aug. 5, 2005; Feb. 22, 2008; Feb. 18, 2010> |
| 1. | A public-interest corporation, etc. incorporated with the property contributed by public-interest corporations, etc. incorporated with the property contributed by the State or local governments; |
| 3. | A public-interest corporation, etc. incorporated with the property contributed by the public-interest corporations, etc. defined in subparagraph 2. |
| (3) | Deleted. <Feb. 22, 2008> |
| (4) | Deleted. <Feb. 22, 2008> |
| (5) | Criteria concerning the donation and acquisition of shares prescribed in the proviso, with the exception of the subparagraphs, of Article 48 (1) of the Act and paragraph (2) 2 of that Article shall apply mutatis mutandis to the calculation of criteria for ownership of stocks, etc. prescribed in Article 49 (1) of the Act. <Amended on Feb. 7, 2017> |
| Article 43 (Tax Verification of Public-Interest Corporations by Outside Experts) |
| (1) | "Standards prescribed by Presidential Decree" in the main clause of Article 50 (1) of the Act means cases not falling under any of the following: <Amended on Jul. 25, 2011; Feb. 2, 2012; Feb. 15, 2013; Feb. 3, 2015; Feb. 5, 2016> |
| 1. | Where he/she is the contributor (excluding a person who contributes no more than the amount corresponding to 1/100 of the total amount of contribution to the relevant public-interest corporation, etc. or 20 million won, whichever is lesser) to the relevant public-interest 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-interest 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, counseling, 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-interest corporation, etc.; |
| 5. | Where he/she is unlikely to perform duties impartially as he/she has a stake in the relevant public-interest 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-interest corporation, etc. prescribed by Presidential Decree" in the proviso of Article 50 (1) of the Act means any of the following public-interest corporations: <Amended on Dec. 31, 1998; Dec. 31, 1999; Dec. 29, 2000; Aug. 5, 2005; Feb. 22, 2008; Feb. 18, 2010; Jul. 25, 2011; Feb. 2, 2012; Feb. 15, 2013; Feb. 21, 2014; Feb. 7, 2017; Feb. 11, 2020; Feb. 15, 2022> |
| 1. | A public-interest 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 a statement of financial position in cases of real estate) of asset of which in a statement of financial position is less than 500 million won as of the last day 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-interest 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; hereafter the same applies in this Article and the proviso of Article 43-5 (2)) 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-interest 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-interest corporation, etc., has received as contributions); |
| 3. | A public-interest 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-interest corporation, etc., with property and income less than the scale prescribed by Presidential Decree" in Article 50 (3) 1 of the Act means a public-interest corporation, etc., if the value of its total assets in the taxable period or business year immediately preceding the taxable period or business year in which it shall undergo an audit satisfies all of the following subparagraphs: Provided, That a public-interest corporation, etc. falling under Article 41-2 (6) is excluded: <Amended on Feb. 11, 2020; Feb. 17, 2021> |
| 1. | The sum of the values (or the appraised value of real estate, if the value of the real estate appraised under Articles 60, 61, and 66 of the Act is larger than the value on the statement of financial position) of total assets on the statement of financial position as of the last day of the taxable period or business year shall be less than 10 billion won; |
| 2. | The sum of the income in the relevant taxable period or business year and the value of property contributed in that taxable period or business year shall be less than five billion won; |
| 3. | The value of property contributed in the relevant taxable period or business year shall be less than two billion won. |
| (4) | "Public-interest corporation, etc. prescribed by Presidential Decree" in Article 50 (3) 2 of the Act means a public-interest corporation, etc. operating any business referred to in the subparagraph 1 or 2 of Article 12: Provided, That a public-interest corporation, etc. falling under Article 41-2 (6) is excluded. <Newly Inserted on Feb. 22, 2008; Feb. 17, 2021> |
| (5) | Items for tax verification by outside experts under Article 50 (6) of the Act mean following:: <Amended on Dec. 31, 1998; Dec. 29, 2000; Feb. 22, 2008; Feb. 29, 2008; Feb. 15, 2013; Feb. 17, 2021> |
| 1. | Whether property received as a contribution is used for public interest purposes; |
| 3. | Deleted; <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-interest corporation, etc. that has undergone tax verification from an outside expert shall submit findings in a report prescribed by Ordinance of the Ministry of Strategy and Finance to the head of a competent tax office within four months from the end of the taxable period or business year of the public-interest corporation, etc. in which tax verification is conducted. <Amended on Dec. 31, 1998; Dec. 29, 2000; Feb. 22, 2008; Feb. 29, 2008; Feb. 2, 2012; Feb. 15, 2013; Feb. 15, 2022> |
| (7) | A public-interest corporation, etc., which has undergone an audit pursuant to Article 50 (3) of the Act shall submit an audit report prepared by auditors to the head of the competent tax office within four months from the end of the taxable period or business year of the relevant public-interest 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 on Feb. 22, 2008; Dec. 30, 2010; Feb. 15, 2022> |
| (8) | Detailed matters necessary for tax verification by outside experts and external audit by auditors, such as procedures and methods for tax verification, appointment and restrictions on appointment of outside experts and auditors, duties of outside experts, tax verification reports, the period of tax verification, etc. under Article 50 (6) of the Act shall be prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended on 17828, Dec. 30, 2002; Feb. 22, 2008; Feb. 2, 2012; Feb. 17, 2021> |
| Article 43-2 (Designation of Auditor for Public-Interest Corporation) |
| (1) | "Public-interest corporation, etc. prescribed by Presidential Decree” in the former part of Article 50 (4) of the Act means any public-interest corporation, etc. if the value of its total assets on the statement of financial position as of the last day of the taxable year immediately preceding the taxable year (referring to the taxable period or business year; hereafter in this Article the same applies) in which the base date of designation specified in paragraph (4) falls is at least 100 billion won: Provided, That the following public-interest corporations, etc. are excluded: |
| 1. | A public-interest corporation, etc. that has undergone an audit under Article 50 (5) of the Act within four years prior to the base date of designation specified in paragraph (4), and such audit finds that the public-interest corporation, etc. has not violated any accounting standards under Article 50-4 (1) of the Act (or the relevant accounting standards in cases of a public-interest corporation, etc. to which separate accounting standards are applied under other statutes or regulations); |
| (2) | A public-interest corporation, etc. (excluding the public-interest corporations, etc. referred to in the subparagraphs of paragraph (1)) shall submit materials prescribed by Ordinance of the Ministry of Strategy and Finance as necessary for an audit conducted under Article 50 (4) of the Act (hereinafter referred to as “designated audit”) to the Minister of Strategy and Finance within two weeks from the first day of the ninth month of the taxable year if the value of its total assets on the statement of financial position as of the last day of the immediately preceding taxable year is at least 100 billion won: Provided, That it need not submit such materials in the second taxable year out of the two taxable years subject to designated audit and in the immediately following three taxable years. |
| (3) | The Minister of Strategy and Finance shall designate auditors under the former part of Article 50 (4) of the Act (hereinafter referred to as “designated auditor”) upon receipt of applications from auditors subject to the Act on External Audit of Stock Companies, but need not designate the following persons as designated auditors: <Amended on Feb. 28, 2023> |
| 1. | A person prosecuted for failing to state or falsely stating, a matter required to be stated in an audit report; |
| 2. | A person who fails to enter into an audit contract within the period specified in paragraph (7) (including cases to which paragraph (7) shall apply mutatis mutandis under paragraph (10)) without a compelling reason; |
| 3. | A person notified to the competent authority, the Commissioner of the National Tax Service, and the Financial Services Commission as having violated the audit standards or accounting standards under Article 43-3 (3); |
| 4. | A person deemed by the Minister of Strategy and Finance to be inappropriate as a designated auditor, including a person regarding whom an opinion is submitted under paragraph (6), for such reasons as requesting excessive audit fees. |
| (4) | The Minister of Strategy and Finance shall designate a designated auditor by 15th day (hereafter in this Article referred to as “base date of designation”) of the 11th month from the beginning of the taxable year immediately preceding the taxable year subject to designated audit and notify the public-interest corporation, etc. subject to designated audit and the designated auditor of such designation, respectively. |
| (5) | Before designating a designated auditor, the Minister of Strategy and Finance shall give the public-interest corporation, etc. subject to designated audit and an auditor to be designated as designated auditor notice in writing of the scheduled designation four weeks prior to the base date of designation: Provided, That such duration can be shortened if it is necessary to designate a designated auditor promptly. |
| (6) | The public-interest corporation, etc. and an auditor to be designated in receipt of the notice given under paragraph (5) may submit an opinion to the Minister of Strategy and Finance within two weeks after receipt of the notice, and the Minister of Strategy and Finance may reflect that opinion if there is a substantial reason. |
| (7) | The public-interest corporation, etc. notified of the designation of a designated auditor under paragraph (4) shall enter into an audit contract with the designated auditor within two weeks from the base date of designation: Provided, That it may request the Minister of Strategy and Finance to re-designate a designated auditor in any of the following cases: |
| 1. | Where the designated auditor does not enter into an audit contract within two weeks from the base date of designation without a compelling reason not to do so; |
| (8) | The Minister of Strategy and Finance may re-designate a designated auditor if a request made under the proviso of paragraph (7) has a substantial reason. |
| (9) | Upon re-designating a designated auditor under paragraph (8), the Minister of Strategy and Finance shall notify the relevant public-interest corporation, etc. and the newly designated auditor of such fact, respectively. |
| (10) | Paragraph (7) shall apply mutatis mutandis to entering into an audit contract when a designated auditor is re-designated under paragraph (8). In such cases, “the base date of designation” shall be deemed to be “the date of notification”. |
| (11) | A designated auditor who enters into an audit contract under paragraph (7) (including cases to which paragraph (7) shall apply mutatis mutandis under paragraph (10)) shall submit a copy of the audit contract to the Minister of Strategy and Finance within two weeks from the date on which the designated auditor enters into the audit contract. |
| (12) | Pursuant to the latter part of Article 50 (4) of the Act, the Minister of Strategy and Finance shall entrust duties pertaining to the designation of designated auditors to the Commissioner of the National Tax Service under this Article. |
| (13) | Except as otherwise provided in paragraphs (1) through (12), procedures for designation of auditors and other details necessary to designate designated auditors shall be prescribed by Ordinance of the Ministry of Strategy and Finance. |
[This Article Newly Inserted on Feb. 15, 2022]
[Previous Article 43-2 moved to Article 43-4 <Feb. 15, 2022>]
| Article 43-3 (Review of Audit Report) |
| (1) | Where any of the following is applicable to an audit report and accompanying financial statements disclosed by a public-interest corporation, etc. under the former part of Article 50 (5) of the Act, the Minister of Strategy and Finance may review the audit report and accompanying financial statements: |
| 1. | Where the audit report and accompanying financial statements are selected as one subject to review by such means as quantitative analysis or random sampling; |
| 2. | Where the Minister of Strategy and Finance deems it necessary to conduct a review to verify if the public-interest corporation, etc. has violated accounting-related statutes or regulations. |
| (2) | The Minister of Strategy and Finance may request the relevant public-interest corporation, etc. or auditor to submit materials or state opinions if necessary for the review under paragraph (1). |
| (3) | Where the Minister of Strategy and Finance determines that the review under paragraph (1) finds that the relevant audit reports or financial statements have violated the audit standards under Article 16 of the Act on External Audit of Stock Companies or the accounting standards under Article 50-4 (1) of the Act (or the relevant accounting standards in cases of a public-interest corporation, etc. to which separate accounting standards are applied under other statutes or regulations), the Minister shall notify the competent authority of the relevant public-interest corporations, etc., the Commissioner of the National Tax Service, and the Financial Services Commission of a list of the relevant public-interest corporations, etc. and auditors and the details of violations. |
| (4) | Where the Financial Services Commission notified under paragraph (3) takes measures, such as disciplining the relevant auditor based on the details so notified, it shall notify the Minister of Strategy and Finance of such measures. |
| (6) | Except as otherwise provided in paragraphs (1) through (5), details necessary for selection of audit reports and accompanying financial statements to be reviewed and review methods shall be prescribed by Ordinance of the Ministry of Strategy and Finance. |
[This Article Newly Inserted on Feb. 15, 2022]
[Previous Article 43-3 moved to Article 43-5 <Feb. 15, 2022>]
| Article 43-4 (Public-Interest Corporation’s Obligation to Open and Use Exclusive Account) |
| (1) | "Public-interest corporations, etc. prescribed by Presidential Decree" in the provisions, with the exception of the subparagraphs, of Article 50-2 (1) of the Act means public-interest corporations, etc. implementing the projects defined in subparagraph 1 of Article 12: Provided, That public-interest corporations, etc. falling under Article 41-2 (6) are excluded. <Amended on Feb. 17, 2021> |
| (2) | "Exclusive account for the direct public-interest project prescribed by Presidential Decree" in the provisions, with the exception of the subparagraphs, of Article 50-2 (1) of the Act means the one meeting all of the following requirements: <Amended on 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-interest corporation, etc. |
| (3) | Each public-interest corporation, etc. may open two or more exclusive accounts (hereinafter referred to as "exclusive account") referred to in the provisions, with the exception of the subparagraphs, of Article 50-2 (1) of the Act. |
| (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 on Feb. 3, 2015> |
| 1. | Remittance and money transfer between accounts; |
| (5) | "Cases prescribed by Presidential Decree" in the proviso of 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 clause 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-interest 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 that 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 of Article 50-2 (2) of the Act shall mean any of the following revenues and expenditures: <Amended on 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, the supporting document of which is impracticable to obtain. |
| (9) | A public-interest 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-interest 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 of tax payment. 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 of tax payment within one month from the date when reasons therefor occur. <Amended on Feb. 29, 2008> |
| (11) | For purposes of Article 50-2 (3) of the Act, if a public-interest corporation, etc. is designated and publicly notified as such under Article 39 (1) 1 (f) of the Enforcement Decree of the Corporate Tax Act within one year from the date of its incorporation, the public-interest corporation, etc. is deemed to qualify as a public-interest corporation, etc. on the date of public notification as a public-interest corporation, etc., notwithstanding the proviso, with the exception of the subparagraphs, of Article 12 of this Decree. <Newly Inserted on Feb. 28, 2023> |
| (12) | The Commissioner of the National Tax Service may determine detailed matters necessary for opening of exclusive accounts, reports, preparation of detailed reports, etc. within the scope necessary for the management of taxation. <Amended on Feb. 28, 2023> |
[This Article Newly Inserted on Feb. 22, 2008]
[Moved from Article 43-2; previous Article 43-4 moved to Article 43-6 <Feb. 15, 2022>]
| Article 43-5 (Public-Interest Corporation’s Obligation to Disclose Closing Documents) |
| (1) | "Public-interest corporation, etc. prescribed by Presidential Decree" in the main clause, with the exception of the subparagraphs, of Article 50-3 (1) of the Act means a public-interest corporation, etc. implementing the projects defined in subparagraph 1 of Article 12: Provided, That public-interest corporations, etc. falling under Article 41-2 (6) are excluded. <Amended on Feb. 11, 2020; Feb. 17, 2021> |
| (2) | “Public-interest corporation, etc.” in the proviso, with the exception of the subparagraphs, of Article 50-3 (1) of the Act means a public-interest corporation, etc. if the sum of its total assets (or the appraised value where the value appraised under Articles 60, 61, and 66 of the Act is larger than the value in the statement of financial position in cases of real estate) in the statement of financial position as of the last day of the taxable period or business year subject to disclosure of closing documents, etc. under Article 50-3 (1) of the Act (hereafter in this Article referred to as "closing documents, etc."), is less than 500 million won: Provided, That this shall not apply to any public-interest corporation, etc. if the sum of its 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, and to any public-interest corporation, etc. falling under Article 41-2 (6). <Newly Inserted on Feb. 11, 2020; Feb. 17, 2021> |
| (3) | "Matters prescribed by Presidential Decree" in Article 50-3 (1) 6 of the Act means the following: <Amended on Feb. 15, 2013; Feb. 7, 2017; Feb. 12, 2019; Feb. 11, 2020; Feb. 17, 2021> |
| 1. | Contribution, acquisition, holding, and disposal of stocks, etc. by a public-interest corporation, etc.; |
| 2. | Relationship between a person who contributes stocks, etc. to a public-interest corporation, etc. and the corporation that has issued such stocks, etc.; |
| 3. | The status of dividends according to stocks, etc., the current status of revenues from the disposal of stocks, etc. in possession, etc.; |
| 4. | In cases of a public-interest corporation, etc. falling under Article 41-2 (6), which holds stocks, etc. with voting rights of a domestic corporation in excess of 5/100 of the total number of outstanding stocks, etc. of the domestic corporation pursuant to Articles 16 (2), 48 (1), and 48 (2) 2 of the Act, the result of exercising the voting rights to the stocks it holds; |
| 5. | In cases of a public-interest corporation, etc. that undergoes an audit under Article 50 (3) of the Act, the current status of use of property received as a contribution for public-interest purposes. |
| (4) | A public-interest corporation, etc. referred to in Article 50-3 (1) of the Act shall access the website of the National Tax Service and disclose its closing documents, etc. prepared in the standard form prescribed by Ordinance of the Ministry of Strategy and Finance (or the simplified form prescribed by Ordinance of the Ministry of Strategy and Finance in cases of public-interest corporations, etc. referred to in the proviso, with the exception of the subparagraphs, of Article 50-3 (1) of the Act).<Amended on Feb. 29, 2008; Feb. 21, 2014; Feb. 11, 2020> |
| (5) | Where the Commissioner of the National Tax Service requests a public-interest corporation, etc. to disclose or to correct errors pursuant to Article 50-3 (2) of the Act, the Commissioner shall make such request in writing and shall impose additional tax pursuant to Article 78 (11) of the Act on the public-interest corporation, etc. that fails to comply with the request and notify such fact to the Minister having jurisdiction over such public-interest corporation, etc. |
| (6) | "Person prescribed by Presidential Decree" in Article 50-3 (3) of the Act means any of the following persons that request the provision of closing documents, etc.: <Amended on Feb. 12, 2019; Feb. 17, 2021> |
| 2. | A public-interest corporation, etc. that has fulfilled its obligation to disclose under Article 50-3 of the Act; |
| (7) | The Commissioner of the National Tax Service may determine detailed matters necessary for disclosure of closing documents, etc. of public-interest corporations, etc., such as methods of disclosing on the website of the National Tax Service, methods of preparing the standard form and the simplified form referred to in paragraph (4), handling of cases in which no disclosure is made or fraudulent disclosure is made, etc. <Amended on Feb. 2, 2012; Feb. 21, 2014; Feb. 17, 2021> |
[This Article Newly Inserted on 20621, Feb. 22, 2008]
[Moved from Article 43-4; previous Article 43-5 moved to Article 43-7 <Feb. 15, 2022>]
| Article 43-6 (Accounting Standards Applied to Public-Interest Corporation) |
| (1) | The Minister of Strategy and Finance shall prescribe accounting standards applied to public-interest corporations, etc. and other matters necessary for the operation of the accounting system, procedures therefor, etc. under Article 50-4 of the Act. <Amended on Feb. 15, 2022; Oct. 4, 2022> |
| (2) | "Public-interest corporations, etc. prescribed by Presidential Decree" in Article 50-4 (1) of the Act means public-interest 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 similar public-interest corporations, etc. |
| (3) | The Ministry of Strategy and Finance may form and operate a committee on accounting standards for public-interest corporations if necessary to discuss the establishment and amendment of the accounting standards applicable to public-interest corporations, etc. and other matters necessary to operate the accounting system with relevant agencies, such as the National Tax Service under paragraph (1). <Newly Inserted on Oct. 4, 2022> |
| (4) | Matters necessary to form and operate the committee on accounting standards for public-interest corporations under paragraph (3) shall be prescribed by Ordinance of the Ministry of Strategy and Finance. <Newly Inserted on Oct. 4, 2022> |
[This Article Newly Inserted on Feb. 7, 2017]
[Moved from Article 43-4 <Feb. 15, 2022>]
| Article 43-7 Deleted. <Oct. 4, 2022> |
| 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 that paragraph shall include details of payments to beneficiaries. <Amended on Dec. 29, 2000; 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 on 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) |
Article 14 shall apply mutatis mutandis to gift tax.
| Article 45-2 (Non-Inclusion in Taxable Value of Property Donated to Person with Disability) |
| (2) | Deleted. <Feb. 7, 2017> |
| (3) | "Asset prescribed by Presidential Decree" in the provisions, with the exception of the subparagraphs, of Article 52-2 (1) of the Act means any of the following: <Amended on Feb. 18, 2010> |
| (4) | "Date prescribed by Presidential Decree" in the main clause, with the exception of the subparagraphs, of Article 52-2 (4) of the Act means any of the following dates: <Amended on Feb. 18, 2010; Jul. 25, 2011; Feb. 11, 2020> |
| 1. | In cases falling under Article 52-2 (4) 1 of the Act, the date of revocation of the trust or the expiration date of the trust; |
| 2. | Where the beneficiary of the trust is changed, the date of change of the beneficiary; |
| 3. | Where all or part of profits from the trust are verified to be delivered to a person other than a person with a disability, the date of verification; |
| 4. | Where the principal in the trust has decreased, the date of withdrawal or disposal of the trust property. |
| (5) | “Person with a disability prescribed by Presidential Decree” in the proviso, with the exception of the subparagraphs, of Article 52-2 (4) of the Act means any of the following persons: <Newly Inserted on Feb. 13, 2018; Feb. 11, 2020> |
| 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; |
| (6) | "Purposes prescribed by Presidential Decree, such paying his or her medical expenses" in the proviso, with the exception of the subparagraphs, of Article 52-2 (4) of the Act means purposes for any of the following expenses: <Newly Inserted on Feb. 13, 2018; Feb. 11, 2020> |
| 3. | Living expenses of the person with a disability himself/herself (limited to a maximum of 1,500 thousand won per month) |
| (7) | A person with a disability who withdraws trust property for such purposes as paying his or her medical expenses under the proviso, with the exception of the subparagraphs, of Article 52-2 (4) of the Act 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 on Feb. 13, 2018; Feb. 11, 2020> |
| (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 on Feb. 13, 2018> |
| (9) | "Unavoidable reason prescribed by Presidential Decree" in the proviso, with the exception of the subparagraphs, of Article 52-2 (4) of the Act means any of the following: <Amended on Feb. 29, 2008; Feb. 18, 2010; Feb. 7, 2017; Feb. 13, 2018; Feb. 12, 2019; Feb. 11, 2020> |
| 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 person with a disability 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) | Deleted. <Feb. 11, 2020> |
| (11) | The gift tax imposed under Article 52-2 (4) and (7) of the Act shall be calculated by multiplying the following value assessed pursuant to the provisions of Chapter IV of the Act as of the date prescribed in the subparagraphs of paragraph (4) by the tax rate defined in Article 56 of the Act: <Amended on Feb. 13, 2018; Feb. 11, 2020> |
| 1. | In cases falling under Article 52-2 (4) 1 and 2 of the Act, the total value of the relevant trust property; |
| 2. | In cases falling under Article 52-2 (4) 3 of the Act, the value in accordance with the following formula; |
The value of trust property × Trust profits that is verified as having vested in a person other than a person with a disability ÷ Total amount of trust profits
| 3. | In cases falling under Article 52-2 (4) 4 of the Act, the value of the property decreased |
| (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 (5) 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 of tax payment: <Amended on Dec. 31, 1999; Aug. 5, 2005; Feb. 18, 2010; Feb. 13, 2018; Feb. 11, 2020> |
| 1. | Statement of donated property and copy of a donation contract; |
| 3. | Documents supporting that the person falls under paragraph (1). |
[This Article Newly Inserted on Dec. 31, 1998]
SECTION 5 Donation Deduction
| Article 46 (Method 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 on 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. <Feb. 2, 2012> |
| Article 46-2 (Deduction of Assessment Fees) |
"Assessment fee for the donated property prescribed by Presidential Decree" in the provisions, with the exception of the subparagraphs, of Article 55 (1) of the Act means 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 on Feb. 4, 2009; Feb. 18, 2010> [This Article Newly Inserted on Dec. 30, 2003]
[Title Amended on Feb. 18, 2010]
| Article 46-3 (Method 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 to be 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 on Feb. 5, 2016]
| Article 47 (Provisions to Be Applied Mutatis Mutandis) |
Article 20 shall apply mutatis mutandis to gift tax. In such cases, the "taxable value of inherited property" in Article 20 (2) shall be construed as the "taxable value of donated property"; "inherited property" as "donated property"; and a "inheritance tax return" in paragraph (3) of that Article as a "return according to Article 65 (hereinafter referred to as "gift tax return")".
| Article 48 (Provisions to be Be Applied Mutatis Mutandis) |
Article 21 shall apply mutatis mutandis to gift tax. In such cases, the "calculated amount of inheritance tax" in Article 21 (1) shall be construed as the "calculated amount of gift tax"; "inherited property" as "donated property"; "inheritance tax" as "gift tax", and a "inheritance tax return" in paragraph (2) of that Article as a "gift tax return".
CHAPTER IV ASSESSMENT OF PROPERTY
| Article 49 (Principles of Assessment) |
| (1) | "What is accepted as the current market price, as prescribed by Presidential Decree, such as the price of expropriation, price of public auction, and appraised value" 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 in this paragraph the same applies) or public sale (hereafter in this Article and Article 49-2 referred to as "sale, etc.") occurs within six months (referring to the period that begins six months prior to the base date of assessment and ends three months after the base date of assessment in the case of donated property; hereafter in this paragraph referred to as "assessment period") before or after the date of commencement of inheritance or the date of donation (hereinafter referred to as “base date of assessment”): 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 in this Article and Article 54 referred to as "taxpayer"), 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 date of assessment 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 date of assessment, 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 on Dec. 31, 1998; Dec. 31, 1999; Dec. 29, 2000; Dec. 30, 2002; Dec. 30, 2003; Aug. 5, 2005; Feb. 9, 2006; Feb. 29, 2008; Feb. 18, 2010; Dec. 30, 2010; Feb. 2, 2012; Feb. 21, 2014; Feb. 5, 2016; Feb. 7, 2017; Feb. 12, 2019; Feb. 11, 2020; Jan. 5, 2021; Feb. 15, 2022; Feb. 28, 2023> |
| 1. | Where sale or purchase of relevant property exists, the consideration for transaction: Provided, That any of the following shall be excluded: |
| (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 corresponding 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, 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; hereinafter referred to as "head of the relevant tax office, etc."), where the relevant appraised value is below the smaller amount (hereafter in this subparagraph referred to as "standard amount") of the value assessed pursuant to Articles 61, 62, 64, and 65, and the value corresponding 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 of the base date of assessment, 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 specially related person acquires the property provided for payment in kind prescribed in Articles 73 and 73-2 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 corresponding 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; |
| (d) | Where the heir of the largest stockholder, etc. or a specially related person of the largest stockholder, etc. under Article 15 (3) acquires unlisted stocks, etc. referred to in Article 54 (1), which have been held by the largest stockholder, etc. through court auction or public sale. |
| (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 date of assessment and ends three months after the base date of assessment in cases of donated property) before or after the base date of assessment 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 date of assessment, 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 on Dec. 30, 2002; Feb. 9, 2006; Dec. 30, 2010; Feb. 21, 2014; Feb. 7, 2017; 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 on Dec. 29, 2000; Aug. 5, 2005; Jun. 28, 2013; 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 that 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 on Dec. 30, 2003; Dec. 30, 2010; Feb. 2, 2012; Feb. 5, 2016; Feb. 7, 2017; 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 date of assessment, and where capital expenditures for relevant property from such date until the base date of assessment are verified, the capital expenditures may be added to the value defined in paragraph (1). <Newly Inserted on Feb. 21, 2014; 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 on 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 in this Article referred to as "initially appraised value") proposed by a taxpayer (hereafter in this Article referred to as "initial appraisal institution") is less than 80/100 of the value appraised by another appraisal institution (hereafter in this Article referred to as "re-appraised value") at the request of the head of the relevant tax office, etc. <Newly Inserted on Feb. 5, 2016; 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 on Feb. 5, 2016; Feb. 7, 2017; Feb. 13, 2018; Jan. 5, 2021> |
| (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 on Feb. 5, 2016; Feb. 7, 2017; 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 on Feb. 5, 2016; 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 on Dec. 31, 1998; Feb. 18, 2010; Feb. 21, 2014; Feb. 5, 2016; Feb. 13, 2018> |
| Article 49-2 (Composition 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 on Feb. 7, 2017; Feb. 13, 2018l Feb. 11, 2020> |
| 1. | Recognition of the price of sale, etc. prescribed in the proviso, with the exception of the subparagraphs, of Article 49 (1) 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) (hereafter in this Article referred to as "unlisted stocks, etc.") and methods for assessment thereof pursuant to Article 54 (6); |
| (2) | Each assessment deliberative committee shall be composed of the following members: <Amended on Feb. 11, 2020> |
| 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 in consideration of their sex 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; |
| (c) | Two persons commissioned by the Commissioner of the National Tax Service from among experts with abundant knowledge and experience about the relevant types of business (limited to deliberation on paragraph (1) 3) |
| 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: Provided, That the term of office of members referred to in paragraph (2) 1 (c) shall begin on the date of commission and end on date on which relevant deliberation finishes. <Amended on Feb. 11, 2020> |
| (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 under paragraph (1) is necessary, the taxpayer shall file an application accompanied with the documents in the following classifications with the assessment deliberative committee. If the taxpayer deems that deliberation on paragraph (1) 1 or 2 is necessary, the taxpayer shall file an application 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): Provided, That where sale, etc. takes 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. takes place, along with the data classified as follows: <Amended on Feb. 7, 2017; Feb. 12, 2019; Feb. 11, 2020> |
| 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 stocks, 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 stocks, etc. assessed in accordance with any method prescribed in the subparagraphs of Article 54 (6) and the assessment annexes; |
| 3. | in cases falling under paragraph (1) 3: Supporting materials to acknowledge that it is necessary to approve the change of a type of business. |
| (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, with the exception of the subparagraphs, of paragraph (5). <Amended on Feb. 12, 2019> |
| (7) | When an assessment deliberative committee deliberates on the assessment of the value of unlisted stocks, etc. and methods of evaluation, it shall take the following matters into consideration: <Amended on 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 stocks, 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) | An assessment deliberative committee shall consider the possibility of utilizing existing technologies, etc. and the possibility of succeeding to existing employees when it deliberates on paragraph (1) 3. <Newly Inserted on Feb. 11, 2020> |
| (9) | 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. <Newly Inserted on Feb. 11, 2020> |
| (10) | Matters necessary for the establishment and operation of assessment deliberative committees, the procedures for filing an application for deliberation, the assessment of the values of unlisted stocks, etc., the methods for assessment, etc. shall be determined and publicly notified by the Commissioner of the National Tax Service. <Amended on Feb. 7, 2017; Feb. 11, 2020> |
[This Article Newly Inserted on Feb. 5, 2016]
| Article 50 (Assessment of Real Estate) |
| (1) | "Amount assessed as prescribed by Presidential Decree" in the proviso of Article 61 (1) 1 of the Act means the value assessed by the head of the tax office having jurisdiction over the place of 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 of 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 of tax payment makes a request for assessment) according to the comparison table defined in Article 3 (8) 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 of tax payment may determine the assessed value with the value calculated by the head of the relevant Si/Gun/Gu under the proviso of 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 of tax payment: <Amended on Dec. 31, 1998; Dec. 30, 2002; Aug. 5, 2005; Dec. 14, 2009; Feb. 18, 2010; Jun. 1, 2015; Feb. 5, 2016; Aug. 31, 2016; Oct. 8, 2020> |
| 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 of 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 on 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 in consideration of the use and size of the relevant building, number of buildings owned under sectional title ownership, etc. <Newly Inserted on Dec. 30, 2003; Aug. 5, 2005; Feb. 18, 2010; Jan. 5, 2021> |
| (4) | "Amount assessed … in a manner prescribed by Presidential Decree" in the proviso of Article 61 (1) 4 of the Act means any of the following amounts: <Newly Inserted on Feb. 18, 2010; Jul. 25, 2011; 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 of tax payment 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 of tax payment makes a request) according to the housing price comparison table defined in Article 16 (6) of that 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 of tax payment 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 of tax payment 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 of 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 rate applicable to the officially assessed individual land price as of the base date of assessment, which is publicly notified by the Commissioner of the National Tax Service in consideration of the actual transaction amount of land in an area with a comparable price condition. <Amended on Feb. 18, 2010; Jan. 5, 2021> |
| (6) | The officially assessed individual land price publicly notified and in force as of the base date of assessment shall apply for purposes of Article 61 (1) 1 of the Act. |
| (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 on 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 on Feb. 18, 2010> |
| 1. | Where the land owner and the building owner are the same person: An amount calculated 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 Article 61 (1) through (4), shall be the assessed value of the land and building (hereafter in this paragraph referred to as "standard market price"); |
| 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 calculated 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) |
| (1) | The value of superficies defined in Article 61 (3) of the Act shall be calculated by converting the amount calculated 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 on Dec. 31, 1998; Aug. 5, 2005; Feb. 29, 2008; Feb. 18, 2010; Jan. 5, 2021> |
| (2) | The value of a right to acquire real estate (including a right to acquire a building and appurtenant land when construction of the building is completed) and a right to use a specific facility referred to in Article 61 (3) of the Act shall be an amount calculated by aggregating the payments (or an amount aggregating the value of a right of association members prescribed by Ordinance of the Ministry of Strategy and Finance based on a management and disposal plan established under Article 74 (1) of the Act on the Improvement of Urban Areas and Residential Environments and such amounts as a down payment and interim payment made until the base date of assessment in cases of housing project member’s right of residency under Article 89 (2) of the Income Tax Act) made until the base date of assessment and an amount corresponding to the premium as of the base date of assessment: 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 on Dec. 31, 2001; Aug. 5, 2005; Feb. 18, 2010; Feb. 3, 2015; Feb. 11, 2020> |
| (3) | In applying 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 corresponding to the depreciation cost prescribed by Ordinance of the Ministry of Strategy and Finance from the date of installation until the base date of assessment 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 calculated by aggregating them). <Amended on Dec. 31, 1998; Dec. 30, 2003; Aug. 5, 2005; Feb. 29, 2008; Feb. 18, 2010; Sep. 20, 2010> |
| (5) | For purposes 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 on Dec. 31, 1998> |
| Article 52 (Assessment of other Tangible Asset) |
| (1) | "Methods prescribed by Presidential Decree" in Article 62 (1) of the Act means 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 means the value calculated by applying the book value (referring to the value calculated by subtracting the depreciation cost from the acquisition price; hereafter the same applies 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 on Dec. 30, 2002; Dec. 30, 2003; Aug. 5, 2005; Feb. 18, 2010; Sep. 20, 2010> |
| (2) | The assessment defined in Article 62 (2) of the Act shall be conducted as follows: <Amended on Dec. 31, 1999; Dec. 30, 2002; Feb. 22, 2008; 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 calculated by applying mutatis mutandis subparagraph 1. |
| (3) | "Amount assessed according to methods prescribed by Presidential Decree" in Article 62 (3) of the Act means an amount classified in the following: <Newly Inserted on Dec. 30, 2003; Feb. 18, 2010; Feb. 15, 2022> |
| 1. | Vessels, aircraft, vehicles, machinery and equipment: An amount converting a rental deposit and an annual rent of the relevant asset from the base date of assessment to the expiry date in the manner prescribed by Ordinance of the Ministry of Strategy and Finance; |
| 2. | Tangible assets other than subparagraph 1: An amount appraised by applying mutatis mutandis Article 50 (7). |
[Title Amended on Feb. 18, 2010]
| Article 52-2 (Assessment of Stocks Traded on Securities Market and KOSDAQ Market) |
| (1) | "Securities market prescribed by Presidential Decree" in Article 60 (1) 1 and the main clause of Article 63 (1) 1 (a) of the Act means the securities market and KOSDAQ market, respectively. <Newly Inserted on Aug. 27, 2013; Feb. 3, 2015; Feb. 7, 2017; Feb. 17, 2021> |
| (2) | "Average amount shall be calculated for the period as prescribed by Presidential Decree" in the main clause of Article 63 (1) 1 (a) of the Act means the average value during the period calculated as follows: <Amended on Feb. 22, 2008; Feb. 18, 2010; Aug. 27, 2013; Feb. 7, 2017> |
| 1. | Where any ground for capital increase, merger, etc. arises before the base date of assessment, 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 date of assessment; hereafter the same applies in this Article) until the day two months elapse from the base date of assessment; |
| 2. | Where a ground for capital increase, merger, etc. arises after the base date of assessment, the period from two months prior to the base date of assessment until the day before such ground arises; |
| 3. | Where a ground for capital increase, merger, etc. arises before or after the base date of assessment, the period from the day after the day when such ground arises before the base date of assessment until the day before such ground arises after the base date of assessment. |
| (3) | "Stocks, etc. prescribed by Presidential Decree" in Article 60 (1) 1 and the main clause of Article 63 (1) 1 (a) of the Act means stocks, etc. excluding stocks, etc. (where stocks, 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 stocks, 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 on Feb. 7, 2017; Feb. 17, 2021> |
| (4) | "No trading days prescribed by Presidential Decree, such as a public holiday" in the main clause of Article 63 (1) 1 (a) of the Act means the following days: <Newly Inserted on Feb. 7, 2017> |
| 1. | Holidays and substitute holidays prescribed in the Regulations concerning Holidays of Government and Municipal Offices; |
[This Article Newly Inserted on Dec. 29, 2000]
[Title Amended on Feb. 7, 2017]
| Article 53 (Assessment of Stocks of Corporations Applying for Listing on KOSDAQ Market) |
| (1) | Deleted. <Feb. 7, 2017> |
| (2) | Deleted. <Feb. 7, 2017> |
| (3) | "Securities market prescribed by Presidential Decree" in Article 63 (2) 2 of the Act means the KOSDAQ. <Newly Inserted on 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 on Feb. 2, 2012; Aug. 27, 2013; Feb. 5, 2016> |
| (5) | In calculating the stake of stocks, etc., held by the largest shareholder etc. defined in Article 63 (3) of the Act, it shall be calculated by adding the stocks, etc. transferred or donated to a third party within one year retrospectively from the base date of assessment to the stocks, etc. held by the largest shareholder etc. <Amended on Aug. 27, 2013> |
| (7) | “Middle-standing enterprise prescribed by Presidential Decree” in the former part of Article 63 (3) of the Act means a middle-standing enterprise as defined in Article 2 of the Special Act on the Promotion of Growth and the Strengthening of Competitiveness of Middle-Standing Enterprises whose average sales for the three taxable periods or business years immediately preceding the taxable period or business year in which the base date of assessment falls is less than 500 billion won. In such cases, sales shall be based on sales on the income statement prepared in accordance with the Korea financial accounting standards and sales for a taxable period or business year that is less than one year shall be converted into one year. <Newly Inserted on Feb. 28, 2023> |
| (8) | "Stocks, etc. prescribed by Presidential Decree, such as those of a small and medium enterprise prescribed by Presidential Decree, a middle-standing enterprise prescribed by Presidential Decree, and a corporation that has continued to have deficits under Article 14 (2) of the Corporate Tax Act within three business years prior to the business year in which the base date of assessment falls" in the former part of Article 63 (3) of the Act means any of the following stocks: <Amended on Feb. 18, 2010; Aug. 27, 2013; Feb. 3, 2015; Feb. 5, 2016; Feb. 11, 2020; Feb. 17, 2021; Feb. 28, 2023> |
| 2. | Where all of the stocks, etc. held by the largest shareholder etc. have been sold within six months (from six months before the base date of assessment to three months after the base date of assessment in cases of donated property) before or after the base date of assessment (limited to cases appropriate for Article 49 (1) 1); |
| 3. | Where profits defined in Articles 28, 29, 29-2, 29-3 and 30 are calculated; |
| 4. | Where a corporation that has issued stocks, etc. subject to assessment holds stocks, etc. issued by another corporation and becomes the largest shareholder, etc. of such another corporation, the stocks, etc. of such another corporation are assessed; |
| 5. | Where a corporation that began business within three years retrospectively from the base date of assessment, 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 date of assessment falls are nil or below; |
| 6. | Where liquidation of a corporation that issued stocks, 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 stocks, 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; |
| 9. | Stocks, etc. issued by small or medium enterprises referred to in paragraph (6) or middle-standing enterprises referred to in paragraph (7). |
[This Article Wholly Amended on Dec. 30, 2002]
[Title Amended on Feb. 7, 2017]
| Article 54 (Assessment of Unlisted Stocks) |
| (1) | The value of stocks, etc. (hereafter in this Article referred to as "unlisted stocks, etc.") 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 calculated by multiplying the net asset value per share by 80/100, the amount calculated by multiplying the net asset value per share by 80/100 shall be the value of unlisted stocks, etc.: <Amended on Dec. 31, 1999; Dec. 30, 2002; Dec. 30, 2003; Aug. 5, 2005; Feb. 22, 2008; Feb. 18, 2010; Feb. 3, 2015; Feb. 5, 2016; Feb. 7, 2017; Jan. 5, 2021> |
Price per share = Weighted average of net profit or loss per share during the latest three years ÷ Interest rate determined by Ordinance of the Ministry of Strategy and Finance in consideration of 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 on Dec. 31, 1999; Dec. 30, 2003>Price per share = Amount of net asset of the relevant corporation ÷ Total number of outstanding stocks (hereinafter referred to as "net asset value") |
| (3) | Where paragraphs (1) and (2) are applied, if a corporation that issued stocks, etc. defined in Article 63 (1) 1 (b) of the Act holds not more than 10/100 of the total number of outstanding stocks, etc. (excluding treasury stocks and treasury equity shares) of another corporation that issued unlisted stocks, etc., such unlisted stocks, 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 on Dec. 31, 1999; Aug. 5, 2005; Feb. 4, 2009; Feb. 3, 2015; Feb. 5, 2016; Feb. 7, 2017> |
| (4) | Where any of the following applies, net asset value defined in paragraph (2) shall apply, notwithstanding paragraph (1): <Amended on Dec. 31, 2004; Aug. 5, 2005; Feb. 2, 2012; Feb. 3, 2015; Feb. 7, 2017; Feb. 13, 2018> |
| 1. | Stocks, 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. | Stocks, 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; <Feb. 13, 2018> |
| 5. | Stocks, etc. of a corporation in which the sum of the value of stocks, etc. accounts for 80/100 of the amount of total assets of the corporation; |
| 6. | Stocks, 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) | For purposes of paragraph (2), "total number of outstanding stocks" shall be according to the total number of outstanding stocks as of the base date of assessment. <Amended on Dec. 29, 2000; Feb. 3, 2015> |
| (6) | Where a taxpayer files an application for deliberation on the assessed value and the methods for assessment of unlisted stocks, 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 stocks, etc., notwithstanding Articles 54 (1) and (4), 55, and 56, assessment of unlisted stocks, 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 on Feb. 5, 2016; 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. |
[Title Amended on Feb. 7, 2017]
| Article 55 (Methods for Calculating Net Asset Value) |
| (1) | An amount calculated by subtracting liabilities from the value of asset as of the base date of assessment 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 calculated by subtracting depreciation cost from acquisition price; hereafter the same applies 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 on Dec. 31, 1998; Dec. 29, 2000; Dec. 30, 2003; Feb. 4, 2009> |
| (2) | For purposes 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 on Dec. 31, 1998; Dec. 30, 2002; Feb. 29, 2008> |
| (3) | For purposes of 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 on Feb. 3, 2015; 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 on 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 date of assessment × 3) + (Net profit or loss per share in business year two years before base date of assessment × 2) + (Net profit or loss per share in business year three years before base date of assessment × 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 on 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 of commencement of inheritance or the date of donation falls in the same year. |
| (3) | For purposes of paragraph (1), the total number of outstanding stocks as of the last day 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 date of assessment falls, the total number of outstanding stocks as of the last day of each business year before capital increase or capital reduction shall be prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended on Dec. 31, 1998; Dec. 31, 1999; Feb. 29, 2008; Jul. 25, 2011; Feb. 3, 2015> |
| (4) | An amount calculated 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 on Dec. 31, 1998; Dec. 31, 1999; Dec. 30, 2002; Dec. 31, 2004; Aug. 5, 2005; Feb. 22, 2008; Feb. 29, 2008; Feb. 4, 2009; Dec. 30, 2010; Jul. 25, 2011; Feb. 21, 2014; Feb. 12, 2019; Feb. 11, 2020; Feb. 28, 2023> |
| 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 tax paid in a foreign country on the amount of dividend income eligible for exclusion from gross income under Article 18-4 of the Corporate Tax Act, and the amount of foreign corporate tax in cases of applying tax credits under Article 57 of that Act) 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 stocks, etc.") new stocks or investment shares (hereafter in this paragraph referred to as "stocks, etc.") to increase capital (including the amount of investment; hereafter in this paragraph the same applies) of the relevant corporation or the fact of retiring stocks, 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 date of assessment falls, an amount calculated 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 stocks, 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 stocks, 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 stocks, etc. or capital reduction with compensation is conducted, and the period less than one month shall be deemed one month: <Newly Inserted on Jul. 25, 2011; Feb. 3, 2015> |
| 1. | The amount paid for a share, etc. for capital increase by issuing new stocks, 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. <Feb. 5, 2016> |
| Article 57 (Assessment of Stocks 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 stocks, 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 of the base date of assessment until initially listing stocks, 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 stocks, etc.: <Amended on Dec. 30, 2002; Aug. 5, 2005; Feb. 22, 2008; Feb. 29, 2008; Feb. 18, 2010; Feb. 3, 2015; Feb. 7, 2017> |
| 2. | The value of stocks, etc. assessed pursuant to Article 63 (1) 1 (a) of the Act (where there is no value under that item, referring to the value under item (b) of that 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 of the base date of assessment 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 stocks, etc. <Amended on Dec. 30, 2002; Feb. 18, 2010; Feb. 7, 2017> |
| (3) | An amount calculated 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 on Dec. 31, 1998; Dec. 29, 2000; Feb. 22, 2008; Feb. 29, 2008; Feb. 18, 2010; Feb. 3, 2015; 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 the provisions, with the exception of the subparagraphs, of Article 40 (1) of the Act; 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 on Dec. 31, 1998; Dec. 29, 2000; Feb. 22, 2008; Feb. 29, 2008;, Feb. 18, 2010; Feb. 3, 2015; Feb. 7, 2017> |
| 1. | The larger of the value assessed by applying mutatis mutandis the main clause of Article 63 (1) 1 (a) of the Act and the latest market value before the base date of assessment 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 date of assessment. In such cases, "stocks, etc." in the main clause 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 date of assessment," respectively; |
| 2. | The following value shall be the value of government bonds, etc. other than those prescribed in subparagraph 1: |
| (a) | An amount calculated by adding the corresponding to uncollected interest until the base date of assessment 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 of the base date of assessment: 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 credits, 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, in consideration of the period for collecting the principal, agreed interest rate, average interest rate determined in the financial market, etc.: Provided, That where all or some of the credits is deemed to be uncollectable as of the base date of assessment, the amount shall not be included. <Amended on Nov. 10, 1997; Dec. 29, 2000; Feb. 29, 2008; Feb. 18, 2010; Jan. 5, 2021> |
| (3) | The standard price at the Exchange as of the base date of assessment or the standard price calculated or publicly announced by a collective investment vehicle or an investment company according to that 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 of the base date of assessment, the redemption price as of the base date of assessment or the standard price on the most recent day before the base date of assessment shall be the assessed value. <Amended on Dec. 30, 2003; Aug. 5, 2005; Feb. 22, 2008; Feb. 18, 2010; Feb. 3, 2015; Feb. 7, 2017> |
[Title Amended on Feb. 18, 2010]
| Article 58-2 (Assessment of Convertible Bonds) |
| (1) | The value assessed by applying mutatis mutandis the methods for assessing national bonds, etc. prescribed in Article 58 (1) 1 shall be the assessed value of the convertible bonds, etc. (referring to the convertible bonds, etc. prescribed in the provisions, with the exception of the subparagraphs, of Article 40 (1) of the Act; hereafter in this Article the same applies) traded on the Exchange among the securities prescribed in Article 63 (1) 2 of the Act. <Amended on Feb. 22, 2008; Feb. 18, 2010; 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 of Article 58 (1) 2 (b) exists, such value may apply: <Amended on Dec. 30, 2002; Dec. 31, 2004; Feb. 18, 2010; Feb. 3, 2015; Feb. 5, 2016; 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 calculated by subtracting the amount calculated by discounting the redemption amount at maturity (including an amount corresponding to interest accrued before maturity; hereafter in this subparagraph the same applies) 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 calculated by adding an amount corresponding to interest accrued until the base date of assessment 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 calculated 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 calculated by subtracting the value of warrant assessed by applying mutatis mutandis item (a) of that subparagraph from the aforementioned amount and by adding the value of warrant assessed by applying mutatis mutandis item (c); |
| (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 calculated 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 calculated 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 calculated by subtracting the difference in dividend from the value of shares before the ex rights date, the value calculated 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 mutatis mutandis items (a) through (c). |
[This Article Wholly Amended on Dec. 29, 2000]
| Article 58-3 (Assessment of Overseas Property) |
| (1) | Where it is inappropriate to apply Articles 60 through 65 of the Act to inherited or donated property located in a foreign country, the value of such inherited or donated property assessed by the country in which it is 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, etc, in consideration of the value appraised by at least two domestic or foreign appraisal institutions (including credit rating agencies prescribed by Ordinance of the Ministry of Strategy and Finance, accounting firms under Certified Public Accountant Act or tax firms under the Certified Tax Accountant Act in cases of assessment of stocks, etc.) that are requested to conduct an appraisal. <Amended on Feb. 15, 2022> |
[This Article Newly Inserted on Dec. 31, 1999]
| Article 58-4 (Assessment of Foreign Currency Assets and Liabilities) |
[This Article Newly Inserted on Feb. 2, 2012]
| Article 59 (Assessment of Intangible Property Rights) |
| (1) | Deleted. <Feb. 21, 2014> |
| (2) | A business right shall be assessed by the price calculated 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 date of assessment (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 on Nov. 10, 1997; Dec. 31, 1998; Dec. 29, 2000; Dec. 30, 2003; Feb. 29, 2008; Feb. 11, 2020; Jan. 5, 2021>[Value corresponding to 50/100 of the weighted average of net profit or loss during the recent three years (where the period is less than three years, such number of years, and a duration for which one has engaged in business as a sole proprietorship in cases falling under any of the items of Article 55 (3) 2)? (Equity capital as of the base date of assessment × Rate prescribed by Ordinance of the Ministry of Strategy and Finance in consideration of interest rates of term deposits with one-year maturity)] |
| (3) | For purposes of paragraph (2), the weighted average of net loss or profit during the recent three years shall be assessed by applying mutatis mutandis Article 56 (1) and (2). In such cases, "net profit or loss per share" in paragraph (1) of that Article and "presumed profit per share" in paragraph (2) of that Article shall be construed as "net profit or loss." <Amended on Dec. 31, 1999; Feb. 21, 2014> |
| (4) | The value of a fishery right and an aquaculture right shall be included in the business rights for the purposes of calculation under paragraph (2). <Amended on Aug. 26, 2020> |
| (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 calculated by averaging the sum of revenue of each year for three years before the base date of assessment may be the annual revenue. <Amended on Dec. 31, 1998; Jun. 30, 2005; Feb. 29, 2008> |
| (6) | An amount calculated by aggregating the amounts calculated by converting average income (where no mining record exists, referring to the estimated net income) for three years before the base date of assessment 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 date of assessment 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 on Dec. 31, 1998; 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 on Dec. 31, 2004; Aug. 5, 2005> |
[Title Amended on Feb. 21, 2014]
| Article 60 (Assessment of Other Conditional Right) |
| (1) | The value of a conditional right, a right with an undetermined duration, and a right in pending litigation referred to in Article 65 (1) of the Act shall be assessed as follows: <Amended on Jan. 5, 2021; Feb. 17, 2021> |
| 1. | For a conditional right, the fair value assessed in consideration of the fact constituting the details of conditions, certainty of fulfilling conditions and other relevant circumstances as of the base date of assessment based on the original price of the right; |
| 2. | For a right with an undetermined duration, the fair value assessed in consideration of the nature of the right, the useful life of the object and other relevant circumstances as of the base date of assessment; |
| 3. | The value of a right in pending litigation is the fair value assessed in consideration of status of litigation proceedings as of the base date of assessment based on facts investigated in relation to the dispute. |
| 1. | A virtual asset traded at a business establishment of any virtual asset service providers publicly notified by the Commissioner of the National Tax Service among virtual asset service providers whose report has been accepted under Article 7 of the Act on Reporting and Using Specified Financial Transaction Information (hereafter in this paragraph referred to as “virtual asset service provider”): The average of its daily average values publicly announced by the relevant virtual asset service provider for each one month before and after the base date of assessment; |
| 2. | Other virtual assets: A reasonably accepted value, such as the daily average value on the trading day or the market value at the closing time, which is publicly announced by the business establishment of any virtual asset service provider other than those falling under subparagraph 1 and a corresponding business operator. |
[Title Amended on Feb. 17, 2021]
| Article 61 (Assessment of Right to Receive Profit from Trust) |
| (1) | The value of a right to receive profits accruing from a trust under 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 trust agreement 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 on Dec. 31, 1998; Feb. 29, 2008; Feb. 7, 2017; Feb. 13, 2018; Feb. 12, 2019; Jan. 5, 2021; Feb. 17, 2021> |
| 1. | Where the beneficiaries of principal and profits from the trust are the same person, the sum of value of trust property assessed pursuant to the Act as of the base date of assessment; |
| 2. | Where the beneficiaries of principal and profits from the trust are different persons, the value prescribed in the following items: |
| (a) | Where profits are earned from principal, the value of trust property assessed pursuant to the Act as of the base date of assessment, less the sum of amounts calculated in accordance with the formula in (b); |
| (b) | Where profits are earned from a right to receive profits, the sum of proceeds receivable each year in the future estimated by the method prescribed by Ordinance of the Ministry of Strategy as of the base date of assessment, calculated in accordance with the following formula, in consideration of the amount, etc. corresponding to the withholding tax on the profits from proceeds: |
Profits from proceeds receivable each year ? an amount corresponding to withholding tax
____________________________________________________________
(1 + interest rate prescribed by Ordinance of the Ministry of Strategy and Finance in consideration of the average rate of return, etc. from trust property)n
n: Number of years from the base date of assessment until the time proceeds are earned.
| (2) | If the time proceeds are earned is not determined for purposes of calculation under item (b) of paragraph (1), the number of years from the base date of assessment until the time proceeds are earned is either 20 years or a life expectancy by applying mutatis mutandis subparagraph 2 or 3 of Article 62. <Newly Inserted on Feb. 17, 2021> |
| 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 on Dec. 30, 2003; Feb. 29, 2008; Dec. 30, 2010; Feb. 5, 2016; Feb. 12, 2019; Jan. 5, 2021> | 1. | Fixed-term periodic payments: The aggregate calculated by the following formula 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 payments receivable each year/(1 + Interest rate specified by Ordinance of the Ministry of Strategy and Finance in consideration of the average interest rate publicly announced by insurance companies)n
n: The number of years lapsed from the base date of assessment
| 2. | Indefinite periodic payments: An amount corresponding 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 is Created) |
| (1) | "Value assessed as prescribed by Presidential Decree" in Article 66 of the Act means any of the following amounts: <Amended on Dec. 31, 1998; Feb. 18, 2010, 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 created is the amount calculated by proportionately dividing the credit for which such property stands security as the amount as of the base date of assessment; |
| 3. | The amount of property for which collateral security is created is the amount of credit for which the relevant property stands security as of the base date of assessment; |
| 4. | The amount of property for which a right of pledge is created 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 agreement 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 agreement 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 created 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 created on the property, an amount calculated 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 on Dec. 30, 2002; Feb. 29, 2008> |
CHAPTER V TAX RETURN AND PAYMENT
| Article 64 (Inheritance Tax Base Return) |
| (1) | An inheritance tax base return prescribed in Article 67 (1) of the Act shall be filed in an inheritance tax base return and voluntary payment statement prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended on Dec. 31, 1998; 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 on Dec. 31, 1998; Dec. 30, 2002; Aug. 5, 2005; Jun. 12, 2006; Feb. 22, 2008; Feb. 29, 2008; Feb. 18, 2010; Nov. 2, 2010; Feb. 2, 2012; Feb. 21, 2014; Feb. 7, 2017; Feb. 13, 2018; Feb. 12, 2019; Feb. 11, 2020; Feb. 28, 2023> |
| 1. | Archived family relationship register of a decedent 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 (22), 16 (11), 17 (3), 18 (2) and (4), 19 (3), 20 (3), and 21 (2) and other documents submitted pursuant to this Act. |
| (3) | Deleted. <Nov. 2, 2010> |
[Title Amended on Feb. 18, 2010]
| Article 65 (Gift Tax Base Return) |
| (1) | A gift tax base return prescribed in Article 68 (1) of the Act shall be filed in a gift tax base return and voluntary payment statement prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended on Dec. 31, 1998; Feb. 29, 2008> |
| (2) | "What is prescribed by Presidential Decree, such as documents substantiating the kinds, quantities and assessed values of donated property, various deductions, etc.” in Article 68 (2) of the Act means any of the followings: <Amended on Feb. 18, 2010> |
| 1. | Documents prescribed in Article 64 (2) 1 and 2. In such cases, "decedent and heir" in subparagraph 1 of that paragraph shall be construed as "donor and donee" and "inheritance" in subparagraph 2 of that paragraph as "donated property"; |
| 2. | Deleted; <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. |
[Title Amended on Feb. 18, 2010]
| Article 65-2 (Deduction of Reported Amount of Tax) |
The calculated amount of inheritance tax and the calculated amount of gift tax prescribed in the main clause, with the exception of the subparagraphs, of Article 69 (1) of the Act and under paragraph (2) of that 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 on 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 of tax payment along 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 on 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 on 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 and Permission for Payment in Annual Installments) |
| (1) | Where a person who intends to apply for payment in 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 filing a revised return under Article 45 of the Framework Act on National Taxes or filing a past due return under Article 45-3 of that Act), the person shall submit an application for payment in annual installments prescribed by Ordinance of the Ministry of Strategy and Finance, of the amount of tax to be paid, along with the inheritance tax return or gift tax return to the head of a tax office having jurisdiction over the place of tax payment: 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 payment deadline (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 that Article, referring to the payment deadline on the relevant payment notice) on the relevant payment notice. <Amended on Dec. 31, 1999; Dec. 30, 2002; Dec. 30, 2003; Feb. 29, 2008; Feb. 18, 2010; Dec. 30, 2010; Feb. 5, 2016; Feb. 12, 2019; Feb. 11, 2020; Feb. 17, 2021> |
| (2) | Upon receipt of an application for payment in annual installments under paragraph (1), the head of a tax office shall determine whether to grant permission and give written notice of the determination to the applicant within the following period. In such cases, where written notice of whether permission is granted is not sent by the relevant period, permission is deemed to be granted: <Amended on Dec. 30, 2010; Feb. 11, 2020; Feb. 17, 2021> |
| 3. | In the case of the proviso of paragraph (1): 14 days after the payment deadline on the payment notice. |
| Article 68 (Calculation of Amount of Annual Installments) |
| (1) | An amount to be paid in annual installments under Article 71 (2) of the Act shall be calculated as follows within the scope of an amount payable annually exceeding 10 million won: <Amended on Dec. 29, 2000; Dec. 30, 2003; Feb. 22, 2008; Feb. 17, 2021; Feb. 15, 2022; Feb. 28, 2023> |
| 1. | The amount of payment in annual installments when payment is made for 10 years from the 10th anniversary of the date on which permission for payment in annual installments is granted under Article 71 (2) 1 (a) of the Act: The amount to be paid annually during the period of payment in annual installments from 10th anniversary of the date on which permission for payment in annual installments is granted shall be calculated in accordance with the following formula: |
Total amount to be paid in annual installments / (Period of payment in annual installments + One);
| 2. | Deleted; <Feb. 28, 2023> |
| 3. | The amount payable in annual installments under Article 71 (2) 1 (excluding cases falling under subparagraph 1 of this paragraph) or 2 of the Act: The amount to be paid annually during the period of payment in annual installments after a deadline for payment after reports or deadline for payment on payment notice (hereafter in this subparagraph referred to as "deadline for payment") or deadline shall be calculated in accordance with the formula of subparagraph 1. |
| (2) | The amount of inheritance tax payable in annual installments pursuant to Article 71 (2) 1 (a) of the Act shall be calculated in accordance with the following formula. In such cases, the value of property the heir inherited on succession to a company means the value of inherited property under paragraph (4) that an heir who satisfies paragraph (3) 3 (including cases where an heir is deemed to have satisfied the requirements) inherits or is to inherit: <Amended on Feb. 11, 2020; Feb. 15, 2022; Feb. 28, 2023> |
[Amount of inheritance tax to be paid × (Amount of property the heir inherited on succession to a company - Amount of deduction for succession to a family business under Article 18 (2) 1 of the Act / Total amount of inherited property - Amount of deduction for succession to a family business under Article 18 (2) 1 of the Act) | (3) | "Where an heir … has succeeded to a small and medium enterprise or middle-standing enterprise satisfying the requirements prescribed by Presidential Decree” in Article 71 (2) 1 (a) of the Act means meeting all of the following requirements that: <Amended on Feb. 11, 2020; Feb. 15, 2022; Feb. 28, 2023> |
| 2. | The decedent shall satisfy all of the following requirements that: |
| (a) | The decedent shall be the largest shareholder, etc. of the small and medium enterprise or middle-standing enterprise referred to in subparagraph 1 and the decedent and specially related persons to him or her shall have held at least 40/100 (or 20/100 in cases of a corporation listed on the exchange) of the total number of stocks, etc. of that enterprise for at least five consecutive years; |
| (b) | The decedent shall have operated such enterprise for at least five consecutive years and shall have served as the representative director, etc. for any of the following periods out of the total period during which such enterprise has been in operation: |
| (i) | At least 30/100 of the total period; |
| (ii) | A period of at least five years (limited to cases where the heir has been serving continuously until the date of commencement of inheritance from the date on which the heir succeeded to the decedent’s position as the representative director, etc.); |
| (iii) | A period of at least three years out of five years retrospectively from the date of commencement of inheritance; |
| 3. | The heir shall satisfy all of the following requirements. In such cases, the heir’s spouse satisfies all of the following requirements, the heir shall be deemed to satisfy such requirements: |
| (a) | The heir shall be 18 years or older as of the date of commencement of inheritance; |
| (b) | The heir shall have taken office as an executive officer by the filing deadline of the inheritance tax base return and shall take office as the representative director, etc. within two years from such filing deadline. |
| (4) | "Inherited property prescribed by Presidential Decree" in Article 71 (2) 1 (a) of the Act means property an heir who satisfies paragraph (3) 3 (including cases where an heir is deemed to have satisfied the requirements) inherits or is to inherit according to the following classification: <Amended on Feb. 11, 2020; Feb. 17, 2021; Feb. 15, 2022; Feb. 28, 2023> |
| 1. | An enterprise subject to the Income Tax Act: the value of business assets such as land, buildings, equipment and machinery directly used for business activities [excluding real estate (including rights to real estate such as superficies and leasehold rights) leased to other persons], less liabilities secured by such assets; |
| 2. | An enterprise subject to the Corporate Tax Act: The value of stocks, etc. of the enterprise [meaning an amount calculated by multiplying the value of such stocks, etc. by the percentage of the value of assets, other than those not related to business as of the date of commencement of inheritance, to the value (meaning the value assessed under Chapter 4 of the Act as of the date of commencement of inheritance) of the enterprise's total assets] |
| (5) | "Property prescribed by Presidential Decree, such as property directly used for a private kindergarten" in Article 71 (2) 1 (a) of the Act and paragraph (4) 5 of that Article 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 on Feb. 5, 2016; Feb. 13, 2018; Feb. 15, 2022; Feb. 28, 2023> |
| (6) | "Where the taxpayer falls under grounds prescribed by Presidential Decree, such as where that taxpayer closes down the business he or she succeeded to or does not engage in such business any longer" in Article 71 (4) 4 of the Act means any of the following cases: <Newly Inserted on Feb. 13, 2018; Feb. 11, 2020> |
| 1. | Where the taxpayer disposes of at least 50/100 of the inherited property referred to in paragraph (4): Provided, That the foregoing shall not apply where the taxpayer falls under any of the items of Article 15 (8) 1; |
| 2. | Where the taxpayer falls under any of the following: Provided, That the foregoing shall not apply where the taxpayer falls under any of the items of Article 15 (8) 2: |
| (a) | Where the heir (where the heir 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 (including cases where the heir has realized no sales) for at least one year or closes down the relevant business; |
| 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 that property … is not used directly for the relevant business" in Article 71 (4) 5 of the Act means the following cases: <Newly Inserted on Feb. 5, 2016; 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 is granted, permission for payment in annual installments originally granted shall be revoked or modified by any of the following methods. In such cases, paragraph (1) 3 shall apply mutatis mutandis to amounts payable in annual installments where permission for payment in annual installments is granted with modification under subparagraphs 1 and 2: <Newly Inserted on Feb. 22, 2008; Feb. 5, 2016; Feb. 13, 2018; Feb. 28, 2023> |
| 1. | Where Article 71 (4) 4 or 5 of the Act is applicable within 10 years from the date on which permission for payment in annual installments is granted, permission for payment in annual installment shall be granted with modification by subtracting the period from the date of original permission to the date on which subparagraph 4 or 5 of that paragraph is applicable from the period for payment in annual installments (or 10 years if such period exceeds 10 years); |
| 2. | Where taxpayers are jointly granted permission for payment in annual installments and Article 71 (4) 1 of the Act is applicable to any of the taxpayers as he or she fail to make an annual installment payment, permission for payment in annual installments granted to the taxpayer who fails to make an annual installment payment (hereafter in this subparagraph referred to as “defaulter”) shall be revoked, permission for payment in annual installments shall be granted to the other taxpayers with modification by subtracting the period from the date of original permission to the date on which Article 71 (4) 1 of the Act is applicable from the period for payment in annual installments, and annual installment payments to be made by the defaulter shall be collected in a lump-sum. In such cases, where the head of the tax office having jurisdiction over the place of tax payment intends to collect the relevant tax with security provided under the latter part Article 71 (1) of the Act, he or she shall collect the relevant tax with the security provided by the defaulter (if the defaulter has provided security jointly with other taxpayers and a portion constituting the security provided by the defaulter can be specified, it means such portion); |
| 3. | 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 in a lump-sum. |
| Article 69 (Additional Rate for Additional Dues on Payment in Annual Installments) |
| (2) | Notwithstanding paragraph (1), if the additional rate is changed at least once during the period for which additional dues shall be paid under the subparagraphs of Article 72 of the Act for purposes of that Article, an amount calculated by applying the additional rate before such change shall be added to each tax installment for the period before the change. <Newly Inserted on Feb. 28, 2023> |
[This Article Wholly Amended on Feb. 18, 2010]
| Article 69-2 (Application for Deferred Payment of Inheritance Tax on Succession to Family Business) |
| 1. | An application for deferred payment prescribed by Ordinance of the Ministry of Strategy and Finance; |
| 2. | A statement of property inherited through succession to a family business and documents supporting the fact of succession to a family business prescribed by Ordinance of the Ministry of Strategy and Finance under Article 15 (22) (only applicable to an application filed under Article 72-2 (1) of the Act); |
| (2) | Upon receipt of an application under paragraph (1), the head of the tax office having jurisdiction over the place of tax payment shall notify in writing the applicant of whether the application is permitted within the periods classified in the following: |
| 1. | Where the applicant files an inheritance tax base return under Article 67 of the Act: Nine months after the filing deadline specified in paragraph (1) of that Article; |
| 2. | Where the applicant files a gift tax base return under Article 68 of the Act: Six months after the filing deadline specified in paragraph (1) of that Article; |
| 4. | In case falling under the proviso of paragraph (1): 14 days after the due date stated in the payment notice. |
| (3) | If notification under paragraph (2) 4 is given after the due date stated in the payment notice, no late-payment penalty under Article 47-4 (1) 1 of the Framework Act on National Taxes (limited to a penalty incurred from the date after the due date stated in the payment notice) and 3 shall be imposed for the period before the date of the notification. |
[This Article Newly Inserted on Feb. 28, 2023]
| Article 69-3 (Calculation of Amount of Tax Deferred) |
| (1) | “Amount prescribed by Presidential Decree” in the provisions, with the exception of the subparagraphs, of Article 72-2 (1) of the Act means an amount calculated according to the following formula: |
Inheritance tax payable x (Value of inherited property on succession to the family business under Article 15 (5)/ Total value of inherited property) | (2) | “Good cause prescribed by Presidential Decree” in the provisions, with the exception of the subparagraphs, of Article 72-2 (3) of the Act means any of the following causes: |
| 1. | For purposes Article 72-2 (3) 1: falling under any of the items of Article 15 (8) 1 (excluding item (c) of that subparagraph); |
| 2. | For purposes Article 72-2 (3) 2: falling under any of the items of Article 15 (8) 2 (excluding item (a) of that subparagraph); |
| 3. | For purposes Article 72-2 (3) 3: falling under any of the items of Article 15 (8) 3 (excluding item (c) of that subparagraph); |
| (3) | “Amount calculated as prescribed by Presidential Decree in consideration of the ratio of disposal” in Article 72-2 (3) 1 of the Act means an amount calculated according to the following formula. In such cases, Article 15 (9) and (10) shall apply mutatis mutandis to the scope of properties for family business and the ratio of disposal: |
| 1. | If the heir (or his or her spouse in cases falling under the latter part of Article 15 (3) 2) does not serve as the representative director, etc. (limited to a period not exceeding five years from the date of commencement of inheritance); |
| 2. | If the heir temporarily closes (including having no business results) the family business for at least one year or permanently closes it. |
| (5) | “Where the equity of the heir who has inherited stocks, etc. has decreased” in the provisions, with the exception of the items, of Article 72-2 (3) 3 of the Act means cases falling under any of the subparagraphs of Article 15 (12). |
| (6) | “Amount calculated as prescribed by Presidential Decree in consideration of the ratio of decrease in equity” in Article 72-2 (3) 3 (b) of the Act and the latter part of paragraph (7) of that Article means an amount calculated according to the following formula, respectively: |
The amount of tax = A x (B/C)
B: Decreased ratio of equity;
C: Ratio of equity as of the date of commencement of inheritance
| (7) | “Amount corresponding to interest calculated as prescribed by Presidential Decree” in the provisions, with the exception of the subparagraphs, of Article 72-2 (3) of the Act means an amount calculated by multiplying the amount of subparagraph 1 by the period of subparagraph 2 and the ratio of the subparagraph 3 (or the ratio of subparagraph 3 multiplied by 50/100 if an heir has obtained permission for deferred payment under Article 72-2 (6) of the Act): |
| 2. | The period from the following day of the filing deadline of the inheritance tax base return on the property originally inherited on succession to family business to the date on which any of the cause provided in the subparagraphs of Article 72-2 (3) of the Act arises; |
| (8) | A person who intends to pay inheritance tax and an amount corresponding to interest under the main clause of Article 72-2 (4) of the Act shall submit a report on the reason for additional collection of a deduction for succession to a family business and calculation of voluntary payment prescribed by Ordinance of the Ministry of Finance and Strategy to the head of the tax office having jurisdiction over the place of tax payment when filing a return under the main clause of that paragraph. |
| (9) | “Amount corresponding to interest calculated as prescribed by Presidential Decree” in the provisions, with the exception of the subparagraphs, of Article 72-2 (5) of the Act means an amount calculated by multiplying the amount of subparagraph 1 by the period of subparagraph 2 and the ratio of the subparagraph 3 (or the ratio of subparagraph 3 multiplied by 50/100 if an heir has obtained permission for deferred payment under Article 72-2 (6) of the Act): |
| 2. | The period from the following day of the filing deadline of the inheritance tax base return on the property originally inherited on succession to family business to the date on which any of the cause provided in the subparagraphs of Article 72-2 (5) of the Act arises; |
| (10) | The heads of the tax offices having jurisdiction over the places of tax payment shall annually verify and manage whether heirs granted permission for deferred payment fall under any of the subparagraphs of Article 72-2 (3) of the Act. |
[This Article Newly Inserted on Feb. 28, 2023]
| Article 70 (Application and Permission for Payment in Kind) |
| (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 on Dec. 29, 2000; Feb. 15, 2013> |
| (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 on Dec. 31, 1999; Dec. 30, 2003; Feb. 15, 2013; Jan. 5, 2021> |
| (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 on Dec. 31, 1999; Aug. 5, 2005; Jul. 27, 2009; Feb. 15, 2013> |
| (5) | Where the head of a tax office having jurisdiction over the place of tax payment 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 on Dec. 31, 1999; Feb. 15, 2013; Feb. 3, 2015> |
| 1. | Deleted; <Dec. 31, 1999> |
| 2. | Deleted. <Dec. 31, 1999> |
| (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 on 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 on Feb. 15, 2013> |
| (8) | Where the property stated in an application for payment in kind falls under any of the subparagraphs of Article 71 (1) before permission for payment in kind is granted, the taxpayer who has filed the application for payment in kind shall withdraw his or her application to the head of a tax office having jurisdiction over the place of tax payment, as prescribed by Ordinance of the Ministry of Strategy and Finance and shall apply for re-assessment of the accepting price of the property paid in kind with the head of a tax office having jurisdiction over the place of tax payment if any of the reasons provided in the items of Article 75 (1) 3 arises. <Newly Inserted on Feb. 11, 2020> |
| (9) | 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. <Amended on Feb. 11, 2020> |
[This Article Wholly Amended on 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 under 73 (1) of the Act is inappropriate for management and disposal due to any of the following reasons, he or she need not permit payment in kind with the property or may order the replacement of the property with another property with which payment in kind is possible: <Amended on Dec. 31, 1999; Dec. 30, 2002; Feb. 29, 2008; Feb. 11, 2020; Feb. 17, 2021> |
| 1. | In cases of real estate referred to in Article 74 (1) 1: where any of the following is applicable; |
| (a) | A property right such as superficies, easement, right to lease on a deposit basis and mortgage is established; |
| (b) | Where the owner of land with which payment in kind is applied and the owner of the building on the land are different persons; |
| (c) | Where the land contains a grave; |
| (d) | Reasons similar to those provided in items (a) through (c), for which management and disposal of property is deemed to be inappropriate by Ordinance of the Ministry of Strategy and Finance. |
| 2. | The securities referred to in Article 74 (1) 2: Where any of the following is applicable; |
| (c) | Where a company that has issued the securities has a loss under Article 14 (2) of the Corporate Tax Act within two years before the date of its application for payment in kind or in the business year in which the period from the date of its application for payment in kind to the date of permission falls: Provided, That cases where payment in kind is permitted by the head of the tax office having jurisdiction over the place of tax payment by jointly investigating the appropriateness of the property applied for payment in kind with the Korea Asset Management Corporation established under the Act on the Establishment of Korea Asset Management Corporation are excluded; |
| (d) | Where an audit report is not prepared by an auditor despite that a company that has issued the securities should undergo an audit under the Act on External Audit of Stock Companies within two years before the date of its application for payment in kind or in the business year in which the period from the date of its application for payment in kind to the date of permission falls; |
| (e) | Reasons similar to those provided in items (a) through (d), for which management and disposal of property is deemed to be inappropriate by Ordinance of the Ministry of Strategy and Finance; |
| 3. | Deleted; <Feb. 11, 2020> |
| 4. | Deleted. <Feb. 11, 2020> |
| (2) | In the case of paragraph (1), the reason shall be notified to a taxpayer. |
| Article 72 (Replacement 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 of 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 on Feb. 5, 2016> |
| (2) | Where no application prescribed in paragraph (1) is filed within the period prescribed in that 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) | 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 on 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 that 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 on Dec. 30, 2003> |
[Title Amended on Dec. 30, 2003]
| Article 72-2 Deleted. <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 on Feb. 3, 2015; Feb. 5, 2016; 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 calculated by subtracting the value of financial assets (referring to the amount calculated 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 on Feb. 3, 2015; 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 corresponding 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 on Dec. 31, 2004; Feb. 3, 2015; Feb. 5, 2016> |
| (4) | Notwithstanding paragraphs (1) and (2), the amount of tax that may be paid in kind with stocks, etc. of a corporation not listed on the stock exchange (hereafter referred to as "unlisted stocks, etc." in this paragraph) shall not exceed the amount calculated by subtracting the amount of inheritance tax imposed [referring to the amount calculated by subtracting the value of unlisted stocks, 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 calculated by subtracting the amount of debt secured by the relevant assets)] from the amount of inheritance tax to be paid. <Newly Inserted on 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 on Feb. 5, 2016; Feb. 13, 2018> |
[Title Amended on Feb. 3, 2015]
| Article 74 (Scope 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 on Dec. 31, 1998; Dec. 31, 1999; Dec. 30, 2002; Aug. 5, 2005; Feb. 22, 2008; Feb. 29, 2008; Feb. 18, 2010; Feb. 15, 2013; Feb. 3, 2015; 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: |
| (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 of the date before the date on which notification of permission for payment in kind is sent, this shall not apply; |
| (b) | Stocks, 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 on Dec. 31, 1999; Feb. 22, 2008; Feb. 18, 2010; Feb. 3, 2015; Feb. 5, 2016; Feb. 7, 2017> |
| 1. | National bonds and public bonds; |
| 2. | Securities (excluding property prescribed in subparagraph 1) falling under the proviso of 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. | Stocks, etc. of a corporation not listed on the Exchange, falling under the proviso of paragraph (1) 2 (b); |
| 6. | A house in which an heir resides as of the date of commencement of inheritance and land appurtenant thereto. |
| Article 75 (Determination of Accepted Value 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 on Dec. 31, 1998; Dec. 31, 1999; Dec. 30, 2002; Feb. 29, 2008; Feb. 15, 2013; Feb. 5, 2016; Feb. 11, 2020> |
| 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; |
| (a) | Deleted; <Dec. 31, 1999> |
| (b) | Deleted. <Dec. 31, 1999> |
| 2. | The accepted 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 of 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 that paragraph; |
| (b) | The amount assessed in accordance with Article 60 (3) of the Act as of 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 that paragraph; |
| 3. | Where the price of securities to be appropriated for payment in kind has decreased by at least 30/100 of the value of the inherited property, compared with the value thereof as of the base date of assessment for any of the following reasons without good cause during the period (hereafter in this subparagraph referred to as “period for payment in kind”) from the base date of assessment to the date before the date of which the notice of permission for payment in kind is issued, such price shall be 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: |
| (a) | Where a company that has issued the securities is divided or merges with another company during the period for payment in kind; |
| (b) | Where a company that has issued the securities disposes of its primary assets during the period for payment in kind; |
| (c) | Where the dividend by a company that has issued the securities increases during the period for payment in kind compared to the dividend in the business year immediately preceding the year in which it applies for payment in kind; |
| (d) | Reasons similar to those provided in items (a) through (c), for which the re-assessment of the accepted value of securities is deemed to be necessary by Ordinance of the Ministry of Strategy and Finance. |
| (2) | The accepted 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 of the date of commencement of inheritance. <Newly Inserted on Feb. 5, 2016> |
| Article 75-2 (Application for Payment in Kind with Cultural Heritage) |
| (1) | “Cultural heritage or work of art prescribed by Presidential Decree” in the provisions, with the exception of the subparagraphs, of Article 73-2 (1) of the Act (hereafter in this Article and Articles 75-3 through 75-5 referred to as “cultural heritage, etc.”) means the following: |
| 1. | Cultural heritage designated or registered under the Cultural Heritage Protection Act, which is tangible cultural heritage or folklore cultural heritage under that Act; |
| 2. | Work of art such as a painting, engraving print, sculpture, craft, and calligraphy. |
| (3) | Article 67 (1) and (3) and Article 70 (2) shall apply mutatis mutandis to applying for payment in kind under Article 73-2 of the Act. In such cases, “payment in annual installments under Article 71 (1) of the Act” in Article 67 (1) is deemed to be “payment in kind under Article 73-2 (1)”, an “application for payment in annual installments prescribed by Ordinance of the Ministry of Strategy and Finance” to be an “application for payment in kind prescribed by Ordinance of the Ministry of Strategy and Finance”, and “notification of whether payment in annual installments is permitted” in Article 67 (3) to be “notification of whether payment in kind is permitted”, “annual installments” to be “payments in kind”, the “date of notification of permission for payment in annual installments” to be the “date of acceptance of property in kind”, and “Article 73 of the Act” in Article 70 (2) to be “Article 73-2 of the Act” and “30 days” to be “nine months”. |
| (4) | Upon receipt of an application for payment in kind under paragraph (3), the head of the tax office having jurisdiction over the place of tax payment shall notify the Minister of Culture, Sports and Tourism of the fact that the application has been filed, along with a copy of the application and relevant materials within two weeks from the date of receipt of such application under Article 73-2 (2) of the Act. |
| (5) | For purposes of Article 73-2 (5) of the Act, where cultural heritage, etc. falls under any of the subparagraphs of Article 75-4 (1) without good cause during the period from the date of commencement of inheritance to the date before an application for payment in kind is filed, the amount of inheritance tax payable on the value of the cultural heritage, etc. shall be excluded from the amount of tax payable regarding which an application for payment in kind can be applied. |
[This Article Newly Inserted on Feb. 28, 2023]
| Article 75-3 (Permission for Payment in Kind with Cultural Heritage) |
| (1) | To request the payment in kind with cultural heritage, etc. to the head of the tax office having jurisdiction over the place of tax payment under Article 73-2 (3) of the Act, the Minister of Culture, Sports and Tourism shall submit the following materials to the head of the tax office having jurisdiction over the place of tax payment within 120 days from the last day of the month in which the date of notification under Article 75-2 (4) falls: Provided, That if it is necessary to extend such period for such a reason as an investigation of the cultural heritage, etc. being delayed, an extension not exceeding 30 days can be granted only once: |
| 1. | Materials supporting why payment in kind is necessary, such as materials proving the historic, academic, or artistic value of the cultural heritage, etc.; |
| 2. | Materials about a plan to utilize the cultural heritage, etc.; |
| 3. | Other materials necessary to determine whether to permit payment in kind. |
| (2) | Upon receipt of a request for payment in kind under paragraph (1), the head of the tax office having jurisdiction over the place of tax payment shall notify in writing the applicant for payment in kind of permission or rejection within the following applicable period: |
| 1. | Where the applicant has filed an inheritance tax base return under Article 67 of the Act: Nine months after the filing deadline specified in paragraph 1 of that Article; |
| 3. | Where the applicant has been notified of the tax base and amount determined under Article 77 of the Act: Nine months after the payment due date stated in the payment notice. |
| (3) | Upon receipt of a request for payment in kind under paragraph (1), the head of the tax office having jurisdiction over the place of tax payment may determine whether to permit payment in kind through consultation with the Minister of Culture, Sports and Tourism if necessary to determine whether the relevant cultural heritage, etc. has a risk of causing a loss to the National Funds. |
| (5) | A taxpayer who has filed an application for payment in kind with cultural heritage, etc. under Article 73-2 (1) of the Act shall withdraw the application, as prescribed by Ordinance of the Ministry of Strategy and Finance, if any of the subparagraphs of Article 75-4 (1) is applicable to the cultural heritage, etc. before the taxpayer is granted permission for payment in kind. |
[This Article Newly Inserted on Feb. 28, 2023]
| Article 75-4 (Rejection of Payment in Kind with Cultural Heritage) |
| (1) | Where any of the following is applicable to cultural heritage, etc. with which an application for payment in kind is filed under Article 73-2 (1) of the Act, the head of the tax office having jurisdiction over the place of tax payment need not permit payment in kind, and may revoke permission for payment in kind if any of the following is applicable to the cultural heritage, etc. during the period from the date of permission for payment in kind to the date of acceptance of the property for payment in kind. In such cases, the head of the tax office having jurisdiction over the place of tax payment shall notify the applicant of the reason for not permitting payment in kind or for revoking permission: |
| 1. | Where a property right, such as a right of pledge, is created in the cultural heritage, etc.; |
| 2. | Where the cultural heritage, etc. is co-owned by other people; |
| 3. | Where the value of the cultural heritage, etc. decreases for such reasons as destruction or deterioration; |
| 4. | In cases prescribed by Ordinance of the Ministry of Strategy and Finance, similar to those provided in subparagraphs 1 through 3. |
| (2) | A person notified under the latter part, with the exception of the subparagraphs, of paragraph (1) or a person who withdraws an application for payment in kind under Article 75-3 (5) may apply for payment in kind with other cultural heritage, etc. again within 20 days from the date of notification or the date of withdrawal: Provided, That where the application for payment in kind with other cultural heritage, etc. is rejected or revoked again under paragraph (1) or a taxpayer withdraws the application under Article 75-3 (5), the applicant or taxpayer cannot re-apply for payment in kind with other cultural heritage, etc. |
| (3) | Where an applicant for payment in kind has a domicile in a foreign country, the period specified in the main clause of paragraph (2) means three months from the date of notification or the date of withdrawal. |
| (4) | Upon receipt of an application for payment in kind filed again under the main clause of paragraph (2), the head of the tax office having jurisdiction over the place of tax payment shall notify in writing the applicant of permission or rejection within nine months from the filing date of the application under the main clause of paragraph (2) of this Article, notwithstanding the subparagraphs of Article 75-3 (2). |
[This Article Newly Inserted on Feb. 28, 2023]
| Article 75-5 (Determination of Accepted Value of Cultural Heritage Appropriated for Payment in Kind) |
The accepted value of cultural heritage, etc. appropriated for payment in kind under Article 73-2 of the Act shall be the following value; | 1. | In cases of cultural heritage, etc. appropriated for payment in kind for each tax installment during the period for payment in annual installments under Article 70 (2) which applies mutatis mutandis under Article 75-2 (3): The value determined by applying mutatis mutandis Article 75 (1) 2. In such cases, “estate and securities” shall be deemed to be “cultural heritage, etc.”. |
| 2. | In any cases other than subparagraph 1: The value of inherited property. |
[This Article Newly Inserted on Feb. 28, 2023]
| Article 76 (Calculation of Deferred Amount of Inheritance Tax on Cultural Heritage Resource) |
| (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 percentage of the property falling under any of the subparagraphs of Article 74 (1) of the Act to inherited property (including donated property added to inherited property under Article 13 of the Act). <Amended on Feb. 28, 2023> |
| (3) | “Land prescribed by Presidential Decree” in Article 74 (1) 3 of the Act means land in any protection zone designated under the Cultural Heritage Protection Act to protect State-designated cultural heritage or Si/Do-designated cultural heritage under that Act. <Newly Inserted on Feb. 28, 2023> |
| (4) | "Reason prescribed by Presidential Decree" in Article 74 (2) of the Act means any of the following cases: <Amended on Dec. 30, 2002; Feb. 29, 2008; Feb. 18, 2010; Feb. 28, 2023> |
| 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. |
| (5) | A person who need not provide security under Article 74 (5) of the Act shall submit a holding status statement of State-designated cultural heritage, etc. prescribed by Ordinance of the Ministry of Strategy and Finance to the head of the tax office having jurisdiction over the place of tax payment by the end of each year under paragraph (6) of that Article. |
| (6) | A person who need not provide security under Article 74 (5) of the Act shall submit a transfer statement of State-designated cultural heritage, etc. prescribed by Ordinance of the Ministry of Strategy and Finance to the head of the tax office having jurisdiction over the place of tax payment when reporting the transfer of State-designated cultural heritage, etc. under paragraph (7) of that Article. <Newly Inserted on Feb. 28, 2023> |
| (7) | Where an heir establishes a museum or gallery pursuant to Article 74 (8) 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. <Amended on Feb. 28, 2023> |
[Title Amended on Feb. 18, 2010]
| Article 77 (Provisions to Be Applied mutatis mutandis) |
Article 76 (1) and (4) shall apply mutatis mutandis to the deferred collection of gift tax on museum objects, etc. referred to in Article 74 (1) 2 of the Act. 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 clause of Article 47 (2) of the Act." [This Article Wholly Amended on Feb. 28, 2023]
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 on 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 clause of Article 76 (5) of the Act means the period beginning on the date of commencement of inheritance and ending on 5th anniversary thereof (hereafter referred to as "inspection standard date" in this Article). <Amended on Dec. 30, 2003; Feb. 18, 2010> |
| (3) | "Primary property prescribed by Presidential Decree" in the main clause of Article 76 (5) of the Act means financial assets, writings, drawings, antiques, tangible property, intangible property rights prescribed in Article 59, etc. <Amended on 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 of commencement of inheritance to the inspection standard date, and the ground for the increase is not objectively clear. <Amended on Dec. 30, 2003> |
| (5) | The subparagraphs of Article 34 (1) shall apply mutatis mutandis to proving the source of funds prescribed in the proviso of Article 76 (5) of the Act. <Amended on Dec. 31, 1998> |
| Article 79 (Notification of Determined Tax Base and Amount) |
Where the head of a tax office notifies a tax base and amount under Article 77 of the Act, he/she shall state the basis for the calculation of the tax base and amount in the payment 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 on Feb. 5, 2016; Feb. 17, 2021>
| Article 80 (Additional Tax) |
| (1) | Deleted. <Feb. 28, 2007> |
| (2) | Deleted. <Feb. 28, 2007> |
| (3) | Deleted. <Feb. 28, 2007> |
| (4) | Deleted. <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 on Feb. 18, 2010> |
| (6) | In imposing additional tax on the stocks, etc. held in excess of the possession standard prescribed in Article 78 (4) of the Act, it shall be imposed, starting with stocks, etc. acquired afterward. <Newly Inserted on Dec. 31, 1999> |
| (7) | "Amount of income in the taxable period of income tax or the business year of corporate tax prescribed by Presidential Decree" in the main clause of Article 78 (5) of the Act means the sum of the following amounts: <Amended on Feb. 7, 2017> |
| 1. | Amount of income for the taxable period of income tax or the business year of corporate tax, during which a public-interest corporation, etc. fails to undergo tax verification by an external expert prescribed in Article 50 (1) of the Act or to file a report prescribed in paragraph (2) of that Article; |
| 2. | Amount of income for the taxable period of income tax or the business year of corporate tax, during which a public-interest corporation, etc. fails to undergo an audit conducted under Article 50 (3) of the Act; |
| 3. | Amount of income for the taxable period of income tax or the business year of corporate tax, during which a public-interest 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 clause, with the exception of the subparagraphs, of Article 78 (5) of the Act means the sum of the value calculated 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 calculated 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 on Feb. 7, 2017> |
| (9) | "Cases prescribed by Presidential Decree" in the proviso, with the exception of the subparagraphs, of Article 78 (5) of the Act means any of the following cases: <Amended on Feb. 7, 2017; Feb. 17, 2021> |
| (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. disbursed 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 disbursed from an account that belongs to a school prescribed in Article 29 of the Private School Act among teachers and staff members), and child caretakers at child welfare centers, librarians at libraries, curators at museums and galleries, and social welfare specialists at social welfare facilities, and researchers prescribed by Ordinance of the Ministry of Strategy and Finance, being researchers at any research institute as defined in subparagraph 3 of Article 2 of the Special Act on Support of Scientists and Engineers for Strengthening National Science and Technology Competitiveness]. 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 on Dec. 31, 1999; Dec. 30, 2002; Feb. 22, 2008; Feb. 18, 2010; Feb. 17, 2021> |
| (11) | Paragraph (6) shall apply mutatis mutandis to the imposition of additional tax under Article 78 (7) of the Act. <Newly Inserted on Dec. 31, 1999; Dec. 30, 2003> |
| (12) | "Expenses directly incurred" in Article 78 (8) of the Act means the following expenses: <Newly Inserted on Dec. 31, 1999; Dec. 31, 2001; Dec. 30, 2003; 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. |
| (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 on 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 calculated 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-interest corporation, etc. <Newly Inserted on Feb. 22, 2008; Feb. 7, 2017> |
| (16) | "Total assets" in Article 78 (11) of the Act means the total value of assets (in cases of real estate, if the price assessed pursuant to Articles 60, 61 and 66 is higher than the price on the statement of financial position, referring to the assessed price) on the statement of financial position as of the last day of a taxable period or business year to be publicly announced. <Newly Inserted on Feb. 22, 2008; Feb. 7, 2017; Feb. 15, 2022> |
| (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 on Feb. 4, 2009; 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 of the payment date; |
| 2. | Where a person to whom payment, other than that under subparagraph 1, is made is verified as missing. |
| (18) | Where a public-interest corporation, etc. fails to report as required under Article 48 (13) of the Act, the head of a tax office shall impose an amount corresponding to 5/1,000 of the total assets provided in paragraph (16) as of the last day of the taxable period or business year in which the public-interest corporation, etc. should report in addition to the tax payable by that public-interest corporation, etc. <Newly Inserted on Feb. 17, 2021; Feb. 28, 2023> |
[Title Amended on Feb. 5, 2016]
| Article 81 (Grounds for Acknowledging Requests 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 on Dec. 30, 2002; 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 that 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 judgment on lawsuits over the recovery of inheritance or lawsuits over the return of legal portion of inheritance due to any dispute between a decedent or heir and a third party is rendered. <Amended on Dec. 30, 2002; Feb. 18, 2010; 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 on Dec. 31, 1999; Dec. 31, 2001; Aug. 5, 2005; Feb. 4, 2009; Feb. 18, 2010; Feb. 15, 2013; Feb. 5, 2016; Feb. 11, 2020; Feb. 17, 2021> |
| 1. | Where the inherited property is expropriated, auctioned (referring to the auction prescribed by the Civil Execution Act) or put to public sale and the amount of compensation, auctioned price, or public sale price is lower than the taxable value of inherited property; |
| 2. | Where stocks, etc. do not amount to the stocks, etc. of the largest shareholder etc. as the stocks, 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 a decedent and an heir) even though the stocks, etc. are assessed at a premium pursuant to Article 63 (3) of the Act; |
| 3. | Where stocks are sold within two months after expiration of the mandatory holding period of the stocks as inherited property is any of the following stocks, and the value of such sale is lower than the taxable value of inheritance tax. In such cases, the foregoing is only applicable if documents supporting the holding of such stocks are submitted to the Commissioner of the National Tax Service: |
| (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 on Dec. 31, 2001; 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 on Feb. 18, 2010; Feb. 5, 2016; 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 on Dec. 30, 2002; Dec. 30, 2003; Feb. 18, 2010> |
| 1. | Where the owner of real estate transfers relevant real estate; |
| 2. | Deleted; <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 on 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 on 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 on Dec. 30, 2002; Dec. 30, 2003; Feb. 18, 2010; Feb. 15, 2013; 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 _____________________________________________________________
CHAPTER VII SUPPLEMENTARY PROVISIONS
| Article 82 (Provision of Data) |
The Minister of the Interior and Safety, a Special Metropolitan City Mayor, a Metropolitan City Mayor, a Special Self-Governing City Mayor, a Do Governor, or a 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 on Mar. 23, 2013; Nov. 19, 2014; 28211, Jul. 26, 2017; Feb. 15, 2022>
[This Article Wholly Amended on Dec. 30, 2010]
| Article 83 (Processing of Unique Identifiable Information) |
[This Article Newly Inserted on Feb. 11, 2020]
| Article 84 (Submission of Payment Statements) |
| (1) | Where a payment statement or details of modification of a title are to be submitted pursuant to Article 82 (1) of the Act, a payment statement 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 on Dec. 31, 1998; Dec. 31, 2004; Feb. 22, 2008; Feb. 29, 2008; Feb. 3, 2015> |
| (2) | Payment statements to be submitted under Article 82 (2) of the Act shall include matters prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended on Dec. 31, 1998; Feb. 29, 2008; Feb. 11, 2020> |
| (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 on 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 on 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 trustor and a beneficiary enter into a trust agreement 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 on Dec. 29, 2000; Dec. 30, 2003; Aug. 5, 2005; Feb. 29, 2008; Feb. 18, 2010> |
| (6) | Where stocks, etc. are transferred (limited to transfer to an individual) between securities accounts managed by a financial investment business entity as defined in Article 8 (1) of the Financial Investment Services and Capital Markets Act (hereafter in this paragraph “financial investment business entity”), the financial investment business entity shall submit a transfer statement containing the following details to the head of the competent tax office within two months from the last day of the quarter in which the date of transfer falls: <Newly Inserted on Feb. 15, 2022> |
| 1. | The name of the financial investment business entity that submits the transfer statement; |
| 2. | The trade names or names of the transferor and the recipient; |
| 4. | Sector name of stocks, etc. transferred; |
[Title Amended on Feb. 22, 2008]
| Article 85 Deleted. <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 on Dec. 31, 1998; Dec. 31, 1999; Jan. 5, 2005; Feb. 29, 2008; 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 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 on Dec. 31, 1998; 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 to the inheritance or donation that commences after this Decree enters into force.
Article 3 (Applicability to Inclusion of Stocks Excessively Contributed to Public-Interest Corporations in Taxable Value)
| (1) | The amended provisions of Articles 13 (3) and 37 (3) shall begin to apply to the contribution of stocks or investment shares made to a public-interest corporation, etc. or the first acquisition of stocks or investment shares by a public-interest corporation, etc. |
| (2) | For the purposes of determining whether the contribution or acquisition exceeds 5/100 of the total number of outstanding 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-interest 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-interest 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 to an application for in-kind payment made after this Decree enters into force. Article 5 (Transitional Measures concerning Scope of Public-Interest Corporations)
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-interest corporation, etc. prescribed in Article 12 of this Decree shall be deemed operated. Article 6 (Transitional Measures concerning Post-Management of Property Contributed to Public-Interest Corporations)
The provisions of Article 38 (4) and (5) shall apply to the property, to which the previous provisions of proviso of 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 previous 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 previous 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 previous 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 to 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 its promulgation. Article 2 (General Applicability)
This Decree shall begin to apply to the 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 to the first merger registered after this Decree enters into force. Article 4 (Applicability to Scope of Public Interest 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 to an 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 to the inheritance or donation after this Decree enters into force.
Article 3 (Applicability to Scope of Public-Interest Corporation)
| (1) | The amended provisions of subparagraph 6 of Article 12 shall begin to apply to the public-interest 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 to the business year of the relevant public-interest 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 to an 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 to the 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 to payments in annual installment and payments in kind after this Decree enters into force. Article 7 (Applicability to Payment Statements)
The amended provisions of Article 84 (4) shall begin to apply to payment or processing after this Decree enters into force. Article 8 (Transitional Measures concerning Public-Interest Corporations)
The public-interest 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 clause of Article 38 (2), paragraphs (4) through (7), (9), (10) and (12) of that 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 to 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 to the first registration of merger after this Decree enters into force; but where the base date of assessment prescribed in the latter part of Article 28 (5) 2 passes before this Decree enters into force, the previous provisions may apply to the base date of assessment. Article 4 (Applicability to Post Management, etc. of Property Received as Donation by Public-Interest Corporations)
| (1) | The amended provisions of proviso of Article 38 (2), and Article 42 (1) and Article 43 (2) shall begin to apply to the first determination of inheritance tax or gift tax after this Decree enters into force. |
| (2) | The amended provisions of the main clause of Article 38 (2), paragraphs (9), (10) and (12) of that Article, Article 41 (1) and Article 43 (3) and (4) shall begin to apply to 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 to 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 previous provisions does not exceed the standard amount of use until five business years from the day this Decree enters into force, the previous provisions shall apply notwithstanding the amended provisions of the latter part of that 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 to 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 to 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 clause 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 clause 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 to the first inheritance or donation after this Decree enters into force.
Article 3 (Applicability to Permission for Taking Office of Directors of Public-Interest Corporations)
The amended provisions of Article 13 (2) 2 shall begin to apply to 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 to the first application for payment in kind after this Decree enters into force. Article 5 (Applicability to Base Date for Calculation of Excessive Stocks Holding in Domestic Corporations by Public-Interest Corporations)
The amended provisions of Article 37 (1) 3 shall begin to apply to the first determination of gift tax after this Decree enters into force. Article 6 (Applicability to Scope of Stocks Entitled to Exemption from Additional Charges)
The amended provisions of Articles 53 (5) and 57 (1) shall begin to apply to 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 to the first application for payment in annual installments after this Decree enters into force. Article 8 (Applicability to Adjustment 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 to the first application for payment in kind after this Decree enters into force. Article 9 (Transitional Measures concerning Base Date for Calculation of Excessive Stocks Holding in Domestic Corporations by Public-Interest 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 of Article 49 (1), subparagraph 2 of that 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 to 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 to 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 to 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 to 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 that paragraph) shall begin to apply to the first determination or correction of inheritance tax or gift tax made after this Decree enters into force. Article 7 (Applicability to Post-Management of Property Received by Public-Interest Corporations as Contribution)
The amended provisions of Article 38 (9) shall begin to apply to the first determination or correction of inheritance tax or gift tax made after this Decree enters into force. Article 8 (Applicability to Post-Management of Amount of Sale of Contributed Property of Public-Interest Corporations)
The amended provisions of Articles 40 (1) 3 and 44 (1) shall begin to apply to 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 to 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 to 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 to 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 to 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 of Inheritance)
The amended provisions of the latter part of Article 82 (2) shall begin to apply to 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 concerning Deemed Donation of Rights to Use Land Gratuitously)
The provisions of Article 27 (5) of the previous Enforcement Decree of the Inheritance Tax and Gift Tax Act (referring to the one Amended on 17459 on December 31, 2001) shall apply to the disposition issued pursuant to Article 27 (5) of the previous Enforcement Decree of the Inheritance Tax and Gift Tax Act (referring to the one Amended on 15193 on December 31, 1996, but not yet Amended on 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 to the first inheritance or donation after this Decree enters into force.
Article 3 (Applicability to Post-Management of Property Received by Public-Interest Corporations as Contribution)
The amended provisions of Article 38 (14) 1 and 2 shall begin to apply to 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 to the first application for payment in kind filed after this Decree enters into force. Article 5 (Applicability to Submission of Payment Statements)
The amended provisions of proviso of Article 84 (1) shall begin to apply to payment statements 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 to the first application filed pursuant to Article 56-2 (1) after this Decree enters into force. |
| (3) | (Applicability to Scope of Acknowledgement of Market Value of Auction Price) The amended provisions of Article 49 (1) 3 shall begin to apply to 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 to the first inheritance or donation after this Decree enters into force. |
| (3) | (Applicability to Scope of Public-Interest Corporations) The amended provisions of the main clause of subparagraph 9 of Article 12 shall begin to apply to 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 to 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 to the first inheritance or donation after this Decree enters into force.
Article 3 (Applicability to Contribution of Stocks to and Acquisition of Stocks by Public-Interest Corporations
| (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 to the first contribution of stocks, etc. to public-interest corporations, etc. or the first acquisition of stocks, etc. by public-interest corporations, etc. made after this Decree enters into force. <Amended on 21292, Feb. 4, 2009> |
| (2) | Where a public-interest corporation that receives contribution of stocks, etc. or acquires stocks, 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-interest 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 stocks, etc. <Newly Inserted on Feb. 4, 2009> |
Article 4 (Applicability to Additional Tax on Shares in Domestic Corporation in Special Relationship Held by Public-Interest Corporations)
The amended provisions of Article 38 (13) shall begin to apply to the taxable period or business year beginning for the first time after January 1, 2009. Article 5 (Applicability to Deduction for Family Business Inheritance)
The amended provisions of Article 15 shall begin to apply to 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 to 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 to 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 to 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 to 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 to 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 56 (1) 2 shall enter into force on January 1, 2011.
Article 2 (General Applicability)
This Decree shall begin to apply to the first inheritance or donation after this Decree enters into force.
Article 3 (Applicability to Methods of Making Contribution to Public-Interest Corporations)
The amended provisions of Article 13 (3) shall begin to apply to the business year in which this Decree enters into force. Article 4 (Applicability to Application and Permission for Payment in Annual Installments)
The amended provisions of the proviso of Article 67 (1) shall begin to apply to 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 to 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 to the inheritance or donation after this Decree enters into force.
Article 3 (Applicability to Tax Verification of Public-Interest Corporations by Outside Experts)
The amended provisions of Article 43 (7) shall begin to apply to the first taxable period or business year after this Decree enters into force. Article 4 (Applicability to Application and Permission for Payment in Annual Installments)
The amended provisions of Article 67 (1) and (2) shall begin to apply to 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-Interest Corporations Subject to Tax Verification by Outside Experts)
The amended provisions of the proviso of Article 43 (2) 1 shall begin to apply to the public-interest corporation, etc. to which the proviso of 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-Interest Corporations under Duty to Make Public Announcement of Statements of Accounts)
The amended provisions of the proviso of Article 43-3 (1) shall begin to apply to the public-interest corporation, etc. to which the amended provisions of the proviso of 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 to 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 to 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 to the first inheritance or donation after this Decree enters into force.
Article 3 (Applicability to Post-Management of Property Received as Contribution by Public-Interest Corporations)
The amended provisions of Article 38 (2) 1 shall begin to apply to 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 to the inheritance or donation after this Decree enters into force.
Article 3 (Applicability to Requirements for Conscientious Public-Interest Corporations Relating to Methods of Making Contribution to Public Interest Corporations)
The amended provisions of Article 13 (3) 3 and 4, (5) and (14) shall begin to apply to 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-interest 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 Deemed 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 to 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-interest 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 to a report filed pursuant to the proviso of 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 to 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 of Public Interest Corporations by Outside Experts)
The amended provisions of Article 43 (3) shall begin to apply to the first outside audit conducted after this Decree enters into force. Article 7 (Applicability to Duty of Public Interest Corporations to Make Public Announcement of Statement of Accounts)
The amended provisions of Article 43-3 (3) 4 shall begin to apply to the first taxable period or business year that commences after this Decree enters into force. Article 8 (Applicability to Appointment of Members when Unlisted Shares are Assessed by Assessment Deliberative Committee)
| (1) | The amended provisions of Article 56-2 (3) shall begin to apply to 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 in this Article referred to as "assessment deliberative committee") 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 and Permission for Payment in Kind)
The amended provisions of Articles 70 (2) and 74 (1) shall begin to apply to the first application for payment in kind made after this Decree enters into force. Article 10 (Applicability to Grounds for Acknowledging Requests for Correction)
The amended provisions of Article 81 (2) shall begin to apply to 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 to the inheritance tax base return filed pursuant to the proviso of 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 to 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 to 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 to the determination of inheritance tax or gift tax after this Decree enters into force. Article 4 (Applicability to Post-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 that Article and paragraph (12) of that Article shall begin to apply to the taxable period or business year in which this Decree enters into force. Article 5 (Applicability to Post-Management of Inheritance to which Deductions for Farming Business Inheritance Were Given)
The amended provisions of Article 16 (4) 6 shall begin to apply to 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 that Article shall begin to apply to 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 proviso of Article 31-7 (2) shall begin to apply to loans to be 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 to 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 to 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 of Public Interest Corporations by Outside Experts)
The amended provisions of Article 43 (2) 1 shall begin to apply to 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-Interest Corporations to Make Public Announcement of Statements of Accounts)
The amended provisions of Article 43-3 (1), (4) and (7) shall begin to apply to the first taxable period or business year that begins in the year in which this Decree enters into force. Article 12 (Applicability to Principles of Assessment)
The amended provisions of Article 49 (1), paragraph (2) 2 of that Article and paragraph (6) of that Article shall begin to apply to 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 that Article shall begin to apply to 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 previous 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 previous 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 on 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 to 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 Compliant Public-Interest Corporation are Met)
The amended provisions of Article 13 (6) shall begin to apply to the first case in which a corporation intends to be confirmed as a conscientious public-interest corporation, etc. after this Decree enters into force. Article 4 (Applicability to Calculation of Donated Profits where Third Person's Property Is Gratuitously Used)
| (1) | The amended provisions of Article 31-9 (1) 1 (a) shall begin to apply to 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 to 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 to 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 to 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 to 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 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 previous 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 to the first case of inheritance or commencing after this Decree enters into force.
Article 3 (Applicability to Requirements for Directors of Public-Interest Corporations)
The amended proviso of Article 13 (3) 2 shall apply to the first correction or decision made after this Decree enters into force. Article 4 (Applicability to Post-Management of Deduction for Family Business Inheritance)
The amended proviso of Article 15 (9) 2 shall begin to apply to 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 of 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 of 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 Excluded from Application of Extra Assessment of Largest Shareholders)
The amended proviso of Article 53 (6) 8 shall begin to apply to the assessment to be made after this Decree enters into force. Article 8 (General Transitional Measures)
The previous 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 previous 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 previous 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 of 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 of 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 of Public-Interest Corporations)
The amended provision of Article 43-3 (3) 4 shall begin to apply to shares to which an exemplary public-interest 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 Stocks)
Where the amended provision of the proviso of Article 54 (1) applies to unlisted stocks, 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-Interest Corporation)
The amended provision of Article 13 (5) shall begin to apply to cases where a public-interest corporation, etc. intends to be verified to be a conscientious public-interest 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 controlling 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 Post-Management of Public-Interest Corporations)
The amended provision of the proviso of Article 38 (19) shall begin to apply to post-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-Interest Corporations)
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 Stocks)
The amended provision of Article 54 (4) shall begin to apply to cases where unlisted stocks, 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 Interest Corporations)
Notwithstanding the amended provisions of Article 12, a person who falls under a public-interest corporation, etc. on December 31, 2018 pursuant to the previous subparagraphs 5 through 8 and 11 of Article 12 shall be deemed to fall under a public-interest 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 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 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 as Donation of Profits 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 as 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 Post-Management of Property Contributed to Public-Interest Corporations)
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 to Make Public Announcement of Statements of Accounts)
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 Persons with Disabilities)
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.
ADDENDA <Presidential Decree No. 30285, Dec. 31, 2019>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation. (Proviso Omitted.)
Article 2 Omitted.
ADDENDA <Presidential Decree No. 30391 Feb. 11, 2020>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation: Provided, That the amended provisions of Article 38 (19) shall enter into force on January 1, 2021. Article 2 (General Applicability)
This Decree shall begin to apply to inheritance or donation that commences after this Decree enters into force.
Article 3 (Applicability to Post-Management of Deduction for Succession to Family Business)
Article 4 (Applicability to Deductions for Inherence of House Where Heir and Decedent Have Resided Together)
The amended provisions of Article 20-2 (1) shall begin to apply to determinations or corrections to be made after this Decree enters into force. Article 5 (Applicability to Presumption of Fund to Acquire Property as Donation)
The amended provisions of Article 34 (2) shall begin to apply to gift tax to be determined after this Decree enters into force. Article 6 (Applicability to Legal Fiction of Profits from Transaction with Specially Related Corporation as Donation)
The amended provisions of Article 34-3 (8) and (12) shall begin to apply to reports to be filed after this Decree enters into force. Article 7 (Applicability to Post-Management of Property Contributed to Public-Interest Corporation)
The amended provisions of Article 38 (19) shall begin to apply to the business years that commence after January 1, 2021. Article 8 (Applicability to Non-Inclusion in Taxable Value of Property Donated to Person with Disability)
The amended provisions of Article 45-2 (6) 3 shall begin to apply to withdrawals to be made after this Decree enters into force. Article 9 (Applicability to Assessment of Property)
| (1) | The amended provisions of Article 49 (1) 3 (e) shall begin to apply to the assessment of property inherited or donated after this Decree enters into force. |
| (2) | The amended provisions of Article 53 (7) 2 shall begin to apply to the assessment of property donated after this Decree enters into force. |
| (3) | The amended provisions of Article 56 (4) and Article 59 (2) shall begin to apply to the assessment of property inherited or donated after this Decree enters into force. |
Article10 (Applicability to Composition of Assessment Deliberative Committee)
The amended provisions of Article 49-2 shall begin to apply to meetings of the assessment Deliberative Committees to be held after this Decree enters into force. Article 11 (Applicability to Application for Payment in Annual Installments)
The amended provisions of Article 67 (2) 2 shall begin to apply to applications for payment in annual installments to be filed after this Decree enters into force. Article 12 (Applicability to Additional Rate for Additional Dues on Payment in Annual Installments)
The amended provisions of Article 69 shall begin to apply to applications for payment in annual installments to be filed after this Decree enters into force: Provided, That the amended provisions of Article 69 may apply to payments to be made after this Decree enters into force if a tax installment is in the period for payment in annual installments before this Decree enters into force, and such amended provisions shall continue to apply to the period for payment in annual installments after the application of such amended provisions. Article 13 (Applicability to Payment in Kind)
The amended provisions of Article 70 (8), Article 71 (1), and Article 75 (1) 3 shall begin to apply to applications for payment in kind to be filed after this Decree enters into force. Article 14 (Applicability to Grounds for Acknowledging Requests for Correction)
The amended provisions of Article 81 (3) shall begin to apply to requests for determination or correction to be made after this Decree enters into force. Article 15 (Applicability to Processing of Unique Identifiable Information)
The amended provisions of Article 83 shall begin to apply to the processing of data containing resident registration numbers after this Decree enters into force. Article 16 (Special Cases concerning Deduction for Succession to Family Business)
Pursuant to Article 3 (2) of the Addenda of the Inheritance Tax and Gift Tax Act partially by Act No. 16846, the amended provisions of Article 18 (6) 1 (d) (limited to provisions about the scope of regular employees; hereafter in this Article the same applies), item (e) of that subparagraph (limited to provisions about the scope of regular employees; hereafter in this Article the same applies) and Article 15 (13) shall apply as provide in the following: | 1. | The amended provisions of Article 18 (6) 1 (d) of the Act may begin to apply to deductions in the taxable periods or business years that commence after January 1, 2020 and, for purposes of applying such amended provisions, such amended provisions shall apply equally to deductions in the entire taxable periods or business years that commence after January 1, 2020; |
Article 17 (Transitional Measures concerning Post-Management of Deduction for Succession to Family Business)
Notwithstanding the amended provisions of Article 15 (15) 2, the previous provisions shall apply to inheritance that has commenced before this Decree enters into force. Article 18 (Transitional Measures concerning Assessment of Property)
Notwithstanding the amended provisions of Article 53 (7) 2, Article 56 (4), and Article 59 (2), the previous provisions shall apply to the assessment of property inherited or donated before this Decree enters into force.
ADDENDA <Presidential Decree No. 30977, Aug. 26, 2020>
Article 1 (Enforcement Date)
This Decree shall enter into force on August, 28, 2020
Articles 2 through 5 Omitted.
ADDENDA <Presidential Decree No. 31101, Oct. 8, 2020>
Article 1 (Enforcement Date)
This Decree shall enter into force on October, 8, 2020
Article 2 Omitted.
ADDENDUM <Presidential Decree No. 31380, Jan. 5, 2021>
This Decree shall enter into force on the date of its promulgation. (Proviso Omitted.)
ADDENDA <Presidential Decree No. 31446, Feb. 17, 2021>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation: Provided, That the amended provisions of the former part, with the exception of the subparagraphs, of Article 38 (5), Article 41-2 (2), Article 43 (5) and (8), Article 60 (2), and Article 71 (1) 2 (a) shall enter into force on January 1, 2020. Article 2 (Applicability to Methods of Calculating Profits from Trust)
The amended provisions of Article 25 (1) 3 (b) shall also apply to inheritance or donation that commences after this Decree enters into force. Article 3 (Applicability to Scope of Donated Property Not Subject to Taxation)
The amended provisions of Article 35 (5) 5 shall begin to apply to gift tax to be determined after this Decree enters into force. Article 4 (Applicability to Post-Management of Property Contributed to Public-Interest Corporations)
| (1) | The amended provisions of Article 38 (3) 2 shall begin to apply to reasons that arise after this Decree enters into force. |
| (2) | The amended provisions of the latter part, with the exception of the subparagraphs, of Article 38 (5) shall begin to apply to the taxable periods or business years that commence after January 1, 2022. |
| (3) | The amended provisions of Article 38 (5) 1 shall begin to apply to additional tax to be determined after this Decree enters into force. |
Article 5 (Applicability to Public-Interest Corporation’s Obligation to Undergo Audit)
The amended provisions of the proviso, with the exception of the subparagraphs, of Article 43 (3) and the proviso of paragraph (4) of that Article shall begin to apply to obligation in the taxable periods or business years that commence after January 1, 2021. Article 6 (Applicability to Public-Interest Corporation’s Obligation to Open and Use Exclusive Account)
The amended provisions of the proviso of Article 43-3 (1), the proviso of paragraph (2) of that Article, and paragraph (3) 4 of that Article shall begin to apply to the taxable periods or business years that commence after January 1, 2021. Article 7 (Applicability to Public-Interest Corporation’s Obligation to Disclose Closing Documents)
The amended provisions of the proviso of Article 43-3 (1), the proviso of paragraph (2) of that Article, and paragraph (3) 4 of that Article shall begin to apply to the taxable periods or business years that commence after January 1, 2021. Article 8 (Applicability to Increased Assessment of Stocks of Largest Shareholder)
The amended provisions of Article 53 (7) 4 shall begin to apply to inheritance tax base returns or gift tax base returns to be filed after this Decree enters into force. Article 9 (Applicability to Assessment of Right to Receive Profit from Trust)
The amended provisions of Article 61 (1) and (2) shall begin to apply to inheritance tax base returns or gift tax base returns to be filed after this Decree enters into force. Article10 (Applicability to Calculation of Period for Payment in Annual Installments)
The amended provisions of Article 68 (4) 1 shall begin to apply to inheritance or donation that commences after this Decree enters into force. Article 11 (Applicability to Additional Tax for Public-Interest Corporation’s Failure to Fulfill Obligation to Prepare and Keep Book)
| (1) | The amended provisions of the proviso of Article 80 (9) 1 shall begin to apply to the taxable periods or business years that commence after January 1, 2021. |
| (2) | The amended provisions of Article 80 (10) shall begin to apply to expenses disbursed in the taxable period or business year in which the enforcement date of this Decree falls. |
Article 12 (Applicability to Grounds for Acknowledging Request for Correction)
The amended provisions of Article 81 (3) 3 shall begin to apply to requests for determinations or correction to be made after this Decree enters into force. Article 13 (Special Cases concerning Verification of Compliant Public-Interest Corporation)
Notwithstanding the amended provisions of Article 13 (5) and (6), the previous Article 13 (5) and (6) shall apply to the taxable periods or business years that commenced before January 1, 2021.
ADDENDA <Presidential Decree No. 32063, Oct. 19, 2021>
Article 1 (Enforcement Date)
This Decree shall enter into force on October, 21, 2021
Articles 2 and 3 Omitted
ADDENDA <Presidential Decree No. 32274, Dec. 28, 2021>
Article 1 (Enforcement Date)
This Decree shall enter into force on December 30, 2021
Articles 2 through 14 Omitted
ADDENDA <Presidential Decree No. 32352, Jan. 21, 2022>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 21, 2022.
Articles 2 through 5 Omitted
ADDENDA <Presidential Decree No. 32414, Feb. 15, 2022>
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 inheritance or donation that commences after this Decree enters into force.
Article 3 (Applicability to Submission of Closing Documents by Public-Interest Corporation)
The amended provisions of the provisions, with the exception of the subparagraphs, of Article 41 (1), Article 43 (6) and the former part of paragraph (7) of that Article shall also apply to public-interest corporations, etc. whose taxable period or business year ended before this Decree enters into force, if four months have not passed from the end of the taxable period or business year as at the time this Decree enters into force. Article 4 (Special Cases concerning Designated Audit)
For purposes of applying the amended provisions of Article 43-2 to conduct a designated audit in the taxable year in which December 31, 2022 falls, notwithstanding such amended provisions, the following shall apply to a public-interest corporation, etc. if the total value of its assets on the statement of financial position as of the last day of the taxable year, two years preceding the taxable year in which December 31, 2022 falls is at least 100 billion won: | 1. | The due date by which public-interest corporations, etc. shall submit materials: To submit materials required under the amended main provisions of Article 43-2 (2) within two weeks from the first day of the third month from the beginning of the taxable year in which December 31, 2022 falls; |
| 2. | The base date for designation of designated auditors: To designate by the 15th day of the fifth months from the beginning of the taxable year in which December 31, 2022 falls; |
| 3. | The due date by which notice of scheduled designation is given and an audit agreement is signed: To calculate from the base date for designation specified in subparagraph 2. |
Article 5 (Transitional Measures concerning Operation Period of Family Business)
Notwithstanding the amended provisions of Article 15 (3) 1 (b) and subparagraph 2 (b) of that paragraph, the previous provisions shall apply to the operation period of family business if inheritance has commenced before this Decree enters into force. Article 6 (Transitional Measures concerning Calculation of Amount Corresponding to Gift Tax)
Notwithstanding the amended provisions of Article 34-5 (9), the previous provisions shall apply to the calculation of an amount corresponding to gift tax on a transaction with a specific corporation under Article 45-5 of the Act if the transaction was made before this Decree enters into force. Article 7 (Transitional Measures concerning Calculation of Amount that Must be Used for Direct Public-Interest Project)
Notwithstanding the amended provisions of Article 38 (19), the previous provisions shall apply to the calculation of an amount that a public-interest corporation, etc. must use for a direct public-interest project in the taxable period or business year that commenced before January 1, 2022. Article 8 (Transitional Measures concerning Assessment of Tangible Assets such as Vessel)
Notwithstanding the amended provisions of Article 52 (3), the previous provisions shall apply to the assessment of inherited property or donated property if inheritance commenced or property was donated before this Decree enters into force. Article 9 (Transitional Measures concerning Assessment of Stocks)
Notwithstanding the amended provisions of Article 58-3 (2), the previous provisions shall apply to the assessment of stocks, etc. among assets in foreign countries if inheritance commenced or property was donated before this Decree enters into force.
ADDENDA <Presidential Decree No. 322447, Feb. 17, 2022>
Article 1 (Enforcement Date)
This Decree shall enter into force on February, 18, 2022
Articles 2 and 3 Omitted
ADDENDA <Presidential Decree No. 32931, Oct. 4, 2022>
Article 1 (Enforcement Date)
This Decree shall enter into force three months after the date of its promulgation. (Proviso Omitted.)
Article 2 Omitted
ADDENDA <Presidential Decree No. 33140, Dec. 27, 2022>
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. 33225, Jan. 10, 2023>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 12, 2023
Articles 2 through 11 Omitted
ADDENDA <Presidential Decree No. 33278, Feb. 28, 2023>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (Applicability to Requirements for Deduction for Succession to Family Business)
| (1) | The amended provisions of Article 15 (2) 3 and paragraph (3) 1 (a) of that Article shall begin to apply to inheritance that commences after January 1, 2023. |
| (2) | Notwithstanding the amended provisions of Article 15 (2) 3 and paragraph (3) 1 (a) of that Article, the previous provisions shall apply to the requirements for deductions for succession to family business if inheritance commenced before January 1, 2023. |
Article 3 (Applicability to Legal Fiction as Donation of Profits through Transactions with Specially Related Corporation)
The amended provisions of Article 34-3 (10) 5, 5-2, 5-3 and paragraph (15) of that Article shall begin to apply to gift tax base returns to be filed under the proviso of Article 68 (1) after this Decree enters into force. Article 4 (Applicability to Base Date for Calculation of Domestic Corporation’s Stocks Held in Excess by Public-Interest Corporation)
The amended provisions of Article 37 (1) 4 shall begin to apply to the stocks, etc. of merged corporations to be acquired after this Decree enters into force. Article 5 (Applicability to Due Date for Opening Exclusive Account by Public-Interest Corporation)
Article 6 (Applicability to Calculation of Net Profit or Loss per Share for Recent Three Years)
The amended provisions of Article 56 (4) 1 (b) and subparagraph 2 (a) of that paragraph shall begin to apply to inheritance or donation that commences after January 1, 2023. Article 7 (Applicability to Requirements for Permission for Payment in Annual Installment)
| (1) | The amended provisions of Article 68 (3) 2 (a) shall begin to apply to inheritance that commences after January 1, 2023. |
| (2) | Notwithstanding the amended provisions of Article 68 (3) 2 (a), the previous provisions shall apply to the requirements for permission for payment in annual installments if inheritance has commenced before January 1, 2023. |
Article 8 (Applicability to Revocation of Payment in Annual Installment)
The amended provisions of the latter part, with the exception of the subparagraphs, of Article 68 (8) shall begin to apply to the cancellation or modification of permission for payment in annual installments after this Decree enters into force. Article 9 (Applicability to Additional Rate for Additional Dues on Payment in Annual Installment)
| (1) | The amended provisions of Article 69 (2) shall begin to apply to additional dues on payment in annual installment to be paid after this Decree enters into force. |
| (2) | Notwithstanding paragraph (1), the amended provisions of Article 69 (2) need not apply where a person granted permission to pay in annual installments before this Decree enters into force pays additional dues on payment in annual installment after this Decree enters into force at his or her choice. |
| (3) | Where the amended provisions of Article 69 (2) does not apply under paragraph (2), such amended provisions shall not continue to apply to the subsequent period for payment in annual installments. |
Article 10 (Applicability to Type of Business Eligible for Deduction for Succession to Family Business)
The amended provisions of subparagraph 1 (k) of the attached Table shall begin to apply to inheritance that commences after this Decree enters into force.
Article 11 (Transitional Measures concerning Requirements for Deduction for Succession to Farming)
Notwithstanding the amended provisions of Article 16 (2) 1 (a) and subparagraph 2 (a) of that paragraph, the previous provisions shall apply to the requirements for deduction for succession to farming if inheritance has commenced before this Decree enters into force.