(Photo= Yonhap news)

[Alpha Biz= Reporter Kim Sangjin] The 2024 tax reform proposal has been unveiled, featuring significant changes to inheritance and gift tax rates and exemptions.

Inheritance and Gift Tax Rate Revisions
Currently, inheritance and gift taxes are structured with a 5-tier progressive rate system as follows:

Up to 100 million won: 10%
Over 100 million won and up to 500 million won: 20%
Over 500 million won and up to 1 billion won: 30%
Over 1 billion won and up to 3 billion won: 40%
Over 3 billion won: 50%
Under the new proposal, the rate structure will be revised to:

Up to 200 million won: 10%
Over 200 million won and up to 500 million won: 20%
Over 500 million won and up to 1 billion won: 30%
Over 1 billion won: 40%
This change will eliminate the highest tax rate of 50% and increase the amount that can be given within the lowest 10% bracket from 150 million won to 250 million won for adult children. This adjustment is expected to reduce the gift tax burden by approximately 10 million won.

Increased Inheritance Exemptions
The exemption for children under inheritance tax will be significantly raised from 50 million won to 5 billion won. If there is one child among the heirs, the total exemption will increase to 700 million won, including the basic exemption of 200 million won and the new child exemption. If there are two children, the exemption will be 1.2 billion won. Previously, in non-extended families, the basic exemption of 5 billion won was often used, but the expanded child exemption will greatly enhance the tax relief.

This tax reform is anticipated to substantially reduce the burden of inheritance and gift taxes, potentially aligning South Korea's tax system with international standards.

 

 

 

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