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By Yoon Ja-young
The Yoon Suk-yeol administration took the first step to lower inheritance tax rates, following an announcement in July that it will overhaul the inheritance tax system.
The Ministry of Economy and Finance announced recently it is taking bids for a research project looking into the introduction of an inherited property acquisition tax system.
The ministry had announced in its tax revision plan in July that it will substitute the current inheritance tax system with the inherited property acquisition tax system to lower the burden on beneficiaries.
Currently, an inheritance tax rate of between 10 percent and 50 percent is applied to the total value of assets bequeathed by the deceased. If the new tax system is introduced, the tax will be imposed on benefactors separately, thereby lowering their tax burden.
There have been complaints, especially among business owner families, over the heavy inheritance tax. A majority of OECD member countries have adopted an inherited property acquisition tax, while only four countries including Korea levy an inheritance tax.
The bereaved family of late Samsung Group Chairman Lee Kun-hee have been making headlines for being subject to around 12 trillion won in taxes on their inheritances, including shares worth 19 trillion won. The late chairman, who passed away in 2020, is reported to have left around 26 trillion won.
Most recently, the bereaved family of Nexon founder Kim Jung-ju filed around 6 trillion won in inheritance tax to the tax agency and paid part of the tax.
The founder of the gaming giant passed away in February and is survived by his wife and two daughters.
As of the end of the last year, Kim held a 67.49 percent stake in NXC, the holding company of Nexon, while his wife held 29.43 percent and their two daughters each had 0.68 percent. The late founder and his family held a total 98.28 percent stake.
The total market cap of Nexon, which is listed on the Tokyo Stock Exchange, is around 24 trillion won. The family's total inheritance, including the late founder's stake in NXC as well as other businesses he had invested in, reportedly surpasses 10 trillion won, and it has been estimated that the family is subject to around 6 trillion won in taxes.
Meanwhile, there is also criticism that the overhaul of the inheritance tax system will only benefit the rich. According to a report by the National Assembly Research Service, only 2.42 percent of inheritors were taxed in 2019 as the majority of them fell below the tax threshold.
