INHERITANCE TAX AND GIFT TAX ACT

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INHERITANCE TAX AND GIFT TAX ACT — 법갈피

Article 4(Property Subject to Gift Tax) #

(1) Gift tax shall be imposed on any of the following donated property pursuant to this Act: <Amended on Dec. 20, 2016>

1. Property or profits gratuitously transferred;

2. Profits generated by receiving property or interest by means of transfer at a remarkably low price: Provided, That in cases of a transaction between persons who are not specially related, it shall be limited to where good cause does not exist as a transactional practice;

3. Profits where the value of property increases after the property is obtained: Provided, That in cases of a transaction between persons who are not specially related, it shall be limited to where good cause does not exist as a transactional practice;

4. Where Articles 33 through 39, 39-2, 39-3, 40, 41-2 through 41-5, 42, 42-2, or 42-3 are applicable, the property or profits therefrom;

5. Where Article 44 or 45 is applicable, the property or profits thereunder;

6. Where the amount of donated property can be calculated by applying mutatis mutandis the provisions listed in subparagraph 4, such as cases in which economic substance is the same as in the provisions listed in subparagraph 4, the property or profits thereunder.

(2) Where Articles 45-2 through 45-5 are applicable, gift tax shall be imposed on the property or profits, by deeming that the property or profits have been donated.

(3) With regard to any property a certain heir obtains in excess of the original share of inheritance as a result of distributing inherited property in consultation with other joint heirs after the share of each heir is fixed by registration, recording, entry of change of a holder in the register, etc. (hereinafter referred to as "registration, etc.") of the inherited property as inheritance commences, gift tax shall be imposed thereon, by deeming that it has been donated by an heir whose share of inheritance decreased due to such distribution: Provided, That where property is obtained in excess of the original share due to distribution by the deadline to file a return of inheritance tax base prescribed in Article 67 and where good cause prescribed by Presidential Decree exists, such as nullification or revocation of the original distribution of inherited property, no gift tax shall be imposed. <Amended on Jun. 9, 2020>

(4) Where a donee returns donated property (excluding money) to a donor according to an agreement between interested parties by the deadline to file a gift tax base prescribed in Article 68 (excluding cases where a tax base and tax amount are determined pursuant to Article 76 before returning the donated property), donation shall be deemed not to have existed from the beginning; and where a donee returns donated property to a donor or re-donates donated property to a donor within three months past the deadline to file a gift tax base prescribed in Article 68, no gift tax shall be imposed on the returned property or re-donated property. <Amended on Jun. 9, 2020>

[This Article Wholly Amended on Dec. 15, 2015]

[Moved from Article 2; previous Article 4 moved to Article 4-2 <Dec. 15, 2015>]

Article 4-2(Obligation to Pay Gift Tax) #

(1) A donee is obliged to pay gift tax on donated property according to the following classifications: <Amended on Dec. 20, 2016; Dec. 31, 2018>

1. Where the donee is a resident (including a non-profit corporation, the head office or main office of which is located in the Republic of Korea; hereafter in this paragraph the same applies): All the donated property subject to gift tax pursuant to Article 4;

2. Where the donee is a non-resident (including a non-profit corporation, the head office or main office of which is located in a foreign country; hereafter in paragraph (6) and Article 6 (2) and (3) the same applies): All the donated property in the Republic of Korea subject to gift tax pursuant to Article 4.

(2) Notwithstanding paragraph (1), where any property is deemed to be donated pursuant to Article 45-2 (including cases where the title holder of such property is a profit-making corporation), the actual owner of such property is obliged to pay gift tax on such property. <Newly Inserted on Dec. 31, 2018>

(3) Where income tax under the Income Tax Act or corporate tax under the Corporate Tax Act is imposed on the donee with respect to donated property under paragraph (1), no gift tax shall be imposed. This shall also apply to cases in which income tax or corporate tax is not imposed, or is reduced or exempted pursuant to the Income Tax Act, the Corporate Tax Act or any other statutes. <Amended on Dec. 31, 2018>

(4) Where corporate tax under the Corporate Tax Act is imposed on property or profits donated to a profit-making corporation (including cases where corporate tax is not imposed, or is reduced or exempted pursuant to the Corporate Tax Act or any other statutes), no gift tax shall be imposed on the shareholders, etc. of the relevant corporation, excluding cases prescribed in Articles 45-3 through 45-5. <Amended on Dec. 31, 2018>

(5) Notwithstanding paragraph (1), where Articles 35 through 37 or Article 41-4 apply and paragraph 6 (2) is applicable to a donee, the gift tax shall be fully or partially exempted. <Amended on Dec. 31, 2018; Dec. 31, 2019>

(6) A donor shall be jointly and severally liable to pay gift tax to be paid by a donee in any of the following cases: Provided, That this shall not apply to cases falling under any of Articles 4 (1) 2 and 3, 35 through 39, 40, 41-2 through 41-5, 42, 42-2, 42-3, 45, 45-3 through 45-5, and 48 (only applicable in cases prescribed by Presidential Decree, where a contributor of a public-interest corporation is not responsible for the operation of the relevant public-interest corporation): <Amended on Dec. 31, 2018; Dec. 29, 2020; Dec. 21, 2021>

1. Where the domicile or residence of the donee is unknown and it is difficult to secure a gift tax claim;

2. Where the donee is deemed to be unable to pay gift tax and it is difficult to secure a gift tax claim, even though the gift tax is collected forcibly;

3. Where the donee is a non-resident;

4. Deleted. <Dec. 31, 2018>

(7) Where a donor is required to pay gift tax pursuant to paragraph (6), the head of the relevant tax office shall notify the donor of the ground therefor. <Amended on Dec. 31, 2018>

(8) This Act shall apply to an association, foundation, or other organization without any legal personality, by deeming it an entity falling under any of the following subparagraphs: <Amended on Dec. 31, 2018>

1. Where it falls under an organization deemed a juristic person under Article 13 (4) of the Framework Act on National Taxes: A non-profit corporation;

2. In other cases not falling under subparagraph 1: A resident or non-resident.

(9) Where an actual owner fails to pay gift tax, additional dues, or a forced collection charge under Article 45-2, and there is a shortage in the amount to be collected even though the gift tax, additional dues or the forced collection charge are collected forcibly from any other property of the actual owner, such gift tax, additional dues, or forced collection charge may be collected from the actual owner as a person liable to pay tax, whose property is deemed donated to a title holder pursuant to Article 45-2, as prescribed in the National Tax Collection Act. <Newly Inserted on Dec. 31, 2018; Dec. 29, 2020>

[This Article Wholly Amended on Dec. 15, 2015]

[Moved from Article 42; Former Article 4-2 is Deleted <Dec. 15, 2015>]

Article 5(Location of Inherited Property) #

(1) The location of any inherited property or donated property shall be a place determined according to the following classifications: <Amended on Jan. 1, 2013; Dec. 15. 2015; Dec. 20, 2016; Aug. 27, 2019; Dec. 22, 2020; Dec. 21, 2021; Dec. 31, 2022>

1. Real estate or a right thereto: The location of such real estate;

2. A mining claim or mining concession right: The location of the mining area;

3. A fishery right, an aquaculture license, or a right to enter fishing grounds: The coast closest to fishing grounds;

4. A vessel: The location of the registry of the vessel;

5. Aircraft: The location of the hangar of the aircraft;

6. Stocks or equity shares (hereafter in this Article, Article 18-2, Article 18-3, Article 22, Article 39, Article 39-2, Article 39-3, Article 41-2, Article 41-3, Article 41-5, Article 60, Article 63, Article 72-2, and Article 82 referred to as "stocks, etc.") or debentures: The location of the head or main office of the corporation that has issued such stocks, etc., or debentures, or in which such stocks, etc., or debentures have been invested: Provided, That with regard to stocks, equity shares, or debentures issued by a foreign corporation in the Republic of Korea pursuant to domestic Acts, the location of the place of business of the financial company, etc. handling the relevant transactions as defined in subparagraph 1 of Article 2 of the Act on Real Name Financial Transactions and Confidentiality (hereinafter referred to as “financial company, etc.”);

7. A monetary trust handled by a person managing a trust business subject to the application of the Financial Investment Services and Capital Markets Act: The location of the place of business that has accepted the relevant trust property: Provided, That with regard to trust property, other than a monetary trust, the location of the trusted property;

8. Financial property prescribed by Presidential Decree, other than subparagraphs 6 and 7: The location of the business place of the financial company, etc. handling such property;

9. A monetary claim: The location of the domicile of the debtor: Provided, That this shall not apply in cases falling under subparagraphs 6 through 8;

10. Tangible property or movables, other than those prescribed in subparagraphs 2 through 9: The location of such tangible property, or the place where the movables are located;

11. Any right requiring registration, including trademark rights, patent rights, etc.: The location of the administrative body with which such rights are registered;

12. A copyright (including publishing rights and neighboring rights): Where the subject work of the copyright has been published, the place of such publication;

13. A right to the business of a person who owns any other place of business, excluding property prescribed in subparagraphs 1 through 12: The location of his or her place of business.

(2) The location of property not stipulated in any subparagraph of paragraph (1) shall be the domicile of the person who holds a right to such property.

(3) Any determination on the location of property prescribed in paragraphs (1) and (2) shall be made, based on circumstances existing as at the time of commencement of inheritance or donation.

[This Article Wholly Amended on Jan. 1, 2010]

Article 6(Jurisdiction over Taxation) #

(1) Inheritance tax shall be levied by the head of a tax office (referring to the Director of the Regional Tax Office with respect to matters deemed specifically important by the Commissioner of the National Tax Service; hereinafter referred to as "head of a tax office, etc.") having jurisdiction over the place of the domicile of an ancestor (referring to the ancestor's residence if his or her domicile does not exist or is unknown; hereinafter referred to as "opening place of inheritance"): Provided, That when the opening place of inheritance is in an overseas location, inheritance tax shall be levied by the head of a tax office, etc. having jurisdiction over the place where the inherited property is located, and where the inherited property extends over jurisdictions of the heads of two or more tax offices, etc., inheritance tax shall be levied by the head of a tax office, etc. having jurisdiction over the place where the main property is located.

(2) Gift tax shall be imposed by the head of a tax office, etc. having jurisdiction over the place of the domicile of a donee (referring to the donee's residence if his or her domicile does not exist or is unknown; hereafter in this paragraph the same applies): Provided, That in any the following cases, gift tax shall be imposed by the head of a tax office, etc. having jurisdiction over the domicile of the donor: <Amended on Dec. 31, 2018>

1. Where the donee is a non-resident;

2. Where the domicile and residence of the donee are unclear;

3. Where the property is deemed donated pursuant to Article 45-2.

(3) Where any of the following is applicable, gift tax shall be imposed by the head of a tax office, etc. having jurisdiction over the place where the donated property is located: <Amended on Jan. 1, 2014; Dec. 15. 2015>

1. Where a donee and a donor are both non-residents;

2. Where address or domicile of both a donee and a donor is unclear;

3. Where a donee is a non-resident or his or her address or domicile is unclear, and a certain person is regarded as a donor pursuant to Articles 38 (2), 39 (2), 39-3 (2), 45-3, and 45-4.

[This Article Wholly Amended on Jan. 1, 2010]

Article 10(Retirement Allowances Deemed Inherited Property) #

Retirement grants, allowances, cash awards for merit, pensions, or other similar ones payable to a decedent, which are actually paid upon the death of the decedent, shall be deemed inherited property: Provided, That none of the following shall be deemed inherited property: <Amended on May 20, 2010; Mar. 20, 2018; Dec. 10, 2019>

1. A bereaved family pension or a lump sum return to be paid upon the death of the decedent pursuant to the National Pension Act;

2. A survivors' pension, a survivors’ disability pension, a survivors’ pension for a public official who died in the line of duty, a survivors’ pension for official duties, a survivors’ pension for a public official who died in the line of duty while under danger, an additional payment to a survivors' pension, a lump-sum survivors' pension, a lump-sum payment to survivors, a survivors’ compensation for a public official who died in the line of duty, a survivors' compensation for official duties, or a survivors’ compensation for a public official who died in the line of duty while under danger, which is paid pursuant to the Public Officials Pension Act, the Public Officials' Accident Compensation Act, or the Pension for Private School Teachers and Staff Act;

3. A veteran's pension for survivor, survivor’s disability pension, survivor’s pension for line-of-duty death, an additional payment to veteran's pension for survivors, a lump-sum veteran’s pension for survivors, survivor’s lump-sum pension for line-of-duty death, a lump-sum payment on retirement to survivors, disability compensation or death compensation paid under the Military Pension Act or the Military Accident Compensation Act;

4. A bereaved family compensation pension, lump-sum bereaved family compensation, lump-sum benefits for a bereaved family, special allowances for a bereaved family, or a pension for a pneumoconiosis bereaved family to be paid pursuant to the Industrial Accident Compensation Insurance Act;

5. Bereaved family compensation or disaster compensation or others similar thereto to be paid by the employer to the bereaved family members of an employee who has died in the course of performing his or her duty, by applying mutatis mutandis the Labor Standards Act, etc.;

6. Those prescribed by Presidential Decree, which are similar to subparagraphs 1 through 5.

[This Article Wholly Amended on Jan. 1, 2010]

Article 16(Non-Inclusion of Property Contributed to Public-Interest Corporations in Taxable Value of Inherited Property) #

(1) The value of property contributed by the filing deadline of an inheritance tax return prescribed in Article 67 (where there are unavoidable reasons prescribed by Presidential Decree, such as the establishment of a public-interest corporation, etc. being delayed for any legal or administrative reason, referring to six months from the last day of the month to which the date such ground ceases to exist belongs), which is the value of property contributed by a decedent or his or her heir among the inherited property to a person who conducts business prescribed by Presidential Decree (hereinafter referred to as "public-interest corporation, etc."), such as business related to religion, charity, academic studies, in consideration of public-interest, shall not be included in the taxable value of inherited property. <Amended on Dec. 20, 2016; Jun. 9, 2020>

(2) Notwithstanding paragraph (1), where a domestic corporation contributes its voting stocks or equity shares (hereafter in this Article referred to as "stocks, etc.") to a public-interest corporation, etc., and the sum of the contributed stocks, etc. and stocks, etc. prescribed in subparagraph 1 exceeds the percentage prescribed in subparagraph 2 of the total number of outstanding voting stocks or the total amount of capital invested (excluding its treasury shares and equity shares; hereafter in this Article referred to as "total number of outstanding stocks, etc.") of the domestic corporation, the value of such excess shall be included in the taxable value of inheritance tax: <Amended on Dec. 19, 2017; Dec. 22, 2020; Dec. 31, 2022>

1. Stocks, etc.: The following stocks, etc.:

(a) Stocks, etc. of the same domestic corporation owned by the contributor as at the time a donor makes a donation;

(b) Stocks, etc. of the same domestic corporation which the contributor and his or her related party have contributed to a public-interest corporation, etc. other than the relevant public-interest corporation, etc.;

(c) Stocks, etc. of the same domestic corporation owned by another public-interest corporation, etc. to which an heir and his or her related party have contributed his property;

2. Percentage: 10/100: Provided, That the percentage specified in each item if any of the following is applicable:

(a) Where he or she makes a contribution to a public-interest corporation, etc. which satisfies all of the following requirements (excluding public-interest corporations, etc. falling under item (b) or item (c)): 20/100:

i) It shall not exercise voting rights of stocks, etc. contributed;

ii) It shall aim at charity, the promotion of learning or social welfare;

(b) A 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 (hereinafter referred to as "business group subject to limitations on cross shareholding"): 5/100

(c) A public-interest corporation, etc. which does not satisfy the requirements provided in the subparagraphs of Article 48 (11): 5/100

(3) Notwithstanding paragraph (2), in any of the following cases, even if a donation exceeds the percentage prescribed in paragraph (2) 2 of the total number of outstanding stocks, etc. of the domestic corporation, no value of such excess shall be included in the taxable value of inheritance tax: <Amended on Dec. 20, 2016; Dec. 19, 2017; Dec. 22, 2020>

1. Where he or she contributes stocks, etc. of the domestic corporation which does not have a special relationship with a contributor to a public-interest corporation, etc. that falls under the proviso, with the exception of subparagraphs, of Article 49 (1) and does not have a special relationship with a business group subject to limitations on cross shareholding, in which case the competent authority deems the contribution necessary in order to efficiently engage in the intended business of the public-interest corporation, etc.;

2. Where he or she contributes stocks, etc. in excess of percentages prescribed in the items of paragraph (2) 2 of the total number of outstanding stocks, etc. to a public-interest corporation, etc. (including cases where a public-interest corporation receives stocks, etc. contributed within three months from the date of its incorporation, and meet the relevant requirements within two years from the date when the business year in which it is incorporated ends) which does not have a special relationship with a business group subject to limitations on cross shareholding and meet the requirements provided in the subparagraphs of Article 48 (11) and, in which case the public-interest corporation, etc. sells stocks, etc. (excluding cases where it sells stocks, etc. to a person who has contributed stocks, etc. or a person who has a special relationship with him or her) which have been contributed, in excess of the designated percentage within three years from the date it holds stocks, etc. in excess of the designated percentage;

3. Where he or she contributes stocks, etc. of a domestic corporation pursuant to the Act on the Establishment and Operation of Public-Interest Corporations and other statutes and regulations.

(4) Where the value of property contributed to a public-interest corporation, etc. is not included in the taxable value of inherited property under paragraphs (1) through (3), and any of the following is applicable, the value prescribed by Presidential Decree shall be included in the taxable value of inherited property: <Newly Inserted on Dec. 20, 2016; Dec. 19, 2017>

1. Where property not included in the taxable value of inherited property and all or some of profits generated from the property are vested in an heir (including a person who has a special relationship with the heir);

2. In cases falling under paragraph (3) 2, where a public-interest corporation does not sell stocks, etc. (excluding cases where it sells stocks, etc. to a person who has contributed stocks, etc. or a person who has a special relationship with him or her) which have been contributed, in excess of percentages prescribed in the items of paragraph (2) 2 of the total number of outstanding stocks, etc. within three years from the date it holds stocks, etc., in excess of the designated percentage.

(5) Methods for contributing inherited property prescribed in paragraphs (1) through (4), the scope of the total number of outstanding stocks, etc., methods for calculating the value in excess of the percentage prescribed in paragraph (2) 2 of the total number of outstanding stocks, etc., the scope of public-interest corporations, etc. which do not have a special relationship with a business group subject to limitations on cross shareholding, the scope of domestic corporations which do not have a special relationship with a contributor to the relevant public-interest corporation, etc., the scope of public-interest corporations, etc. which meet requirements prescribed in paragraph (2) 2 (a), and other necessary matters shall be prescribed by Presidential Decree. <Amended on Dec. 31, 2011; Dec. 20, 2016; Dec. 19, 2017; Dec. 22, 2020>

[This Article Wholly Amended on Jan. 1, 2010]

[Title Amended on Dec. 20, 2016]

Article 18-2(Deduction for Succession to Family Business) #

(1) Where inheritance commences upon the death of a resident and such inheritance qualifies for succession to a family business (hereinafter referred to as “succession to a family business”) [which means a small and medium enterprise prescribed by Presidential Decree or a middle-standing enterprise prescribed by Presidential Decree (excluding any enterprise whose average sales in the three taxable periods of income tax or the three business years of corporate tax immediately preceding the taxable period of income tax or business year of corporate tax in which inheritance commences is 500 billion won or more; hereinafter in this Article the same applies) that is managed by a decedent for at least 10 consecutive years; hereinafter in this Article the same applies], an amount corresponding to the value of inherited property on succession to the family business is deducted from the taxable value of inheritance tax. In such cases, the amount to be deducted shall not exceed the following amount:

1. Where the decedent has managed the enterprise for a period of at least 10 consecutive but not exceeding 20 years: 30 billion won;

2. Where the decedent has managed the enterprise for a period of at least 20 years but not exceeding 30 years: 40 billion won;

3. Where the decedent has managed the enterprise for a period of at least 30 years: 60 billion won.

(2) Notwithstanding paragraph (1), where a family business falls within middle-standing enterprises and the value of property other than the inherited property on succession to the family business an heir inherits or is to inherit exceeds the amount calculated by multiplying the amount to be paid by the heir as inheritance tax by the percentage prescribed by Presidential Decree, deductions prescribed in paragraph (1) (hereinafter referred to as “deduction for succession to a family business”) do not apply to the inherited property on succession to the family business the heir inherits or is to inherit.

(3) An heir who intends to receive a deduction for succession to a family business shall submit documents supporting that the succession qualifies for succession to a family business to the head of the tax office having jurisdiction over the place of tax payment, pursuant to Article 67 (2).

(4) For purposes of paragraphs (1) and (2), the scope of succession to a family business, such as requirements for decedents and heirs, and the methods for filing an application in cases of inheriting stocks, etc., the scope of inherited property on succession to a family business and inherited property other than inherited property on succession to a family business, methods for calculating amounts to be paid as inheritance tax by heirs who succeeds or is to succeeds to a family business, and other necessary matters shall be prescribed by Presidential Decree.

(5) Where an heir who has received a deduction for succession to a family business falls under any of the following within five years from the date of commencement of inheritance without good cause prescribed by Presidential Decree, an amount (referring to an amount additionally multiplied by the rate of disposal of property for the family business in cases falling under subparagraph 1) calculated by multiplying an amount deducted under paragraph (1) by the percentage prescribed by Presidential Decree in consideration of the period of up to the relevant date shall be included in the taxable value of inheritance tax at the time of commencement of the inheritance for the purposes of imposing inheritance tax. In such cases, an amount corresponding to interest calculated as prescribed by Presidential Decree shall be added to the inheritance tax to be imposed:

1. Where the heir has disposed of at least 40/100 of the property for the family business;

2. Where the heir ceases to engage in the family business;

3. Where the equity of the heir who has inherited stocks, etc. has decreased: Provided, That this shall not apply where the heir’s equity has decreased as the heir pays inherited stocks, etc. in kind under Article 73, however, in which cases, the heir shall be the largest shareholder or the largest investor referred to in Article 22 (2);

4. Where both of the following subparagraphs are satisfied:

(a) Where the average of the total number of regular employees prescribed by Presidential Decree (hereafter in this Article referred to as “regular employees”) for five years from the date of commencement of inheritance falls short of 90/100 of the average of numbers of regular employees in the two taxable periods of income tax or two business years of corporate tax immediately preceding the taxable period of income tax or the business year of corporate tax, in which inheritance commences:

(b) Where the amount of total salaries prescribed by Presidential Decree (hereafter in this item referred to as “total salaries”) for five years from the date of commencement of inheritance short of 90/100 of total salaries in the two taxable periods of income tax or two business years of corporate tax immediately preceding the taxable period of income tax or the business year of corporate tax, in which inheritance commences.

(6) The heir who has received a deduction for succession to a family business shall submit the details about property for the family business, the family business, and equity to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree.

(7) For purposes of paragraph (5), the scope of property for a family business, methods for calculating the rate of disposal of property for a family business, methods for determining whether the heir engages in a family business and the heir’s equity has decreased, calculation of the average of the numbers of regular employees, and other necessary matters shall be prescribed by Presidential Decree.

(8) The following applies if a decedent or his or her heir has been sentenced to imprisonment with labor or a fine prescribed by Presidential Decree for tax evasion or accounting fraud in relation to the management of the decedent or heir’s family business (referring to committing any offences prescribed in Article 3 (1) of the Punishment of Tax Offenses Act or Article 39 (1) of the Act on External Audit of Stock Companies for a limited period of 10 years before the date of commencement of inheritance or five years from the date of commencement of inheritance; hereafter in Article 18-3 the same applies) and such sentence becomes final:

1. Where the sentence imposed on the decent or heir becomes final before a tax base and tax rate are determined under Article 76: Do not apply a deduction for succession to a family business:

2. Where the sentenced imposed on the heir becomes final after the heir has received a deduction for succession to a family business: To include the amount of such deduction in the taxable value of inheritance tax at the time of commencement of inheritance and impose the inheritance tax accordingly. In such cases, an amount corresponding to interest calculated as prescribed by Presidential Decree shall be added to the inheritance tax to be imposed.

(9) Where paragraph (5) or paragraph (8) 2 is applicable to an heir, a person liable to pay inheritance tax shall file a return with the head of a tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree, within six months from the last day of the month during which any subparagraph of paragraph (5) or paragraph (8) 2 becomes applicable to the heir, and pay the inheritance tax and an amount corresponding to interest to the head of the tax office having jurisdiction over the place of tax payment, the Bank of Korea, or any postal office: Provided, That this shall not apply where the person has already paid the inheritance tax and an amount corresponding to interest imposed under paragraph (5) or paragraph (8) 2.

(10) Where there is any capital gains tax paid or payable under Article 97-2 (4) of the Income Tax Act when imposing inheritance tax under paragraph (5) or paragraph (8) 2, an amount corresponding to the capital gains tax calculated as prescribed by Presidential Decree is deducted from the calculated amount of inheritance tax: Provided, That where the amount remaining after such deduction is negative, it is deemed zero.

[This Article Newly Inserted on Dec. 31, 2022]

Article 18-3(Deduction for Succession to Farming) #

(1) Where inheritance commences upon the death of a resident and the inheritance qualifies for succession to farming prescribed by Presidential Decree [including stocking farming, fishing farming, and forestry; hereafter in this Article the same applies] (hereinafter referred to as “succession to farming”), an amount (which shall not exceed the maximum of three billion won) corresponding to the value of the inherited property on succession to farming shall be deducted from the taxable value of inheritance tax.

(2) An heir who intends to receive a deduction for succession to farming under paragraph (1) (hereinafter referred to as “deduction for succession to farming”) shall submit documents supporting that the succession qualifies for succession to farming to the head of the tax office having jurisdiction over the place of tax payment, pursuant to Article 67 (2).

(3) For purposes of paragraph (1), the scope of succession to farming, such as requirements for decedents and heirs, and the methods of filing an application in cases of inheriting stocks, etc., and other necessary matters shall be prescribed by Presidential Decree.

(4) Where an heir who has received a deduction for succession to farming falls under any of the following subparagraphs within five years from the date of commencement of inheritance without good cause prescribed by Presidential Decree, an amount calculated by multiplying an amount deducted under paragraph (1) by the percentage prescribed by Presidential Decree in consideration of the period of up to the relevant date is included in the taxable value of inheritance tax at the time the inheritance commences for the purposes of imposing inheritance tax. In such cases, an amount corresponding to interest calculated as prescribed by Presidential Decree shall be added to the inheritance tax to be imposed:

1. Where the heir has disposed of the inherited property eligible for a deduction for succession to farming (hereinafter referred to as “inherited property on succession to farming”);

2. Where the heir ceases to engage in farming.

(5) For purposes of paragraph (4), the scope of inherited property on succession to farming, methods of determining whether the heir engages in farming, and other necessary matters shall be prescribed by Presidential Decree.

(6) The following applies if a decedent or his or her heir has been sentenced to imprisonment with labor or a fine prescribed by Presidential Decree for tax evasion or accounting fraud in relation to the management of the decedent or heir’s farming and such sentence becomes final:

1. Where the sentence imposed on the decent or heir becomes final before a tax base and tax rate are determined under Article 76: Do not apply a deduction for succession to farming:

2. Where the sentenced imposed on the heir becomes final after the heir has received a deduction for succession to farming: To include the amount of such deduction in the taxable value of inheritance tax at the time of commencement of inheritance and impose the inheritance tax accordingly. In such cases, an amount corresponding to interest calculated as prescribed by Presidential Decree is added to the inheritance tax to be imposed.

(7) Where paragraph (4) or paragraph (6) 2 is applicable to an heir, a person liable to pay inheritance tax shall file a return with the head of a tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree, within six months from the last day of the month during which any subparagraph of paragraph (4) or paragraph (6) 2 becomes applicable to the heir, and pay the inheritance tax and an amount corresponding to interest to the head of the tax office having jurisdiction over the place of tax payment, the Bank of Korea, or any postal office: Provided, That this shall not apply where the person has already paid the inheritance tax and an amount corresponding to interest imposed under paragraph (4) or paragraph (6) 2.

[This Article Newly Inserted on Dec. 31, 2022]

Article 19(Inheritance Deduction for Surviving Spouse) #

(1) The actual amount inherited by a surviving spouse as inheritance commences upon the death of a resident shall be deducted from the taxable value of inherited property within the limit of a smaller amount of the following: <Amended on Dec. 20, 2016>

1. Ceiling amount calculated in accordance with the following formula:

Number of persons entering a golf course x Number of holes actually played/Total number of holes

2. Three billion won.

(2) An inheritance deduction for a surviving spouse under paragraph (1) shall apply where the inherited property is divided (in cases requiring the registration, entry, or change of holders, limited to those who have completed registration, entry, or change of holders; hereafter in this Article the same applies) by the date on which nine months elapse from the following day of the filing deadline of an inherited tax base return prescribed in Article 67 (hereafter in this Article referred to as "division deadline of the inherited property of a spouse"): Provided, That an heir shall report the fact that the inherited property has been divided, if any, to the head of the tax office having jurisdiction over the place of tax payment by no later than the division deadline of the inherited property of a spouse. <Amended on Dec. 22, 2020>

(3) Notwithstanding paragraph (2), if it is not feasible to divide the inherited property of a spouse by the division deadline of the inherited property of a spouse due to any unavoidable reason prescribed by Presidential Decree, and the inherited property is divided and a report thereon is filed by the date on which six months elapse from the following day of the division deadline of the inherited property of a spouse (if there exists any inevitable ground, such as filing of a lawsuit or an administrative appeal, the date on which the lawsuit or administrative appeal is concluded) (where the tax base and amount of tax prescribed in Article 76 are decided after six months from the following day of the division deadline of the inherited property of a spouse, it refers to the date of such decision), the inherited property of the spouse is deemed to have been divided by the division deadline of the inherited property of a spouse: Provided, That this shall be limited to such cases where an heir reports the unavoidable reason to the head of the tax office having jurisdiction over the place of tax payment by the division deadline of the inherited property of a spouse, as prescribed by Presidential Decree. <Amended on Jan. 1, 2014; Dec. 31, 2019; Jun. 9, 2020>

(4) Where no actual amount is inherited by the surviving spouse or the amount inherited by the surviving spouse is less than 500 million won in cases falling under paragraph (1), 500 million won shall be deducted, notwithstanding paragraph (2).

[This Article Wholly Amended on Jan. 1, 2010]

[Paragraph (3) of this Article was amended by Act No. 12168 promulgated on January 1, 2014 pursuant to the decision on unconstitutionality by the Constitutional Court made on May 31, 2012]

Article 23-2(Inheritance Tax Deduction for House in which Decedent and Heir Have Lived Together) #

(1) Where inheritance commences upon the death of a resident and all of the following requirements are met, an amount corresponding to 100/100 of the value of an inherited house (referring to the value including the value of land annexed to the house prescribed in Article 89 (1) 3 of the Income Tax Act, but excluding the amount of debt secured by the house and land annexed to the house as of the date of commencement of inheritance) shall be deducted from the taxable value of inheritance: Provided, That the deductible amount shall be limited to 600 million won: <Amended on Dec. 27, 2010; Jan. 1, 2013; Jan. 1, 2014; Dec. 15. 2015; Dec. 20, 2016; Dec. 31, 2019; Dec. 21, 2021>

1. That a decedent and his or her heir (limited to the decedent’s lineal descendant and the spouse of the lineal descendant who becomes an heir under Article 1003 (2) of the Civil Act; hereafter in this Article the same applies) shall have lived together in one and the same house continuously for at least 10 years retroactively from the date of commencement of inheritance (excluding the period during which the heir has been a minor);

2. That while an ancestor and his or her heir have formed a household continuously for at least 10 years retroactively from the date inheritance commences, they shall have met the requirements of one house for one household prescribed by Presidential Decree (hereafter in this Article referred to as "one house for one household"). In such cases, if there exists a period during which they have not owned a house, such period shall be included in the period meeting the requirements of one house for one household under the fore part;

3. That it shall be a house inherited by an heir who owns no house or has been living together with the decedent while owning one house jointly with the decedent under the same household as of the date of commencement of inheritance.

(2) Where a decedent and his or her heir have not been able to live together due to any ground prescribed by Presidential Decree for purposes of paragraph (1), they are deemed to have lived together continuously, but the period during which they have not lived together shall not be included in the period of living together under that paragraph.

(3) Where one household temporarily owns two houses, methods of determining a house in which family members live together, and other necessary matters shall be prescribed by Presidential Decree. <Newly Inserted on Dec. 20, 2016>

[This Article Wholly Amended on Jan. 1, 2010]

Article 35(Donation of Profit from Acquisition at Low Price or Transfer at High Price) #

(1) Where property (excluding property prescribed by Presidential Decree, such as convertible bonds; hereafter in this Article the same applies) is acquired at a price below the market value or is transferred at a price above the market value between specially related persons, and where the difference between the price actually paid or received and the market value is the same as or above the standard amount prescribed by Presidential Decree (hereafter in this paragraph referred to as "standard amount"), an amount calculated by subtracting the standard amount from the difference between the price actually paid or received and the market value, by regarding the date of acquisition or the date of transfer of the relevant property as the date of donation, shall be the price of property donated to the person who earns profits from such acquisition or transfer.

(2) Where property is acquired or transferred between persons, other than specially related persons, at a price significantly lower or higher than the market value without good cause, as a transactional practice, and where the difference between the price actually paid or received and the market value is at least the standard amount prescribed by Presidential Decree, an amount calculated by subtracting the amount prescribed by Presidential Decree from the difference between the price actually paid or received and the market value, by regarding the day of acquisition or the day of transfer of the relevant property as the date of donation, shall be the price of property donated to the person who earns profits from such acquisition or transfer.

(3) Where property is acquired or transferred and Article 52 (1) of the Corporate Tax Act and Article 101 (1) of the Income Tax Act (including cases to which Article 101 (1) of the Income Tax Act applies mutatis mutandis under Article 87-27 of that Act) is not applicable to the transaction as the price actually paid or received corresponds to the market value under Article 52 (2) of that Act, paragraphs (1) and (2) shall not be applicable: Provided, That this shall not apply where inheritance tax or gift tax is deemed to have been reduced by fraud or other improper means. <Amended on Dec. 21, 2021>

(4) For purposes of paragraphs (1) and (2), determination of the date of acquisition or the date of transfer and other necessary matters shall be prescribed by Presidential Decree.

[This Article Wholly Amended on Dec. 15, 2015]

[Enforcement Date: Jan. 1, 2025]

Article 39(Donation of Profit from Capital Increase) #

(1) Where a person gets any of the following profits as a corporation issues new stocks or equity shares (hereafter in this Article referred to as "new stocks") to increase its capital (including the amount of investment; hereinafter the same applies), an amount corresponding to the profits shall be the value of property donated to the person who gets the profits by regarding the day prescribed by Presidential Decree, such as the day on which the price of stocks is paid, as the date of donation: <Amended on Dec. 31, 2011; Dec. 15, 2015; Dec. 20, 2016>

1. Where new stocks are issued at a price below the market value (referring to the price assessed under Articles 60 and 63; hereafter in this Article, Articles 39-2, 39-3 and 40 the same applies): Any of the following profits:

(a) Where a shareholder, etc. of the relevant corporation renounces, in whole or in part, their right to be allotted new stocks (hereafter in this Article referred to as "preemptive right"), and where such corporation allots such renounced new stocks (hereafter in this paragraph referred to as "forfeited stocks") (excluding where a listed corporation prescribed by the Financial Investment Services and Capital Markets Act allots such new stocks through public offering (excluding cases prescribed by Presidential Decree) prescribed in Article 9 (7) of that Act; hereafter in this paragraph the same applies), profits from the allotment of forfeited stocks earned by those who are allotted the forfeited stocks;

(b) Where a shareholder, etc. of the relevant corporation has renounced, in whole or in part, their preemptive right, and where the corporation does not allot the forfeited stocks, profits from the acquisition of the new stocks earned by persons specially related to those who renounce acquiring the new stocks;

(c) Profits earned by persons, who are not shareholders, etc. of the relevant corporation, by being directly allotted new stocks by the relevant corporation (including cases in which they directly take over or acquire the relevant new stocks from an underwriter prescribed in Article 9 (12) of the Financial Investment Services and Capital Markets Act and through methods prescribed by Presidential Decree; hereafter in this paragraph the same applies);

(d) Profits earned by shareholders, etc. of the relevant corporation by being directly allotted new stocks in excess of the number of stocks, etc. they are entitled to, under equal conditions, in proportion to the number of stocks, etc. owned by them;

2. Where new stocks are issued at a price above the market value: Any of the following profits:

(a) Where a shareholder, etc. of the relevant corporation renounces, in whole or in part, their preemptive right, and where the relevant corporation allots forfeited stocks, profits earned by the shareholder, etc. who renounces taking over new stocks that are allotted to them as a person who has a special relationship with them takes over such forfeited stocks that are allotted to him or her;

(b) Where a shareholder, etc. of the relevant corporation renounces, in whole or in part, their preemptive right, and where the relevant corporation does not allot forfeited stocks, profits earned by the shareholder, etc. who renounces taking over new stocks as new stocks are taken over by another shareholder, etc. who has a special relationship with the shareholder, etc. who renounces taking over new stocks;

(c) Where a person who is not a shareholder, etc. of the relevant corporation takes over new stocks after being allotted new stocks directly by the relevant corporation, profits earned by a shareholder, etc. of the relevant corporation who is specially related to the aforementioned person;

(d) Profits earned by a shareholder, etc. of the relevant corporation as another shareholder, etc. of the relevant corporation, who is specially related to the aforementioned shareholder, etc. of the relevant corporation, is directly allotted new stocks in excess of the number of stocks they are entitled to be allotted, under equal conditions, in proportion to the number of stocks possessed by them;

3. Where a corporation issues classes of shares (hereafter in this subparagraph referred to as "convertible shares") prescribed in Article 346 of the Commercial Act when subparagraphs 1 and 2 apply: Profits classified as follows generated by converting to different classes of shares after the issuance thereof:

(a) Where the corporation issues convertible shares at the value lower than the market price: Profits earned by a person to whom shares were issued because the value of shares which were issued or will be issued to him or her exceeds the value of convertible shares as at the time the convertible shares are issued;

(b) Where the corporation issues convertible shares at the value higher than the market price: Profits earned by a person who has a special relationship with a person to whom shares were issued because the value of shares which were issued or will be issued to him or her becomes lower than the value of convertible shares as at the time the convertible shares are issued.

(2) In applying paragraph (1) 1, where the number of minority shareholders prescribed by Presidential Decree (hereafter in this paragraph and Article 39-3 referred to as "minority shareholder") who donate profits is at least two, profits shall be calculated by deeming the number of minority shareholders to be one. <Amended on Dec. 15, 2015>

(3) In applying paragraphs (1) and (2), the method of calculating profits and other necessary matters shall be prescribed by Presidential Decree. <Amended on Dec. 31, 2011; Dec. 15, 2015>

[This Article Wholly Amended on Jan. 1, 2010]

Article 40(Donation of Profit from Conversion of Convertible Bonds into Stocks) #

(1) Where any of the following profits is earned by taking over, acquiring or transferring convertible bonds, bonds with warrants (referring to warrants if they are detachable) or other bonds (hereafter in this Article and Article 41-3 referred to as "convertible bonds, etc.") with a right to conversion into stocks, exchange for stocks or takeover of stocks, or by converting convertible bonds, etc. into stocks, exchanging convertible bonds, etc. for stocks or taking over stocks (hereafter in this Article referred to as "conversion into stocks, etc."), an amount corresponding to such profits shall be the value of property donated to a person who earns such profits: Provided, That where the amount corresponding to such profits is below the standard amount prescribed by Presidential Decree, such case is excluded: <Amended on Dec. 31, 2011; Dec. 15, 2015; Dec. 20, 2016>

1. Any of the following profits earned by taking over or acquiring convertible bonds, etc. on the date of takeover or acquisition:

(a) Profits earned from the acquisition of convertible bonds, etc. from a specially related person at a price below the market value;

(b) Profits earned by the largest shareholder of a corporation issuing convertible bonds, etc. (excluding a stock market listed corporation prescribed by the Financial Investment Services and Capital Markets Act that issues convertible bonds, etc. through public offering of securities (excluding cases prescribed by Presidential Decree) or by other shareholder who is specially related to the largest shareholder, as he or she takes over or acquires (including cases in which he or she accepts or acquires convertible bonds, etc. from an underwriter prescribed in Article 9 (12) of the Financial Investment Services and Capital Markets Act and through other methods prescribed by Presidential Decree; hereafter in this paragraph referred to as "takeover, etc.") convertible bonds, etc. from the corporation at a price below the market value in excess of the number of convertible bonds, etc. he or she is entitled to be allotted, under equal conditions, in proportion to the number of stocks in possession;

(c) Profits earned by a person specially related to the largest shareholder of a corporation issuing convertible bonds, etc. (excluding a shareholder of the corporation) as he or she takes over, etc. the convertible bonds, etc. from the corporation at a price below the market value;

2. Any of the following profits earned by converting, etc. convertible bonds, etc. into stocks on the day conversion into stocks, etc. is made:

(a) Where the convertible bonds, etc. have been acquired from the specially related person, the profits earned as the value of the stocks received or to be received with the convertible bonds, etc. exceeds the value of conversion, exchange or acceptance (hereafter in this paragraph referred to as "conversion value, etc.");

(b) Where the largest shareholder of the corporation issuing the convertible bonds, etc. or other shareholders who are the specially related parties of the largest shareholder have accepted, etc. the convertible bonds, etc. from the relevant corporation in excess of the number entitled to be allotted, under equal conditions, in proportion to the number of stocks they possessed, the profits earned as the value of the stocks received or to be received with the convertible bonds, etc. exceeds the value of the conversion value, etc.;

(c) Where a non-shareholder of the corporation issuing the convertible bonds, etc. who is a specially related person of the largest shareholder has accepted, etc. the convertible bonds, etc. from the relevant corporation, the profits earned as the value of the stocks received or to be received with the convertible bonds, etc. exceeds the value of the conversion value, etc.;

(d) Where the convertible bonds, etc. are converted into or exchanged with the stocks, or the stocks are accepted, the profits earned by the specially related person of those to whom the relevant stocks are delivered, as the value of stocks delivered against the convertible bonds, etc. becomes less than the conversion value, etc.;

(e) Deleted; <Dec. 15, 2015>

3. Where the methods and profits are similar to those stipulated in subparagraph 1 or 2, the profits earned directly or indirectly from a specially related person, by conducting the transaction of the convertible bonds, etc. or by converting the convertible bonds, etc. into the stocks.

(2) The largest shareholder prescribed in paragraph (1), the value of stocks received or to be received and the method of calculating profits, determination on the date of donation and other necessary matters shall be prescribed by Presidential Decree. <Amended on Dec. 31, 2011; Dec. 15, 2015>

[This Article Wholly Amended on Jan. 1, 2010]

Article 41-2(Donation of Profit from Excess Dividend) #

(1) Where a corporation allots or distributes a profit or surplus fund (hereafter in this paragraph referred to as "dividend, etc.") and the largest shareholder or largest investor prescribed by Presidential Decree in the corporation (hereafter in this Article referred to as "largest shareholder, etc.") receives dividends, etc. in an amount more than the proportion of stocks, etc. he or she possesses, as the largest shareholder, etc. renounce, in whole or in part, the dividends, etc. that they are eligible to receive or as they receive the dividends, etc. in an inequitable condition in proportion to the stocks, etc. they possess, the amount of dividends, etc. that the person specially related to the largest shareholder, etc. receives in an inequitable condition in proportion to the stocks, etc. in possession (hereafter in this Article referred to as "excess dividends"), less an amount corresponding to income tax on the excess dividends, shall be the value of property donated to the person specially related to the largest shareholder, etc. deeming the date on which the allotted or distributed amount is paid to be the date of donation, notwithstanding Article 4-2 (3). <Amended on Dec. 31, 2018; Dec. 22, 2020, Dec. 21, 2021>

(2) A person who has gift tax imposed on excess dividends pursuant to paragraph (1) shall pay an amount of gift tax under subparagraph 2 less an amount of gift tax under subparagraph 1, to the head of the relevant tax office, as prescribed by Presidential Decree when paying income tax (including where there is no tax payable): Provided, That, if an amount of gift tax under subparagraph 1 exceeds an amount of gift tax under subparagraph 2, the person can receive a refund of the excess: <Amended on Dec. 22, 2020>

1. An amount of gift tax calculated based on the value of donated property under paragraph (1);

2. An amount of gift tax on excess dividends reflecting an amount of actual income tax (hereafter in this Article referred to as "adjusted value of donated property").

(3) The filing deadline of a gift tax base return on the adjusted value of donated property under paragraph (2) means a period from May 1 to 31 (or June 3 in cases of business entities subject to confirmation of compliant filing that have submitted a certificate of confirmation of compliant filing under Article 70-2 (2) of the Income Tax Act) of the following year of the year during which excess dividends accrue. <Amended on Dec. 22, 2020; Dec. 21, 2021>

(4) The methods for calculating excess dividends, an amount corresponding to income tax on excess dividends, and the adjusted value of donated property, and other necessary matters shall be prescribed by Presidential Decree. <Amended on Dec. 22, 2020>

[This Article Newly Inserted on Dec. 15, 2015]

Article 41-3(Donation of Profit from Listing of Stocks) #

(1) Where a person specially related to any of the following persons who are deemed to be in a position to use undisclosed information on the management, etc. of a corporation (hereafter in this Article and Article 41-5 referred to as "largest shareholder, etc.") is donated stocks, etc. of the corporation or acquires the stocks, etc. pursuant to paragraph (2), and where the person earns profits in excess of the original taxable value of gift (excluding cases of acquiring the stocks, etc. with the donated property pursuant to paragraph (2) 2), or in excess of acquisition value when the value of such stocks, etc. increases as they are listed on the stock market (hereafter in this Article referred to as "stock market") prescribed by Presidential Decree, which is the stock market prescribed in Article 8-2 (4) 1 of the Financial Investment Services and Capital Markets Act within five years from the day on which the person is donated or acquires such stocks, etc., an amount corresponding to the profits shall be the value of property donated to the person who earns the profits: Provided, That cases where an amount corresponding to the profits is below the standard amount prescribed by Presidential Decree are excluded: <Amended on Dec. 31, 2011; May 28, 2013; Dec. 15, 2015; Dec. 20, 2016>

1. The largest shareholder or the largest investor prescribed in Article 22 (2);

2. A person prescribed by Presidential Decree who owns at least 25/100 of the total number of outstanding stocks of a domestic corporation or of the total amount of investment in a domestic corporation.

(2) Donation or acquisition of stocks, etc. under paragraph (1) means any of the following: <Newly Inserted on Dec. 15, 2015>

1. Where the person was donated stocks, etc. of the relevant corporation by the largest shareholder, etc. or acquired the stocks, etc. from the largest shareholder, etc. at a cost;

2. Where stocks, etc. of the relevant corporation are acquired with donated property (referring to the property donated by the largest shareholder, etc. within three years retroactively from the date stocks, etc. are acquired at a cost; hereafter in this Article and Article 41-5 the same applies).

(3) The profits prescribed in paragraph (1) shall be calculated, based on the date when three months elapse from the day on which relevant stocks are listed (referring to the date of death, date of donation or date of transfer if a person who owns the stocks, etc. dies, donates or transfers the stocks, etc. within three months from the day on which the stocks, etc. are listed; hereafter in this Article and Article 68 referred to as "adjustment base date"). <Amended on Dec. 15, 2015>

(4) With regard to a person who earns profits prescribed in paragraph (1), the gift tax base and the amount of gift tax shall be adjusted by adding the profits to the original taxable value of gift (where the stocks, etc. have been acquired with the donated property, referring to the taxable value of such donated property; hereafter in this Article the same applies): Provided, That where the value of the stocks, etc. as at the adjustment base date is below the original taxable value of gift and the difference is corresponding to or above the standard prescribed by Presidential Decree, the amount of gift tax corresponding to the difference (referring to the original amount of gift tax paid as at the time the donation is received) may be refunded. <Amended on Dec. 15, 2015>

(5) The date on which stocks, etc. are listed under paragraph (1) means the date on which trading of stocks, etc. commences on the stock market. <Amended on May 28, 2013; Dec. 15, 2015; Dec. 20, 2016>

(6) In applying paragraph (2) 2, where acquisition of stocks, etc. with donated property is uncertain since the donated property and other property are mixed, the stocks, etc. shall be presumed to have been acquired with the donated property. In such cases, if the stocks, etc. have been acquired with the money borrowed by offering the donated property as security, such stocks, etc. shall be deemed to have been acquired with the donated property. <Amended on Dec. 15, 2015>

(7) Paragraph (2) shall include cases in which new stocks are taken over or allotted, as new stocks are issued to increase the capital of a corporation after stocks, etc. have been received as a gift or have been acquired. <Amended on Dec. 15, 2015>

(8) Where convertible bonds, etc., which were received as a gift or were acquired at a cost, have been converted into stocks, etc. (including cases of taking over or acquiring convertible bonds, etc. directly from an issuing corporation) and the convertible bonds, etc. are converted into stocks, etc. within five years, paragraphs (1) through (6) shall apply by deeming that the converted stocks, etc. were received as a gift or were acquired as at the time the convertible bonds, etc. were received as a gift or were acquired. In such cases, where the convertible bonds, etc. are not converted into stocks, etc. by the adjustment base date, paragraphs (1) through (5) shall apply, deeming that such convertible bonds, etc. were converted into stocks, etc. on the adjustment base date; and where the convertible bonds, etc. have not been converted into stocks, etc. by the expiration date of convertible bonds, etc., the amount of gift tax imposed based on the adjustment base date shall be refunded. <Amended on Dec. 15, 2015>

(9) Where the amount of gift tax is deemed to have been reduced by fraud or other improper means, paragraphs (1) and (2) shall apply even to a gift between persons who are not specially related. In such cases, provisions concerning the period shall be deemed nonexistent in paragraph (1). <Amended on Dec. 15, 2015>

(10) The method of calculating profits prescribed in paragraph (1) and other necessary matters shall be prescribed by Presidential Decree. <Amended on Dec. 31, 2011; Dec. 15, 2015>

[This Article Wholly Amended on Jan. 1, 2010]

[Title Amended on Dec. 15, 2015]

Article 41-5(Donation of Profit from Listing of Stocks Following Merger) #

(1) Where a person, to whom any of the following is applicable, who is specially related to the largest shareholder, etc. of a corporation and was donated or acquired stocks, etc. of the corporation, earns profits in excess of the original taxable value of gift (excluding cases of acquisition of stocks, etc. with donated property) or acquisition value as the corporation that issued the stocks, etc. merges with a listed corporation having a special relationship prescribed by Presidential Decree with the aforementioned corporation within five years from the date he or she was donated or acquired the stocks, etc. and thus the value of the stocks, etc. increases, an amount corresponding to the profits shall be the value of property donated to the person who earns the profits: Provided, That where the amount corresponding to the profits is below the standard amount prescribed by Presidential Decree, such cases shall be excluded: <Amended on 11130, Dec. 31, 2011; Dec. 15, 2015>

1. Where the person was donated stocks, etc. of the relevant corporation by the largest shareholder, etc. or acquired the stocks, etc. from the largest shareholder, etc. at a cost;

2. Where the person acquired stocks, etc. of the relevant corporation with donated property from a person who was not the largest shareholder, etc.;

3. Where the person acquired stocks, etc. of another corporation with donated property, of which stocks, etc. are possessed by the largest shareholder, etc., from a person other than the largest shareholder, etc., and thus became the largest shareholder, etc. of the another corporation when stocks, etc. possessed by the largest shareholder, etc. and the aforementioned person who is specially related to the largest shareholder, etc. are totaled up.

(2) Article 41-3 (3) through (9) shall apply mutatis mutandis to the donation of profits from the listing, etc. of stocks, etc., following merger under paragraph (1). In such cases, the term "listing date" shall be deemed "date of merger registration". <Amended on Dec. 15, 2015>

[This Article Wholly Amended on Jan. 1, 2010]

Article 42(Donation of Profit from Use of Property or Provision of Services) #

(1) Were a person earns any of the following profits by using property or providing services, an amount corresponding to the profits (referring to the difference between the market value and the price actually paid) shall be the value of property donated to the person who earns the profits: Provided, That where the amount corresponding to the profits is below the standard amount prescribed by Presidential Decree, such cases shall be excluded: <Amended on Dec. 15, 2015>

1. Profits earned by paying another person a price below the market value or by using another person's property (excluding real estate and money; hereafter in this Article the same applies) at no cost;

2. Profits earned by allowing another person to use property after receiving a price higher than the market value;

3. Profits earned by paying another person a price below the market value or by being provided with services at no cost;

4. Profits earned by providing another person with services at a price above the market value.

(2) In applying paragraph (1), where the period of using property or the period of providing services is not specified, such period shall be one year, and where such period is one year or more, the person shall be deemed to newly use or to newly allow another person to use the property, or the person shall be deemed to newly provide services to another person or to be newly provided with services by another person each year on the day next to the day that is one year from the beginning of such period. <Amended on Dec. 15, 2015>

(3) In cases of a transaction between persons other than those specially related, paragraph (1) shall apply only to cases where good cause does not exist as a transactional practice. <Amended on Dec. 15, 2015>

(4) For purposes of paragraph (1), determination of the date of donation, method of calculating profits, and other necessary matters shall be prescribed by Presidential Decree. <Amended on Dec. 31, 2011; Dec. 15, 2015>

(5) Deleted. <Dec. 15, 2015>

(6) Deleted. <Dec. 15, 2015>

[This Article Wholly Amended on Jan. 1, 2010]

[Title Amended on Dec. 15, 2015]

Article 42-3(Donation of Profit from Increase in Value of Property After Acquisition of Property) #

(1) Where a person, who is deemed to be unable to perform a certain act by his or her own exertions in consideration of his or her occupation, age, income and possessions, earns profits due to a reason prescribed by Presidential Decree (hereafter in this Article, referred to as "reason for increase in the value of property"), such as implementation of a development project, change in the form and quality, partition of co-owned property, authorization of or permission for business, etc., within five years from the date he or she acquired property for following reasons, an amount corresponding to the profits shall be the value of property donated to the person who earns such profits: Provided, That cases where the amount corresponding to the profits is below the standard amount prescribed by Presidential Decree are excluded: <Amended on Dec. 31, 2023>

1. Where he or she is donated property by a specially related person;

2. Where he or she acquires property related to undisclosed internal information at a cost after he or she learns undisclosed internal information on the management, etc. of a corporation from a specially related person;

3. Where he or she acquires property with funds donated or borrowed from a specially related person, or with funds borrowed with the property of a specially related person as security.

(2) The amount calculated as prescribed by Presidential Decree, in consideration of the value of relevant property at the time of occurrence of reasons for increase in the value of property, acquisition price (referring to the taxable amount of gift in the case of donated property), usual increase in value, contribution to increasing value by a person who acquires property, etc., shall be the profits under paragraph (1). In such cases, where the property is transferred before the day reasons for increase in the value of property occur, the date of transfer shall be deemed the day on which reasons for increase in the value of property occur.

(3) Where gift tax is deemed to have been reduced by fraud or other improper means, paragraph (1) shall apply even to a donation between persons other than those specially related. In such cases, provisions concerning period under paragraph (1) shall be deemed not to be in existence.

[This Article Newly Inserted on Dec. 15, 2015]

Article 44(Presumption of Donation of Property Transferred to Spouse) #

(1) Any property transferred to a spouse or a lineal ascendant or descendant (hereafter in this Article referred to as "spouse, etc.") shall be deemed the value of property donated to the spouse, etc. by presuming that the spouse, etc. has received the donation of the value of the property when the transferor has transferred such property.

(2) Where any property transferred to a specially related person (hereafter in this paragraph and paragraph (4) referred to as "transferee") has been re-transferred to the spouse, etc. of the original transferor within three years from the date of acquisition, the value of property as at the time the transferee has retransferred such property shall be deemed the value of property donated to the spouse, etc. of the original transferor, by presuming that the spouse, etc. received the donation of the value of such property: Provided, That this shall not apply where the aggregate of determined amounts of tax prescribed by the Income Tax Act borne by the original transferor and transferee is larger than the amount of gift tax where the spouse, etc. is presumed to have been donated the property at the time the transferor transferred the property. <Amended on Dec. 31, 2011; Dec. 15, 2015>

(3) Paragraphs (1) and (2) shall not apply if the relevant property falls under any of the following subparagraphs: <Amended on May 28, 2013>

1. Where the relevant property is disposed of by an auction procedure under a court decision;

2. Where the relevant property is disposed of by the declaration of bankruptcy;

3. Where the relevant property is sold by public auction pursuant to the National Tax Collection Act;

4. Where securities are disposed of through the securities exchange prescribed in Article 8-2 (4) 1 of the Financial Investment Services and Capital Markets Act: Provided, That this shall not apply to cases prescribed by Presidential Decree where the securities are not deemed to have been disposed of by transactions among many and unspecified persons;

5. Cases prescribed by Presidential Decree where the fact that the relevant property is transferred to the spouse, etc. in return for consideration is clearly recognized.

(4) Where gift tax has been imposed on the relevant spouse, etc. under the main clause of paragraph (2), income tax arising from the transfer of the relevant property shall not be imposed on the original transferor and transferee, notwithstanding the provisions of the Income Tax Act.

[This Article Wholly Amended on Jan. 1, 2010]

Article 45-2(Legal Fiction of Property Registered in Name of Another Person as Donation) #

(1) Where the actual owner and the title holder of any property (excluding land and buildings: hereafter in this Article the same applies) requiring registration, etc. to transfer or exercise a right thereto are different persons, an amount corresponding to the value of such property (where the property requires change of a title, referring to the value assessed on the basis of the day on which ownership is obtained) shall be deemed donated by the actual owner to the title holder as at the day on which the property is registered, etc. in the name of the title holder (where such property requires transfer of a title, referring to the day next to the last day of the year following the year in which the day on which ownership is obtained falls), notwithstanding Article 14 of the Framework Act on National Taxes: Provided, That this shall not apply in any of the following cases: <Amended on Dec. 31, 2011; Dec. 15, 2015; Dec. 31, 2018>

1. Where the property is registered, etc. in the name of another person or the property title is not transferred to the actual owner who obtains ownership without any intention of avoiding taxes;

2. Deleted; <Dec. 15, 2015>

3. Where registration, etc. of the fact that the property is in trust property pursuant to the Financial Investment Services and Capital Markets Act is made;

4. Where a non-resident makes a registration, etc. in the name of a legal representative or administrator of the property.

(2) Deleted. <Dec. 31, 2018>

(3) Where a person registers, etc. his or her property in the name of another person, or a person does not change a name on property title to actual owner, he or she shall be presumed to have an intention of avoiding taxes: Provided, That where he or she does not change name on property title to actual owner and where any of the following is applicable, he or she shall not be presumed to have an intention of avoiding taxes: <Amended on Dec. 15, 2015>

1. Where, in cases of obtaining ownership as a result of purchase and sale of the property, the previous owner makes a report on the change of property title as he or she files a return of capital gains tax base prescribed in Articles 105 and 110 of the Income Tax Act or a return prescribed in Article 10 of the Securities Transaction Tax Act;

2. Where, in cases of obtaining ownership through inheritance, an heir files a return in which the property is included in the taxable value of inheritance as he or she files a return corresponding to any of the following: Provided, That where he or she files a revised return knowing beforehand that inheritance tax base and tax amount are to be determined or corrected, or files a return after deadline, such case is excluded:

(a) A return of the inheritance tax base prescribed in Article 67;

(b) A revised return prescribed in Article 45 of the Framework Act on National Taxes;

(4) Where a shareholder register or an employee register is not prepared for purposes of paragraph (1), whether property title has been changed shall be determined with documents concerning shareholders, etc. and a report on changes in the ownership of stocks, etc. submitted to the head of a tax office having jurisdiction over the place of tax payment prescribed in Articles 109 (1) and 119 of the Corporate Tax Act. In such cases, the 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. <Amended on Dec. 15, 2015; Dec. 31, 2019>

(5) Deleted. <Dec. 15, 2015>

(6) The term "taxes" in paragraphs (1) 1 and (3) means the national tax and local tax referred to in subparagraphs 1 and 7 of Article 2 of the Framework Act on National Taxes and customs referred to in the Customs Act. <Amended on Dec. 19, 2017>

(7) Deleted. <Dec. 31, 2011>

[This Article Wholly Amended on Jan. 1, 2010]

Article 45-3(Legal Fiction of Profit from Transaction with Specially Related Corporation as Donation) #

(1) Where a corporation falls under subparagraph 1, a controlling shareholder of the corporation (hereafter in this Article and Article 68 referred to as "beneficiary corporation") and relatives of the controlling shareholder [limited to a shareholder in whose case a percentage of shares he or she directly or indirectly holds (hereafter in this Article referred to as "shareholding ratio") out of the total number of outstanding stocks of or the total amount of capital invested in a beneficiary corporation exceeds the shareholding ratio prescribed by Presidential Decree (hereafter in this Article referred to as "minimum shareholding ratio"); hereafter in this Article the same applies] shall be deemed to have received donations of profits prescribed in subparagraph 2 (hereafter in this Article and Article 55 referred to as "profits deemed donated"), respectively. In such cases, where the beneficiary corporation satisfies the requirements prescribed by Presidential Decree, such as keeping separate accounting for each business division, the transaction ratio with a specially related corporation, the net operating profit less adjusted taxes, etc. can be calculated for each business division, as prescribed by Presidential Decree for purposes of subparagraphs 1 and 2: <Amended on Dec. 19, 2017; Dec. 29, 2020; Dec. 31, 2022>

1. Where a corporation falls under any of the following:

(a) Where the corporation is a small and medium enterprise prescribed by Presidential Decree (hereafter in this Article referred to as "small and medium enterprise") or a middle-standing enterprise prescribed by Presidential Decree (hereafter in this Article referred to as "middle-standing enterprise"): Where a percentage of sales (including 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) to a corporation in a special relationship prescribed by Presidential Decree (hereafter in this Article referred to as "specially-related corporation") with a controlling shareholder in the corporation (hereafter in this Article referred to as "ratio of transactions with a specially related corporation"), out of the sales of the corporation in the business year (referring to the sales calculated in accordance with the accounting standards for enterprises referred to in Article 43 of the Corporate Tax Act; hereafter in this Article the same applies) exceeds the percentage prescribed by Presidential Decree (hereafter in this Article referred to as "percentage of normal transactions"), in consideration of the size, etc. of the corporation;

(b) Where the corporation is not a small and medium enterprise or middle-standing enterprise: Where the corporation falls under any of the following:

i) Where the corporation falls under a ground prescribed in item (a);

ii) Where the sales to a specially-related corporation exceeds the amount prescribed by Presidential Decree, in consideration of the size, etc. of the corporation, in which case a ratio of transactions with the specially-related corporation exceeds 2/3 of the percentage of normal transactions;

2. Profits: Amounts calculated in accordance with formulas classified as follows:

(a) Where a beneficiary corporation falls under a small and medium enterprise:

Number of persons entering a golf course x Number of holes actually played/Total number of holes

(b) Where a corporation that receives benefits falls under a backbone enterprise:

Number of persons entering a golf course x Number of holes actually played/Total number of holes

(2) For the purpose of calculating the profit deemed donated, where controlling shareholders and relatives of the controlling shareholders simultaneously invest in the beneficiary corporation directly and invest in the same corporation indirectly through a corporation prescribed by Presidential Decree, each amount calculated respectively in accordance with the formula prescribed in paragraph (1) shall be added up.

(3) Profits deemed donated shall be calculated each business year of a beneficiary corporation, and the closing date of the relevant business year of a beneficiary corporation shall be deemed the date of donation.

(4) 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 shall be excluded from sales prescribed in paragraph (1). <Newly Inserted on Jan. 1, 2014>

(5) Methods for determining where a shareholder is a controlling shareholder, the scope of relatives of a controlling shareholder, calculation of the ratio of transactions with a specially related corporation, calculation of the net operating profit less adjusted taxes, calculation of shareholding ratio of stocks, and calculation of profits deemed donated under paragraph (1) shall be prescribed by Presidential Decree. <Amended on Dec. 15, 2015; Dec. 31, 2019>

[This Article Newly Inserted on Dec. 31, 2011]

Article 45-4(Legal Fiction of Profit from Business Opportunity Provided by Specially Related Corporation as Donation) #

(1) Where a corporation (hereafter in this Article referred to as "beneficiary corporation") at least 30/100 of whose stocks are directly or indirectly held by a controlling shareholder and his or her relatives (hereafter in this Article referred to as "controlling shareholder, etc.") is provided with business opportunities in the manner prescribed by Presidential Decree by another corporation having a special relationship prescribed by Presidential Decree with the controlling shareholder, etc. (excluding a small and medium enterprise prescribed by Presidential Decree and a corporation prescribed by Presidential Decree), the controlling shareholder, etc. of the beneficiary corporation shall be deemed to have been donated an amount (hereafter in this Article referred to as "profits deemed donated") calculated according to the following formula on the last day of the business year (hereafter in this Article referred to as "year of commencing business") in which the day (hereafter in this Article referred to as "day when business opportunities are provided") on which business opportunities are provided falls. <Amended on Dec. 20, 2016; Dec. 31, 2019>

Number of persons entering a golf course x Number of holes actually played/Total number of holes

(2) The filing deadline of a gift tax base under paragraph (1) shall be the day when three months elapse from the end of the month in which the filing deadline of a tax base return prescribed in Article 60 (1) of the Corporate Tax Act falls.

(3) By the business year (hereafter in this Article referred to as "adjustment business year") in which the day when two years elapse from the date when business opportunities are provided falls, the controlling shareholder, etc. of a beneficiary corporation to which profits deemed donated under paragraph (1) accrues, shall pay the difference between gift tax on an amount (hereafter in this Article referred to as "adjusted profits deemed donated") calculated according to the following formula and gift tax on profits deemed donated that was paid pursuant to paragraph (2) reflecting actual profits accrued from business opportunities provided to the beneficiary corporation, to the head of a tax office having jurisdiction over the place of tax payment: Provided, That where the adjusted profits deemed donated are less than the original profits deemed donated, the controlling shareholder, etc. may be refunded with gift tax (tax amount paid pursuant to paragraph (2) shall be the limit) corresponding to the difference. <Amended on Jun. 9, 2020>

Number of persons entering a golf course x Number of holes actually played/Total number of holes

(4) The shareholding ratio of stocks held by the controlling shareholder, etc. prescribed in paragraphs (1) and (3) shall be applicable, based on the last day of the year of commencing business.

(5) The filing deadline of a gift tax base return under paragraph (3) shall be the day when three months elapse from the last day of the month in the adjustment business year in which the filing deadline of a tax base return under Article 60 (1) of the Corporate Tax Act falls.

(6) Matters necessary to determine whether a shareholder is a controlling shareholder, to calculate the shareholding ratio of stocks in possession under paragraphs (1) and (3), to calculate profits earned by a beneficiary corporation accruing from business opportunities provided and to calculate a corresponding amount among paid corporate tax, method of adjustment, procedures therefor, etc. shall be prescribed by Presidential Decree. <Amended on Dec. 31, 2019>

[This Article Newly Inserted on Dec. 15, 2015]

Article 45-5(Legal Fiction of Profit from Transaction with Specific Corporation as Donation) #

(1) Where a corporation (hereafter in this Article and Article 68 referred to as "specific corporation") at least 30/100 of the stocks of which is held directly or indirectly by its controlling shareholders and their relatives (hereafter in this Article referred to as "controlling shareholder, etc.") conducts any of the following transactions with a specially related person of the controlling shareholder, etc., an amount calculated by multiplying the profits of the specific corporation by the ratio of shares directly or indirectly held by the shareholders, etc. in the specific corporation is deemed to have been donated to the shareholder, etc. of the specific corporation deeming the date of the transaction to be the date of donation: <Amended on Dec. 31, 2023>

1. Being provided with property or services without consideration;

2. Transferring or being provided with, property or services at a substantially low price in view of ordinary trading practices;

3. Transferring or providing, property or services at a substantially high price in view of ordinary trading practices;

4. Other transactions prescribed by Presidential Decree that are similar to subparagraphs 1 through 3.

(2) Where the amount of gift tax calculated under paragraph (1) exceeds an amount deducting a corresponding amount of corporate tax paid by the specific corporation from a corresponding amount of gift tax payable when the controlling shareholder, etc., directly receives a donation, an excess shall be deemed nil.

(3) Methods for determining whether a shareholder is a controlling shareholder, determination of the date of donation, calculation of profits of the specific corporation, and the scopes of a substantially low price and a substantially high price under paragraph (1), calculation of an excess under paragraph (2), and other necessary matters shall be prescribed by Presidential Decree.

[This Article Wholly Amended on Dec. 31, 2019]

Article 46(Donated Property Not Subject to Taxation) #

No gift tax shall be imposed on any of the following: <Amended on Jun. 8, 2010; Dec. 15, 2015; Dec. 20, 2016>

1. The value of property donated by the State or a local government;

2. Where an employee of a domestic corporation who has joined an employee association (hereinafter referred to as "employee stock ownership association") satisfying requirements prescribed by Presidential Decree acquires shares of the relevant corporation through the employee stock ownership association and members of such association meet the criteria for a minority shareholder prescribed by Presidential Decree, the value corresponding to the profits accrued from the difference between the acquisition value of such shares and their current market value;

3. The value of property donated to a political party pursuant to the Political Parties Act;

4. The value of property donated to an intra-company labor welfare fund pursuant to the Framework Act on Labor Welfare, or other similar associations prescribed by Presidential Decree;

5. Socially recognized disaster relief funds and goods, medical treatment expenses, education fees or others similar thereto that are prescribed by Presidential Decree;

6. The value of property donated to the Credit Guarantee Fund pursuant to the Credit Guarantee Fund Act or other similar associations prescribed by Presidential Decree;

7. The value of property donated to the State, local governments, or public organizations;

8. Insurance proceeds of an insurance policy prescribed by Presidential Decree, whereunder the beneficiary of insurance proceeds is a person with a disability;

9. The value of property, such as donations, articles, etc. given to the bereaved family members of persons who provided distinguished services to the State prescribed by the Act on the Honorable Treatment of and Support for Persons, etc. of Distinguished Service to the State or the bereaved family members of persons wounded or killed for a righteous cause prescribed by the Act on Honorable Treatment of and Support for Persons Who Died or Was Injured for Public Good;

10. Where a not-for-profit corporation inherits assets, rights and obligations of another not-for-profit corporation because another not-for-profit corporation has been dissolved or its business has changed due to alterations of statutes and regulations that constitute the basis for the incorporation thereof, the value of the relevant assets the not-for-profit corporation inherits.

[This Article Wholly Amended on Jan. 1, 2010]

Article 48(Non-Inclusion in Taxable Value of Property Contributed to Public-Interest Corporation) #

(1) No value of property contributed to a public-interest corporation, etc. shall be included in the taxable value of gift: Provided, That where voting stocks or equity shares (hereafter in this Article referred to as "stocks, etc.") of a domestic corporation are contributed to a public-interest corporation, etc., in which case the sum of the contributed stocks, etc. and the following stocks, etc. exceeds the percentage referred to in Article 16 (2) 2 of the total number of outstanding stocks with voting rights or the total amount of equity shares (excluding treasury stocks and its own equity shares; hereinafter referred to as "total number of outstanding stocks, etc.") of the domestic corporation (excluding cases falling under the subparagraphs of Article 16 (3)), the value of such excess shall be included in the taxable value of gift tax: <Amended on Dec. 31, Dec. 15, 2015; Dec. 20, 2016; Dec. 19, 2017>

1. Stocks, etc. of the same domestic corporation, which are owned by the relevant public-interest corporation, etc. as at the time the contributor makes contributions;

2. Stocks, etc. of the same domestic corporation, which are contributed by the contributor and his or her specially related person to a public-interest corporation, etc. other than the relevant public-interest corporation, etc.;

3. Stocks, etc. of the same domestic corporation, which are owned by another public-interest corporation, etc. to which the contributor or a person who has a special relationship with him or her has contributed property.

(2) Where a public-interest corporation, etc. to which property is contributed pursuant to paragraph (1) and Article 16 (1) fall under any of subparagraphs 1 through 4, 6, and 8, the head of the competent tax office, etc. shall immediately impose gift tax on the public-interest corporation, etc. deeming that such public-interest corporation, etc. have received a gift in the value prescribed by Presidential Decree on the date on which the relevant cause arises, and the head of the tax office, etc. shall impose an additional tax under Article 78 (9) when such public-interest corporation, etc. fall under subparagraph 5 or 7: Provided, That among property contributed from many unspecified persons, property prescribed by Presidential Decree, the value of which is difficult to be calculated according to its contributors, is excluded: <Amended on Dec. 27, 2010; Jul. 25, 2011; Dec. 20, 2016; Dec. 19, 2017; Dec. 31, 2018; Dec. 31, 2019; Dec. 22, 2020; Dec. 31, 2023>

1. Where the public-interest corporation, etc. uses the contributed property for purposes other than direct public-interest projects, etc. (including cases where the public-interest corporation, etc. operates such property for profit or for-profit projects to appropriate for direct public-interest projects; hereafter in this subparagraph the same applies) or fails to use such property for direct public-interest projects within three years or fails to continue to use such property for direct public-interest project upon expiration of thee-year period from the date on which such property is contributed: Provided, That this shall not apply where there is any 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., and such fact is reported to the head of the tax office having jurisdiction over the place of tax payment as at the time a report under paragraph (5) is submitted and such property is used for direct public-interest projects, etc. within one year from the date of disappearance of such reason;

2. Where a public-interest corporation, etc. uses the contributed property (including cases where the public-interest corporation, etc. operates such property for profits or for-profit projects, and where any operating income accrues therefrom; hereafter in this subparagraph and paragraph (3) the same applies) and the proceeds from the sale of the contributed property (including property increased due to the proceeds from the sale thereof but excluding the amount expended to pay utility bills prescribed by Presidential Decree; hereafter in this Article the same applies) to acquire stocks, etc. of a domestic corporation, in such cases where the sum of the acquired stocks, etc. and the following shares exceeds the percentage referred to in Article 16 (2) 2, out of the total number of outstanding stocks, etc. of the domestic corporation: Provided, That this shall not apply where the contribution meets requirements prescribed by Presidential Decree, in such cases where the contribution falls under Article 16 (3) 1 or 3 (in such cases, "contribution" shall be construed as "acquisition") and an industry-academia cooperation organization prescribed in the Industrial Education Enhancement and Industry-Academia-Research Cooperation Promotion Act acquires stocks, etc.:

(a) Stocks, etc. of a domestic corporation that are the same as those owned by the relevant public-interest corporation, etc. as at the time the stocks, etc. are acquired;

(b) Stocks, etc. of a domestic corporation that are the same as those contributed by a contributor in a special relationship with the relevant domestic corporation to a public-interest corporation, etc., other than the relevant public-interest corporation, etc.;

(c) Stocks, etc. of the same domestic corporation owned by another public-interest corporation, etc. to which a contributor who has a special relationship with the relevant domestic corporation has contributed property;

3. Where a public-interest corporation, etc. operates the contributed property for profits or for-profit projects and uses operating income accrued therefrom for purposes other than direct public-interest projects;

4. Where a public-interest corporation, etc. fails to use the proceeds from the sale of the contributed property, as prescribed by Presidential Decree, by the date on which three years have elapsed from the date of sale;

5. Where a public-interest corporation, etc. uses the operating income prescribed in subparagraph 3 short of the standard amount prescribed by Presidential Decree, or uses the proceeds from sale under subparagraph 4 short of the standard amount prescribed by Presidential Decree for three years from the date of sale;

6. Where a public-interest corporation, etc. which satisfies the requirements prescribed in Article 16 (2) 2 (a) (excluding public-interest corporations, etc. falling under item (b) and (c) of that subparagraph) exercises voting rights of stocks, etc. contributed, in violation subitem i) of that item;

7. Where public interest corporations, etc. specified in the following items directly use an amount for public interest projects (excluding any projects subject to income tax under the Income Tax Act or subject to corporate tax under the Corporate Tax Act) because the amount falls short of an amount calculated by multiplying 1/100 (or 3/100 if public interest corporations, etc. falling under Article 16 (2) 2 (a) hold more than 10/100 of the total number of outstanding stocks, etc.) by the value of contributed property prescribed by Presidential Decree (hereinafter referred to as "standard amount" in Article 78 (9) 3);

(a) A public interest corporation and others that meet all of the following requirements, which are prescribed by Presidential Decree:

i) It shall be a public interest corporation and others that have received shares, etc. of domestic corporations through contribution;

ii) The shareholding ratio calculated as prescribed by Presidential Decree exceeds five-hundredth of the total number of issued shares of the domestic corporation;

(b) Public interest corporations other than those listed in item (a) (except for public interest corporations and others designated by Presidential Decree in consideration of the size of assets, nature of business, etc.).

8. Other cases where public-interest corporations, etc. fail to operate the contributed property or direct public-interest projects as prescribed by Presidential Decree.

(3) Where a public-interest corporation, etc. permits any of the following persons to use or make a profit from the contributed property under paragraph (1), the property acquired with the contributed property as the principal money, and the proceeds from the sale of the contributed property by means of lease, loan for consumption, loan for use, etc., gift tax shall be promptly imposed on the public-interest corporation, etc. by deeming that the value prescribed by Presidential Decree is contributed to the public-interest corporation, etc.: Provided, That this shall not apply to cases prescribed by Presidential where the public-interest corporation, etc. is provided with services in connection with direct public-interest projects and pays normal prices therefor, etc.: <Amended on Dec. 31, 2011; Dec. 31, 2018>

1. Contributor and his or her relatives;

2. Any other public-interest corporation, etc. to whom the contributor makes a contribution;

3. Persons prescribed by Presidential Decree as the specially related parties of those stipulated in subparagraph 1 or 2.

(4) [Previous Paragraph (4) moved to Paragraph (14) <Dec. 22, 2020>]

(5) Where a public-interest corporation, etc. has received any property contributed pursuant to paragraph (1) and Article 16 (1), the public-interest corporation, etc. shall submit a report on the plan and progress on the use of such contributed property, to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree.

(6) When the head of a tax office levies inheritance tax or gift tax on a public-interest corporation, etc., he or she shall inform the competent authority of the public-interest corporation, etc. of such fact.

(7) When the competent authority of a public-interest corporation, etc. grants an incorporation license to the public-interest corporation, etc., revokes the granted incorporation license, issues a corrective order to the public- service corporation, etc., or discovers that the public-interest corporation, etc. falls under the proviso of paragraph (1), (2), or (3) as a result of supervision, it shall notify the head of the tax office having jurisdiction over the place of tax payment of such fact, as prescribed by Presidential Decree.

(8) Where a contributor or his or her specially related person becomes a director of a public-interest corporation, etc. prescribed by Presidential Decree and thus the number of directors exceeds one-fifth of the current number of directors (where the current number of directors is less than five, it shall be deemed five), or becomes an executive or employee (excluding director; hereinafter the same applies) thereof, an additional tax prescribed in Article 78 (6) shall be imposed: Provided, That where a contributor or a person specially related to him or her becomes a director and thus the number of directors exceeds 1/5 of the current number of directors of a public-interest corporation, etc. for any unavoidable reason prescribed by Presidential Decree, such as death, and where a director is recruited to fill the vacancy or replaced within two months from the date such ground occurs, no additional tax shall be imposed. <Amended on Dec. 31, 2011; Dec. 15, 2015>

(9) Where a public-interest corporation, etc. (excluding a public-interest corporation, etc. established by the State or a local government, a corresponding public-interest corporation, etc. prescribed by Presidential Decree, and a public-interest corporation, etc. satisfying the requirements of the subparagraphs of paragraph (11)) own stocks, etc. of a domestic corporation in a special relationship prescribed by Presidential Decree, in which case the value of the stocks, etc. of the domestic corporation exceeds 30/100 of the total value of its property (or 50/100 in cases of a public-interest corporation, etc. that undergo external audit under Article 50 (3), open and uses an exclusive account under Article 50-2, and disclose closing statements, etc. under Article 50-3), the additional tax prescribed in Article 78 (7) shall be imposed. In such cases, the calculation of the value of such excess stocks, etc. of the domestic corporation shall be prescribed by Presidential Decree. <Amended on Dec. 20, 2016; Dec. 22, 2020>

(10) Where a public-interest corporation, etc. advertises or publicizes without reasonable consideration for the purpose of increasing the profits of a domestic corporation in a special relationship with it, the additional tax prescribed in Article 78 (8) shall be imposed. In such cases, the scope of a domestic corporation in a special relationship, the methods of advertisement and public relations, and other necessary matters shall be prescribed by Presidential Decree.

(11) Where a public-interest corporation, etc. ceases to satisfy any of the following requirements after having received a contribution of stocks, etc. in excess of 5/100 of the total number of outstanding stocks, etc. of a domestic corporation (including acquiring stocks, etc. with the contributed property and proceeds from sale of such property), a corresponding amount shall be included in the taxable value of inherited or donated property under Article 16 (2) or paragraph (1) of this Article, or gift tax shall be immediately imposed on it under paragraph (2), as prescribed by Presidential Decree: <Amended on Dec. 22, 2020; Dec. 31, 2023>

1. To use at least an amount calculated by multiplying the operating income referred to in paragraph (2) 3 by the percentage prescribed by Presidential Decree for a direct public-interest project;

2. Deleted; <Dec. 31, 2022>

3. To satisfy other requirements prescribed by Presidential Decree, such as the composition of directors in a public-interest corporation.

(12) Where a public-interest corporation, etc. referred to in any subparagraph of Article 16 (3) or the proviso of Article 48 (2) 2 becomes ineligible for a public-interest corporation, etc. referred to in the provisions, with the exception of the subparagraphs, of Article 49 (1), or hold the stocks, etc. of a domestic corporation in a special relationship with the relevant contributor in excess of 5/100 of the total number of outstanding stocks, etc. of the domestic corporation, the relevant amount shall be included in the taxable value of inheritance tax under Article 16 (2) or gift tax under Article 48 (1), or gift tax shall be imposed immediately under Article 48 (2). <Newly Inserted on Dec. 22, 2020>

(13) A 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. under Article 16 (2), shall report whether it has fulfilled its obligation in the taxable period or business year to the commissioner of a regional tax office, as prescribed by Presidential Decree. <Newly Inserted on Dec. 22, 2020>

(14) Criteria for determining whether the contributed property is used for direct public-interest projects, criteria for determining whether the contributed property is for profits or for profit-making projects, methods for calculating the values of stocks, etc. exceeding the percentage specified in Article 16 (2) 2 of the total number of outstanding stocks, etc., the scope of contributors in a special relationship with the relevant domestic corporation, detailed matters about inclusion in the taxable value of inheritance tax or gift tax or immediate imposition of gift tax, matters about reporting whether a public-interest corporation, etc. has fulfilled its obligation, and other necessary matters shall be prescribed by Presidential Decree. <Amended on Dec. 31, 2011; Dec. 20, 2016; Dec. 19, 2017; Dec. 22, 2020>

[This Article Wholly Amended on Jan. 1, 2010]

Article 50(Public-Interest Corporation’s Obligation to Undergo Tax Verification and Audit) #

(1) A public-interest corporation, etc. shall undergo tax verification (hereinafter referred to as "tax verification by outside experts") as to whether the contributed property is used for public-interest projects by taxable period or business year by appointing at least two attorneys-at-law, certified public accountants, or certified tax accountants who meet standards prescribed by Presidential Decree: Provided, That any public-interest corporation, etc. prescribed by Presidential Decree in consideration of the size of its assets and characteristics of its business need not undergo tax verification by outside experts. <Amended on Dec. 20, 2016>

(2) A public-interest corporation, etc. that has undergone tax verification by outside experts pursuant to paragraph (1) shall report the findings thereof to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. In such cases, the head of the competent tax office shall make the findings on the tax verification by outside experts as to whether the public-interest corporation, etc. uses the contributed property for public-interest projects available for perusal by the public.

(3) A public-interest corporation, etc. shall undergo an audit conducted by an auditor as defined in subparagraph 7 of Article 2 of the Act on External Audit of Stock Companies for each taxable period or business year: Provided, That this does not apply to any of the following public-interest corporations, etc.: <Amended on Dec. 31, 2018; Dec. 31, 2019>

1. A public-interest corporation, etc., with property and income less than the scale prescribed by Presidential Decree;

2. A public-interest corporation, etc. prescribed by Presidential Decree in consideration of the characteristics of its business.

(4) Where a public-interest corporation, etc. prescribed by Presidential Decree in consideration of the size of its assets has undergone an audit for four consecutive taxable periods or business years under paragraph (3), the Minister of Economy and Finance may require the public-interest corporation, etc. to undergo an audit conducted by an auditor designated by that Minister for the two consecutive taxable periods or business year beginning from the following taxable period of business year. In such cases, the Minister of Economy and Finance may entrust all or some of the designation duties to the Commissioner of the National Tax Service. <Newly Inserted on Dec. 31, 2019; Dec, 31, 2022>

(5) The Minister of Economy and Finance may supervise the audit report and the financial statements attached to the audit report publicly notified by a public interest corporation, etc. that is obligated to have its accounts audited pursuant to paragraph (3) or (4). <Newly Inserted on Dec. 31, 2019; Dec. 31, 2023>

(6) The Minister of Economy and Finance may entrust all or part of the supervisory work under paragraph (5) to a corporation or organization with expertise in accounting audits and supervision as prescribed by Presidential Decree. In this case, the corporation or organization entrusted with the relevant affairs may receive part of the audit fees for the accounting audit under paragraph (3) or (4) from the auditor as commissions for the supervision affairs, as prescribed by Ordinance of the Ministry of Economy and Finance. <Newly Inserted on Dec. 31, 2023>

(7) For the purposes of paragraphs (1) through (5), items for tax verification, procedures and methods for tax verification, the preparation of reports, procedures for reporting findings of tax verification, methods of conducting audits, procedures and methods for appointment of auditors, review tasks and actions to be taken based on review findings, and other necessary matters shall be prescribed by Presidential Decree. <Amended on Dec. 31, 2019; Dec. 31, 2023>

[This Article Wholly Amended on Jan. 1, 2010]

[Title Amended on Dec. 20, 2016]

Article 50-2(Public-Interest Corporation's Obligation to Open and Use Exclusive Account) #

(1) Where revenue and expenditure received or disbursed in connection with a direct public-interest project by a public-interest corporation, etc. fall under any of the following subparagraphs, the public-interest corporation, etc. (excluding public-interest corporations, etc. prescribed by Presidential Decree in consideration of the characteristics of their business; hereinafter the same applies) shall use an exclusive account (hereinafter referred to as "exclusive account") for the direct public-interest project prescribed by Presidential Decree: <Amended on Jan. 1, 2013>

1. Where revenue and expenditure related to a direct public-interest project is received or settled through a financial company, etc. prescribed by Presidential Decree;

2. Where donations, contributions or membership fees are received: Provided, That this shall be excluded in cases prescribed by Presidential Decree where cash is received directly;

3. Where personnel expenses and rent are paid;

4. Where expenses for a direct public-interest project prescribed by Presidential Decree, such as donations, scholarship, research expenses, etc. are paid: Provided, That it shall be limited to where such expenses exceed one million won;

5. Where the money calculated by disposing of property for profit-making or profit-making projects and other operating income are transferred to the accounting of a proper purpose business (applicable only when the transfer of funds, such as cash, is accompanied).

(2) A public-interest corporation, etc. shall separately prepare and keep detailed statements in any cases not falling under any of the subparagraphs of paragraph (1) in connection with direct public-interest projects: Provided, That this shall not apply to revenue and expenditure prescribed by Presidential Decree, including cases where evidentiary documents falling under Article 160-2 (2) 3 or 4 of the Income Tax Act are prepared.

(3) A public-interest corporation, etc. shall open an exclusive account within three months from the date it qualifies as a public-interest corporation, etc., and shall report thereon to the head of the tax office having jurisdiction over the place of tax payment of the public-interest corporation, etc.: Provided, That a public corporation may report the opening of an exclusive account by June 30, 2019, where it fails to file such report pursuant to the main clause of this Article, and the sum of the two amounts specified in (A) and (B) as follows is less than 500 million won: (A) the amount of income (referring to the amount of income under the Income Tax Act related to the relevant public project or the amount of income related to profit-making business subject to corporate taxation under the Corporate Tax Act) for the taxable period of income tax or for the business year of corporate tax to which January 1, 2016, January 1, 2017, or January 1, 2018 belongs; and (B) the value amount of property contributed for such taxable period of income tax or for such business year of corporate tax. <Amended on Dec. 31, 2018>

(4) Where a public-interest corporation, etc. intends to change an exclusive account or open an additional exclusive account, it shall report thereon, as prescribed by Presidential Decree.

(5) The opening, reporting, change and addition of exclusive accounts of a public-interest corporation, etc. and the method of reporting, extent of using exclusive accounts, necessary matters for preparing detailed statements shall be prescribed by Presidential Decree.

[This Article Wholly Amended on Jan. 1, 2010]

Article 50-3(Public-Interest Corporation’s Obligation to Disclose Closing Documents) #

(1) A public-interest corporation, etc. (excluding public-interest corporations, etc. prescribed by Presidential Decree in consideration of the characteristics of their business, hereafter in this Article the same applies) shall disclose the following documents, etc. (hereafter in this Article referred to as "closing documents, etc.") by posting them on the website of the National Tax Service within four months from the last day of the taxable period or business year of that public-interest corporation, etc., as prescribed by Presidential Decree: Provided, That a public-interest corporation, etc. prescribed by Presidential Decree in consideration of the size of its assets may disclose the closing documents, etc. in a simplified manner, as prescribed by Presidential Decree. <Amended on Dec. 27, 2010; Dec. 20, 2016; Dec. 31, 2018; Dec. 31, 2019>

1. Financial statements;

2. Details of collection and disbursement of donations;

3. Matters concerning the representative, directors, contributors, location, and intended projects of the relevant public-interest corporation, etc.;

4. Details of use of income accrued from operating the contributed property;

5. An audit report and accompanying financial statements, in cases of a public-interest corporation, etc. obliged to undergo an audit pursuant to Article 50 (3);

6. Matters prescribed by Presidential Decree, such as stock holding status

(2) Where a public-interest corporation, etc. fails to disclose the closing documents, etc. pursuant to paragraph (1) or where any erroneous information is included in the disclosure, the Commissioner of the National Tax Service, the commissioner of the regional tax office or the head of the tax office having jurisdiction over the placement of tax payment may request the public-interest corporation, etc. to disclose the closing documents or to correct such erroneous information within a specified period not exceeding one month. <Amended on Dec. 31, 2022>

(3) The Commissioner of the National Tax Service may provide the closing documents, etc. disclosed by a public-interest corporation, etc. to any person prescribed by Presidential Decree. <Newly Inserted on Dec. 31, 2011>

(4) Disclosure of the closing documents, etc. and the procedures for requesting correction thereof, under paragraphs (1) and (2), and other matters shall be prescribed by Presidential Decree. <Amended on Dec. 31, 2011>

[This Article Wholly Amended on Jan. 1, 2010]

[Title Amended on Dec. 20, 2016]

Article 52-2(Non-Inclusion in Taxable Value of Property Donated to Person with Disability) #

(1) Where a person with a disability prescribed by Presidential Decree (hereafter in this Article referred to as "person with a disability") receives donation of an asset (referring to an asset prescribed by Presidential Decree, which can be placed in a trust managed by a trust business entity prescribed by the Financial Investment Services and Capital Markets Act; hereafter in this Article the same applies), places the donated asset in a trust designating him or herself as the beneficiary, and the trust (hereafter in this Article referred to as "self-settled trust") meets all of the following requirements, the value of the donated asset shall not be included in the taxable value of gift tax:

1. The asset shall be placed in a trust managed by a trust business entity prescribed by the Financial Investment Services and Capital Markets Act (hereafter in this Article referred to as "trust business entity");

2. The person with a disability shall be the beneficiary who receives all profits accruing from the trust;

3. The term of the trust shall be until the time of death of the person with a disability: Provided, That where the term of trust expires before the death of that person shall be extended by up to the time of his or her death.

(2) Where an individual places an asset in a trust designating a person with a disability as the beneficiary and the trust (hereafter in this Article "third party trust") meets all of the following requirements, profits (including a withdrawn amount if the principal of the trust is withdrawn under the proviso of paragraph (4); hereafter in this Article the same applies) from the trust donated to the person with a disability shall not be included in the taxable value of gift tax:

1. The asset shall be placed in a trust managed by a trust business entity;

2. The person with a disability shall be the beneficiary to receive all profits accruing from the trust: Provided, That the same does not apply to any residue after the death of that person with a disability;

3. The following details shall be included in the trust agreement:

(a) The residue will vest in that person with a disability if the trust is revoked or expires before the death of such person;

(b) The beneficiary cannot be changed before the death of that person with a disability;

(c) The trustor’s status in the trust will transfer to that person with a disability if the trustor dies before the death of such person with a disability.

(3) The sum of the values (referring to the sum of the values of donated assets while the person with a disability is alive) of donated assets under paragraph (1) and the sum (referred to the sum of the values of principal at the time of creation of third party trusts designating that person with a disability as the beneficiary while such person is alive) is limited to 500 million won.

(4) Where any of the following is applicable to a person with a disability who has created a self-settled trust with an asset donated under paragraph (1), the head of the competent tax office, etc. shall immediately impose gift tax on the person with a disability, deeming that the value of that asset is donated to the person with a disability on the date prescribed by Presidential Decree: Provided, That this does not apply where a person with a disability prescribed by Presidential Decree among persons with disabilities withdraws from the principal of the trust for purposes prescribed by Presidential Decree, such as paying his or her medical expenses, or for any unavoidable reason prescribed by Presidential Decree:

1. Where the trust is revoked or expires: Provided, That cases where the person renews the trust within one month from the date of revocation or the date of expiration are excluded;

2. Where the beneficiary is changed during the term of the trust;

3. Where it is verified that all or some profits from the trust vest in any person other than the person with a disability;

4. Where the principal in the trust has decreased.

(5) A person who wishes to be eligible under paragraph (1) or paragraph (2) shall apply to the head of the tax office having jurisdiction over the place of tax payment by the filing deadline (referring to the filing deadline of profits from the first donated trust in cases of a third party trust), prescribed in Article 68, as prescribed by Presidential Decree.

(6) Where a person who wishes to be eligible under paragraph (2) has filed a return under Article 68 or an application under paragraph (5) about profits from the first trust donated to the person, such person need not file a return under Article 68 or an application under paragraph (5) about profits (limited to profits not included in the taxable value under paragraph (2)) from the trust donated as the beneficiary of the third-party trust after the first donation.

(7) Methods for calculating the amount of gift tax under paragraph (4), and other necessary matters shall be prescribed by Presidential Decree.

[This Article Wholly Amended on Dec. 31, 2019]

Article 53-2(Deduction of Property Donated by Marriage and Childbirth) #

(1) If a resident receives a gift from a lineal ascendant within two years before or after the date of marriage (referring to the date of report on the certificate of marital relations under Article 15 (1) 3 of the Act on Registration of Family Relations), 100 million won shall be deducted from the taxable value of gift tax, separately from the deduction under paragraph (2) and subparagraph 2 of Article 53. In such cases, if the sum of the amount to be deducted from the taxable value of gift tax and the amount already deducted for the donee under the former part exceeds 100 million won, the excess portion shall not be deducted.

(2) If a resident receives a gift from a lineal ascendant within two years before or after the date of childbirth (referring to the date of report on the birth report under Article 44 of the Act on Registration of Family Relations) or the date of adoption (referring to the date of adoption pursuant to Article 61 of the Act on Registration of Family Relationships), 100 million won shall be deducted from the taxable value of gift tax, separately from the deduction under paragraph (1) and subparagraph 2 of Article 53. In such cases, where the sum of the amount to be deducted from the taxable value of gift tax and the amount already deducted for the donated person under the former part exceeds 100 million won, the excess portion shall not be deducted.

(3) If the sum of the amount deducted or to be deducted from the taxable value of gift tax pursuant to paragraphs (1) and (2) exceeds 100 million won, the excess portion shall not be deducted.

(4) Deductions under paragraphs (1) through (3) shall not apply to donated property under Article 4 (1) 4 and 5 and (2) of the same Article.

(5) If a resident receives a deduction under paragraph (1) and then returns the gifted property to the donor within 3 months from the end day of the month in which an unavoidable cause prescribed by Presidential Decree occurs, such as the death of a fiance, the gifted property shall be deemed not to have been gifted in the first place.

(6) If a resident who received a deduction pursuant to paragraph (1) before marriage does not marry within two years from the date of donation (or, in the case of multiple gifts to which the deduction was applied, referring to the date of the first gift; hereafter the same shall apply in this paragraph), and files an amended return pursuant to Article 45 of the National Tax Act or a late return pursuant to Article 45-3 of the same Act by the date on which three months elapse from the last day of the month in which the second anniversary of the date of the gift falls, all or part of the additional tax pursuant to Articles 47-2 through 47-4 of the same Act shall not be imposed as prescribed by Presidential Decree, but the amount equivalent to interests calculated as prescribed by the Presidential Decree shall be added to the gift tax.

(7) If a resident who has received a deduction pursuant to paragraph (1) but in whose case marriage is nullified files an amended return pursuant to Article 45 of the National Taxation Act or a late return pursuant to Article 45-3 of the same Act by the date on which three months elapse from the end day of the month in which the judgment on the invalidity of the marriage is finalized, all or part of the additional tax pursuant to Articles 47-2 through 47-4 of the same Act shall not be imposed as prescribed by Presidential Decree, but the amount equivalent to interests calculated as prescribed by the Presidential Decree shall be added to the gift tax.

[This Article Newly Inserted on Dec. 31, 2023]

Article 60(Principles of Assessment) #

(1) The value of property on which inheritance tax or gift tax is imposed pursuant to this Act shall be based on its market value as of the date of commencement of inheritance or as of the date of donation (hereinafter referred to as "base date of assessment"). In such cases, the following values are deemed market values in the following cases: <Amended on Dec. 20, 2016; Dec. 22, 2020; Jul. 18, 2023>

1. In cases of stocks, etc. prescribed by Presidential Decree (excluding stocks, etc. referred to in Article 63 (2)) among stocks, etc. of listed companies traded in a securities market prescribed by Presidential Decree, being securities markets provided in the Financial Investment Services and Capital Markets Act: Values assessed by the method provided in Article 63 (1) 1 (a);

2. In cases of virtual assets as defined in subparagraph 1 of Article 2 of the Act on the Protection of Virtual Assets Users: Values assessed by the method provided in Article 65 (2).

(2) The current market price prescribed in paragraph (1) shall be the value deemed to be normally established when many and unspecified persons engage in transactions freely, and include 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.

(3) Where it is impracticable to calculate the current market price in applying paragraph (1), the value assessed by the methods stipulated in Articles 61 through 65, based on the kinds, scale, transaction circumstances, etc. of the relevant property, shall be deemed the current market price.

(4) For purposes of paragraph (1), the value of the donated property added to the value of the inherited property pursuant to Article 13 shall be based on the current market price as of the date of donation.

(5) In determining the appraised value prescribed in paragraph (2), requests shall be made for at least two appraisal institutions (in cases of real estate whose value is not more than the amount prescribed by Presidential Decree, at least one appraisal institution), as prescribed by Presidential Decree. In such cases, where grounds prescribed by Presidential Decree exist, such as that the value appraised by an appraisal institution is below 80/100 of the value appraised by another appraisal institution, etc., the head of the competent tax office or the Director of a regional National Tax Service may designate the relevant appraisal institution as an appraisal institution whose appraisal of market price is not approved within a fixed period not exceeding one year following procedures prescribed by Presidential Decree, as prescribed by Presidential Decree, and the value appraised by an appraisal institution designated as an appraisal institution whose appraisal of market price is not approved while it is designated as such shall not be deemed a market price. <Newly Inserted on Dec. 15, 2015; Dec. 20, 2016; Dec. 19, 2017>

[This Article Wholly Amended on Jan. 1, 2010]

Article 61(Assessment of Real Estate) #

(1) Real estate shall be assessed by any of the following methods: <Amended on Jan. 1, 2014; Jan. 19, 2016; Dec. 20, 2016>

1. Land:

The officially assessed individual land prices prescribed in the Act on the Public Announcement of Real Estate Values (hereinafter referred to as "officially assessed individual land prices"): Provided, That the value of land, the officially assessed individual price of which has yet to be established (specific assessment criteria shall be prescribed by Presidential Decree), shall be an amount assessed by the head of the tax office having jurisdiction over the place of tax payment in a manner prescribed by Presidential Decree, based on the officially assessed individual land price of similar land adjacent thereto, and the value of land in an area where land price rises sharply, which is prescribed by Presidential Decree, shall be an amount assessed by using a multiplication method;

2. Building:

The price calculated and publicly notified by the Commissioner of the National Tax Service at least once a year, based on the construction costs, structure, purposes of use, location, year of construction, etc. of the relevant building (excluding buildings falling under subparagraph 3 or 4);

3. Officetel and commercial buildings:

For an officetel and a commercial building (including land attached thereto) under sectional ownership in which the attached land is jointly owned and which is prescribed by Presidential Decree, based on the purpose of use and size of the building, the number of buildings under sectional ownership, etc., the prices of land and buildings calculated and publicly notified by the Commissioner of the National Tax Service collectively at least once a year, based on the type, scale, transaction situation, location, etc. of the relevant building;

4. Housing:

The individual housing price or collective housing price prescribed in the Act on the Public Announcement of Real Estate Values (if any collective housing price is determined and publicly notified by the Commissioner of the National Tax Service pursuant to the proviso of Article 18 (1) of that Act, referring to such price; hereafter in this subparagraph referred to as "publicly notified housing price"): Provided, That in either of the following cases, the price shall be an amount assessed by the head of the tax office having jurisdiction over the place of tax payment in a manner prescribed by Presidential Decree, in consideration of the publicly notified housing price of similar housing adjacent thereto:

(a) Where there is no publicly notified housing price for the relevant housing;

(b) Where it is inappropriate that the relevant housing is assessed, based on its publicly notified housing price, because it is substantially repaired or remodeled under Article 2 (1) 9 or 10 of the Building Act after the public notification of the price.

(2) "Multiplication method" in the proviso of paragraph (1) 1 means a method of calculation, based on amounts calculated by multiplying officially assessed individual land price by a rate prescribed by Presidential Decree.

(3) The value of superficies, a right to acquire real estate and a right to use a specific facility shall be an amount assessed according to methods prescribed by Presidential Decree, based on the remaining period, nature, substance, transaction circumstances, etc. of such right.

(4) The value of other facilities or structures shall be an amount assessed according to methods prescribed by Presidential Decree, based on the value required to rebuild or reacquire such facilities or structures as of the base date of assessment.

(5) The value of property, the lease contract of which is de facto concluded or the leasehold of which is registered, shall be the larger of the assessed value based on its rent, etc. according to methods prescribed by Presidential Decree and the value assessed under paragraphs (1) through (4). <Amended on Dec. 15, 2015>

(6) Articles 99 (4) through (6) and 99-2 of the Income Tax Act shall apply mutatis mutandis to the hearing of opinions of owners and any other interested persons about the value calculated and publicly notified by the Commissioner of the National Tax Service pursuant to paragraph (1) 3 as well as an application for re-calculation and public notification.

[This Article Wholly Amended on Jan. 1, 2010]

[Title Amended on Jan. 1, 2010]

Article 63(Assessment of Securities) #

(1) Securities shall be assessed by any of the following methods: <Amended on May 28, 2013; Dec. 20, 2016>

1. Assessment of shares of stock, etc.:

(a) With regard to stocks, etc. prescribed by Presidential Decree (hereafter in this subparagraph referred to as "exchange-listed shares") among shares of corporations listed on the stock exchange, traded in the securities market prescribed by Presidential Decree, which is provided for in the Financial Investment Services and Capital Markets Act, the average amount (where it is inappropriate to calculate the average amount for two months before and after the base date of assessment because any grounds for the increase of capital, merger, etc. arise during that period, the average amount shall be calculated for the period as prescribed by Presidential Decree during the period of two months before and after the base date of assessment) of closing market prices (irrespective of whether trading was conducted or not) on a daily basis in the stock exchange permitted pursuant to the Financial Investment Services and Capital Markets Act publicly announced for two months before and after the base date of assessment (where the base date of assessment is no trading day prescribed by Presidential Decree, such as a public holiday, the base date of assessment shall be the day before the date): Provided, That where profits generated from a merger are calculated pursuant to Article 38, market prices of exchange-listed shares owned by a corporation that ceases to exist or is acquired, or newly incorporated or surviving corporation through a merger (including a merger after division) shall be closing market prices in the stock exchange as of the base date of assessment;

(b) Stocks, etc. other than those prescribed in item (a) shall be assessed in accordance with the methods prescribed by Presidential Decree, based on the assets, earnings, etc. of the relevant corporation;

2. Securities other than those prescribed in subparagraph 1, such as government bonds and public bonds, shall be assessed in accordance with the methods prescribed by Presidential Decree, based on the type, size, transaction circumstances, etc. of the relevant property.

(2) Notwithstanding paragraph (1) 1, any of the following stocks, etc. shall be assessed by the methods prescribed by Presidential Decree, based on the business feasibility, transaction circumstances, etc. of the relevant corporation: <Amended on May 28, 2013; Dec. 15, 2015; Dec. 22, 2020>

1. Stocks, etc. of a corporation that has reported on its securities to the Financial Services Commission for the purpose of public offer within the period prescribed by Presidential Decree;

2. Of the stocks, etc. mentioned in paragraph (1) 1 (b), stocks, etc. of a corporation that has applied for listing to the securities market prescribed by Presidential Decree being one prescribed by the Financial Investment Services and Capital Markets Act within the period prescribed by Presidential Decree for the purpose of trading its stocks, etc. on the securities exchange;

3. Of the stocks of a corporation listed on an exchange, new stocks acquired as a result of an increase in capital of the relevant corporation, but not listed as of the base date of assessment.

(3) For purposes of paragraph (1) 1, paragraph (2), and Article 60 (2), stocks, etc. (excluding the 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) of the largest shareholder or the largest investor prescribed by Presidential Decree and a shareholder, etc. who are specially related to the largest shareholder or the largest investor (hereafter in this paragraph referred to as "largest shareholder, etc.") shall be calculated by adding 20/100 of the value assessed under paragraphs (1) 1 and (2) or the value recognized under Article 60 (2) to such value. In such cases, the method of calculating stocks, etc. held by the largest shareholder, etc. shall be prescribed by Presidential Decree. <Amended on Dec. 31, 2011; Dec. 15, 2015; Dec. 20, 2016; Dec. 31, 2019; Dec. 31, 2022>

(4) Deposits, savings, installment savings, etc. shall be assessed, based on the value calculated by deducting an amount corresponding to the withholding tax prescribed in Article 127 (1) of the Income Tax Act from the aggregate of the total amount of deposits and receipts as of the base date of assessment and the amount of accrued interest receivable as of the base date of assessment.

[This Article Wholly Amended on Jan. 1, 2010]

Article 71(Payment in Annual Installments) #

(1) Where the amount of inheritance tax or gift tax exceeds 20 million won, the head of the tax office having jurisdiction over the place of tax payment may permit the payment of such tax in annual installments upon an application by a taxpayer, as prescribed by Presidential Decree. In such cases, the taxpayer shall provide security, and where the taxpayer applies for permission for payment in annual installments by providing security stipulated in subparagraphs 1 through 4 of Article 18 (1) of the National Tax Collection Act, such taxpayer shall be deemed to have been permitted to pay in annual installments on the date of such application. <Amended on Dec. 11, 2020; Dec. 21, 2021>

(2) The period for which payment in annual installments is made under paragraph (1) shall be a period applied for by the relevant taxpayer within the period classified in the following: Provided, That the period for which payment in annual installments is made shall be determined so that the amount of the tax to be paid in each installment exceeds 10 million won: <Amended on Dec. 15, 2015; Dec. 19, 2017; Dec. 31, 2019; Dec. 21, 2021; Dec. 31, 2022; Dec. 31, 2023>

1. In cases of inheritance tax: the period for each item of inherited property classified in the following:

(a) In cases of inherited property prescribed by Presidential Decree (including property prescribed by Presidential Decree, such as property directly used for a private kindergarten as defined in subparagraph 3 of Article 7 of the Early Childhood Education Act: hereafter in this Article the same applies) where an heir has received a deduction for succession to farming under Article 18-2 or has succeeded to a small and medium enterprise or middle-standing enterprise satisfying the requirements prescribed by Presidential Decree: 20 years from the date on which permission to pay inheritance tax in annual installments is granted or 10 years from the 10th anniversary of the date on which permission to pay inheritance tax in annual installments is granted;

(b) In cases of other inherited properties: 10 years from the date on which permission to pay inheritance tax in annual installments is granted;

2. In cases of gift tax: The period for each item of gift property classified in the following:

(a) Donated property to which special taxation exemption under Article 30-6 of the Act on Restriction on Special Cases concerning Taxation is applied: 15 years from the date of permission for annual payment in installments;

(b) Donated property other than those in item (a): 5 years from the date of permission for annual payment in installments;

(3) For purposes of paragraph (2), the method of calculating the amount of annual installment payments shall be prescribed by Presidential Decree.

(4) Where a taxpayer who has obtained permission for payment in annual installments under paragraph (1) falls under any of the following subparagraphs, the head of a tax office having jurisdiction over the place of tax payment may revoke or modify permission for payment in annual installments, as prescribed by Presidential Decree, and accordingly collect all or part of the amount related to payment in annual installments: <Amended on Dec. 15, 2015; Dec. 19, 2017; Dec. 31, 2019; Jun. 9, 2020; Dec. 22, 2020>

1. Where the taxpayer fails to pay the amount of tax to be paid in annual installments by the designated deadline for payment (referring to the scheduled payment date of tax to be paid in annual installments where he or she is deemed to have been permitted under the latter part of paragraph (1));

2. Where the taxpayer changes security or fails to comply with an order issued by the head of the competent tax office that is necessary for the preservation of security;

3. Where the taxpayer falls under any subparagraph of Article 9 (1) of the National Tax Collection Act, and thus it is deemed that the entire amount of tax related to the payment in annual installments cannot be collected by the deadline for payment in annual installments;

4. 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;

5. Cases prescribed by Presidential Decree, such as property prescribed by Presidential Decree, such as property directly used for a private kindergarten as defined in subparagraph 3 of Article 7 of the Early Childhood Education Act, is not used directly for the relevant business.

(5) Where the head of the tax office having jurisdiction over the place of tax payment either grants permission for payment in annual installments pursuant to paragraph (1) (excluding cases where the taxpayer is deemed to have been permitted under the latter part of paragraph (1)), or cancels permission for payment in annual installments pursuant to paragraph (4), he or she shall notify the taxpayer of such fact.

[This Article Wholly Amended on Jan. 1, 2010]

Article 72-2(Deferred Payment of Inheritance Tax on Succession to Family Business) #

(1) Where a taxpayer who satisfies all of the following requirements applies for deferred payment of inheritance tax, the head of the tax office having jurisdiction over the place of tax payment may permit the deferred payment of an amount prescribed by Presidential Decree:

1. That an heir shall have succeeded to a family business as provided in Article 18-2 (1) (limited to small and medium enterprises);

2. That the heir shall have not received a deduction for succession to a family business. In such cases, where the heir has received a deduction for succession to faming in lieu of a deduction for succession to a family business under Article 18-4, such heir is deemed to have received a deduction for succession to a family business.

(2) A taxpayer who intends to obtain permission for deferred payment under paragraph (1) shall provide security.

(3) Where an heir falls under any of the following cases without good cause prescribed by Presidential Decree, the head of the tax office having jurisdiction over the place of tax payment shall revoke or modify permission granted under paragraph (1), and collect an amount specified in the relevant subparagraph and an amount corresponding to interest calculated as prescribed by Presidential Decree:

1. Where the heir has succeeded to a family business subject to the Income Tax Act and disposes of at least 40/100 of the property for such family business: An amount calculated as prescribed by Presidential Decree in consideration of the ratio of disposal out of the deferred tax;

2. Where the heir ceases to engage in the family business: A full amount of the deferred tax;

3. Where the equity of the heir who has inherited stocks, etc. has decreased: The following relevant amount:

(a) Where decreased within five years from the date of commencement of inheritance: A full amount of the deferred tax;

(b) Where decreased five years after the date of commencement of inheritance: An amount calculated as prescribed by Presidential Decree in consideration of the ratio of decrease in equity out of the deferred tax;

4. Where the heir falls under any item of Article 18-2 (5) 4 (in which cases "90/100" referred to in items (a) and (b) of that subparagraph is deemed "70/100"): A full amount of the deferred tax;

5. Where inheritance commences upon the death of the heir: A full amount of the deferred tax.

(4) Where an heir who has obtained permission for deferred payment under paragraph (1) falls under any subparagraph of paragraph (3), the heir shall file a report with the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree, and pay inheritance tax and an amount corresponding to interest to the tax office having jurisdiction over the place of tax payment, the Bank of Korea, or the post office within six months from the last day of the month in which the relevant date falls: Provided, That this does not apply where the inheritance tax and an amount corresponding to interest has been already collected under paragraph (3)

(5) Where a person who has obtained permission for deferred payment under paragraph (1) falls any of the following, the head of the tax office having jurisdiction over the place of tax payment may revoke or modify the permission, and may collect a portion or all of the deferred tax and an amount corresponding to interest calculated as prescribed by Presidential Decree:

1. Where the person fails to comply with an order given by the head of the tax office having jurisdiction over the place of tax payment as necessary to change security or replenish security;

2. Where it is deemed unable to collect a portion or all of the deferred tax as the person falls under any subparagraph of Article 9 (1) of the National Tax Collection Act.

(6) A person liable to pay deferred tax and an amount corresponding to interest under paragraph (3) 3 or 5 (including where that provisions apply mutatis mutandis under paragraph (7)) may apply for permission for deferred payment of such tax and amount corresponding to interest to the head of the tax office having jurisdiction over the place of tax payment, notwithstanding paragraphs (3) and (4), if any of the following is applicable:

1. Where the person falls under paragraph (3) 3 and the donee has have the benefit of special taxation under Article 30-6 of the Act on Restriction on Special Cases concerning Taxation or has obtained permission for deferred payment under Article 30-7 of that Act;

2. Where the person falls under paragraph (3) 5 and an heir who newly succeeded to a family business has received a deduction for such family business or has obtained permission for deferred payment under paragraph (1).

(7) Paragraph (2) through (5) (excluding paragraph (3) 4) apply mutatis mutandis to deferred payment under paragraph (6). In such cases, the "full amount of the deferred tax" in paragraph (3) 3 (a) is deemed to be an "amount calculated as prescribed by Presidential Decree in consideration of the ratio of decrease in share out of the deferred tax", and where the person has obtained permission for deferred payment under paragraph (6) 1, an "heir" is deemed to be a "donee", "inherited" to be "donated", and the "date of commencement of inheritance" to be the "date of donation" in paragraphs (3) through (5).

(8) For purposes of paragraphs (1) through (7), procedures for applying for deferred payment, matters about provision of security, matters concerning whether to impose a late-payment penalty in relation to the time when permission for deferred payment is granted, methods for determining whether an heir engages in family business, and other necessary matters shall be prescribed by Presidential Decree.

[This Article Newly Inserted on Dec. 31, 2022]

Article 73-2(Payment in Kind with Cultural Heritage) #

(1) A taxpayer may apply for payment in kind with cultural heritage to the head of the tax office having jurisdiction over the place of tax payment if the property the taxpayer inherited include a cultural heritage or work of art prescribed by Presidential Decree (hereafter in this Article referred to as "cultural heritage, etc.") and the taxpayer satisfies all of the following requirements: <Amended on Aug. 8, 2023>

1. That the amount of inheritance tax payable shall exceed 20 million won;

2. That the amount of inheritance tax payable shall exceed the value (excluding the value of donated property added to inherited property under Article 13) of financial assets prescribed by Presidential Decree among the value of inherited property.

(2) Where an application for payment in kind is filed under paragraph (1), 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 details of the application for payment in kind, as prescribed by Presidential Decree.

(3) Where payment in kind is deemed necessary as the cultural heritage, etc. applied for payment in kind has historic, academic, or artistic value or for other reasons, the Minister of Culture, Sports, and Tourism shall request the payment in kind with such cultural heritage, etc. to the head of the tax office having jurisdiction over the place of tax payment in accordance with the procedures prescribed by Presidential Decree. <Amended on Aug. 8, 2023>

(4) Upon receipt of a request under paragraph (3), the head of the tax office having jurisdiction over the place of tax payment shall permit payment in kind if he or she deems that the relevant cultural heritage, etc. has little risk of causing a loss to the National Funds in accordance with the procedures prescribed by Presidential Decree. <Amended on Aug. 8, 2023>

(5) An amount of tax payable regarding which an application for payment in kind can be applied under paragraph (1) shall not exceed an amount of inheritance tax payable on the value of cultural heritage, etc. appropriated for payment in kind among inherited properties. <Amended on Aug. 8, 2023>

(6) Other matters necessary for applying for payment in kind and procedures for permission shall be prescribed by Presidential Decree.

[This Article Newly Inserted on Dec. 21, 2021]

[Title Amended on Aug. 8, 2023]

Article 74(Deferred Collection of Inheritance Tax on Designated Cultural Heritage) #

(1) Where inherited property includes any of the following, the head of the tax office having jurisdiction over the place of tax payment shall defer the collection of the amount of inheritance tax on the value of such inherited property that is to be imposed, as calculated under Presidential Decree: <Amended on Feb. 4, 2010; Dec. 24, 2018; Nov. 26, 2019; Dec. 31, 2022; Mar. 21, 2023; Aug. 8, 2023; Sep. 14, 2023>

1. Any cultural heritage resource as defined Article 2 (3) 3 of the Act on Preservation and Utilization of Cultural Heritage and the State-registered cultural heritage under Article 6 (1) of the Act on the Preservation and Utilization of Modern and Contemporary Cultural Heritage (hereafter in this Article "cultural heritage resource, etc."), and land prescribed by Presidential Decree which is located in any protection zone designated under the Act on Preservation and Utilization of Cultural Heritage;

2. Among museum objects or art gallery objects (hereafter in this Article referred to as "museum object, etc.") registered under the Museum and Art Gallery Support Act, property being exhibited or preserved in a museum or an art gallery (referring to those qualified as public-interest corporations, etc. in cases of private museums or private art galleries) under that Act;

3. State-designated cultural heritages and Si or Do-designated cultural heritages under the Cultural Heritage Protection Act, and land prescribed by Presidential Decree (hereafter in this Article referred to as "State-designated cultural heritage, etc."), being land in any protection zone designated under that Act;

4. Natural monuments, scenic spots, and Si or Do natural heritages designed under the Act on Preservation and Utilization of Natural Heritage, and land prescribed by Presidential Decree (hereafter in this Article referred to as "natural monument, etc."), being land in any protection zone designated under that Act.

(2) Where an heir or a legatee to whom a cultural heritage resource, etc., a museum object, etc. State-registered cultural heritage, etc., or a natural monument, etc. has been inherited either transfers such property for consideration or withdraws the museum object, etc. for any reason prescribed by Presidential Decree, the head of the tax office having jurisdiction over the place of tax payment shall immediately collect inheritance tax, the collection of which is deferred. <Amended on Dec. 31, 2022; Mar. 21, 2023; Aug. 8, 2023>

(3) Where inheritance takes place again due to the death of the heir or legatee who owns a cultural heritage resource, etc., a museum object, etc. State-registered cultural heritage, etc., or a natural monument, etc. during the period for which collection is deferred under paragraph (1), the head of the tax office having jurisdiction over the place of tax payment shall cancel a decision to impose the amount of inheritance tax, the collection of which has been deferred, and shall not re-impose the cancelled amount of inheritance tax. <Amended on Dec. 31, 2022; Mar. 21, 2023; Aug. 8, 2023>

(4) A person who intends to obtain permission for deferred collection under paragraph (1) shall provide security corresponding to such deferred amount of inheritance tax. In such cases, Article 71 shall apply mutatis mutandis to the provision of security.

(5) Notwithstanding paragraph (4), a person who intends to obtain permission for deferred collection of inheritance tax on State-designated cultural heritage, etc. referred to in paragraph (1) 3 or a natural monument, etc. referred to in subparagraph 4 of that paragraph need not provide security corresponding to such deferred amount of inheritance tax. <Newly Inserted on Dec. 31, 2022; Mar. 21, 2023; Aug. 8, 2023>

(6) A person who need not provide security under paragraph (5) shall submit a holding status statement of State-designated cultural heritage, etc. or natural monument, etc. to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree, by the end of each year, and the head of the tax office having jurisdiction over the place of tax payment shall inspect whether the holding status is appropriate. <Newly Inserted on Dec. 31, 2022; Mar. 21, 2023; Aug. 8, 2023>

(7) Where a person who need not provide security under paragraph (5) transfers State-designated cultural heritage, etc. or natural monument, etc. for consideration shall report such transfer to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree, seven days prior to the date of such transfer. <Newly Inserted on Dec. 31, 2022; Mar. 21, 2023; Aug. 8, 2023>

(8) For purposes of paragraph (1), cases where an heir exhibits or preserves museum objects or art gallery objects, among inherited property at a museum or an art gallery under the Museum and Art Gallery Support Act, as prescribed by Presidential Decree by the filing deadline specified in Article 67 (where a museum or art gallery is established and any inevitable ground exists, it means six months from the last day of the month during which such reason ceases to exist.). <Amended on Dec. 31, 2022>

[This Article Wholly Amended on Jan. 1, 2010]

[Title Amended on Dec. 31, 2022; Aug. 8, 2023]

Article 76(Determination and Correction) #

(1) The head of the competent tax office, etc. shall determine the tax base and amount of tax based on a report filed pursuant to Article 67 or 68: Provided, That if a taxpayer fails to file a report, or an omission or error exists in the reported tax base or amount of tax, the head of the competent tax office, etc. shall determine the tax base and amount of tax after conducting an investigation thereon.

(2) Where a ground falling under any of the subparagraphs of Article 9 (1) of the National Tax Collection Act exists, the head of the competent tax office, etc. may determine the tax base and the amount of tax at any time even before the reporting deadline under Articles 67 and 68 expires, notwithstanding paragraph (1). <Amended on Dec. 22, 2020>

(3) The head of the competent tax office, etc. shall determine the tax base and the amount of tax within a period (hereinafter referred to as a "statutory deadline for determination") prescribed by Presidential Decree from the date on which he or she has received a report under paragraph (1): Provided, That where the head of the competent tax office, etc. is unable to make a determination within that period due to any extenuating circumstance, such as taking a long time to conduct an investigation of the inherited or donated property, an assessment of its value, etc., he or she shall notify the heir, legatee, or donee of such circumstance.

(4) Where the head of the competent tax office, etc. is either unable to determine the tax base or amount of tax pursuant to paragraph (1) or (2), or discovers an omission or error in the determined tax base or amount of tax, he or she shall promptly investigate such tax base and amount of tax and make a determination or correction.

(5) Where the value of the inherited property determined pursuant to paragraph (1) or (2) is not less than three billion won in applying paragraph (4), and the value of real estate, stocks, or other primary property prescribed by Presidential Decree that are retained by the heir significantly increases compared to that as at the time of commencement of inheritance within a period prescribed by Presidential Decree after the commencement of inheritance, the head of the competent tax office, etc. shall investigate as to whether any omission or error exists in the determined tax base and the amount of tax, as prescribed by Presidential Decree: Provided, That this shall not apply where the heir has proven the source of the funds for the increased property, as prescribed by Presidential Decree.

[This Article Wholly Amended on Jan. 1, 2010]

Article 78(Additional Tax) #

(1) Deleted. <Dec. 30, 2006>

(2) Deleted. <Dec. 30, 2006>

(3) Where a public-interest corporation, etc. fails to submit a report required under Article 48 (5), or the details of the report submitted are unclear as prescribed by Presidential Decree, the head of the competent tax office, etc. shall collect an amount corresponding to 1/100 of the amount of inheritance tax or gift tax to be imposed on the portion that a report is not submitted or the reported details are unclear. <Amended on Jan. 1, 2010>

(4) Where a public-interest corporation, etc. continues possessing stocks, etc. in excess of the upper limits of holding stocks, etc. prescribed in Article 49 (1) even after the deadline stipulated under each subparagraph of that paragraph expires, the head of the competent tax office, etc. shall impose an amount corresponding to 5/100 of the current market value of shares with voting rights or equity stakes (hereafter in this paragraph and paragraph (7) referred to as "stocks, etc.") in excess of the upper limits of holding stocks, etc. as of the last day of the deadline stipulated in each subparagraph of that paragraph (in cases of a public-interest corporation, etc., governed by the proviso, with the exception of the subparagraphs, of Article 49 (1) as of the last day of the taxable period of income tax or business year of corporate tax during which the public-interest corporation, etc. fails to meet the standards under the same proviso), as of the last day of each year, in addition to an amount of tax payable by such public-interest corporation, etc., as prescribed by Presidential Decree. In such cases, the period for imposition of additional tax shall not exceed 10 years. <Amended on Jan. 1, 2010; Dec. 20, 2016>

(5) Where a public-interest corporation, etc. falls under any of the following, the head of the competent tax office, etc. shall collect an amount calculated (if, in cases falling under subparagraph 1, the amount calculated is less than one million won, it shall be deemed one million won) by multiplying 7/10,000 by the aggregate of the amount of income in the taxable period of income tax or the business year of corporate tax prescribed by Presidential Decree and the value of the property received through contribution during the relevant taxable period or the business year as the inheritance tax or gift tax: Provided That this shall not apply in cases prescribed by Presidential Decree, based on the characteristics of the public-interest corporation, etc., the scale of the property received through contribution, and the operational performance, etc. of public-interest projects: <Amended on Jan. 1, 2010; Jan. 1, 2014; Dec. 20, 2016; Dec. 31, 2022>

1. Where it fails to perform its reporting duty, etc. on tax verification by outside experts pursuant to Article 50 (1) and (2);

2. Where it fails to perform its duty to prepare and keep books and records pursuant to Article 51;

3. Where it fails to undergo an audit pursuant to Article 50 (3) or (4) (including where it has undergone an audit conducted by any auditor other than the auditors designated under Article 50 (4).

(6) Where directors, or executives and employees exist in excess of the number of directors stipulated under Article 48 (8), the head of the competent tax office, etc. shall impose the full amount corresponding to direct expenses and indirect expenses prescribed by Presidential Decree that are incurred in connection with such persons, in addition to the amount of tax payable by the public-interest corporation, etc. each year, as prescribed by Presidential Decree. <Amended on Jan. 1, 2010>

(7) Where a public-interest corporation, etc. holds the stocks, etc. in excess of the upper limits of holding stocks, etc. of a domestic corporation prescribed in Article 48 (9), the head of the competent tax office, etc. shall impose an amount corresponding to 5/100 of the current market value of the stocks, etc. excessively held by the public-interest corporation, etc. as at the end of each business year, in addition to the amount of tax payable by such public-interest corporation, etc., as prescribed by Presidential Decree. <Amended on Jan. 1, 2010>

(8) Where a public-interest corporation, etc. advertises or publicizes pursuant to Article 48 (10), the head of the competent tax office, etc. shall impose an amount corresponding to expenses directly incurred in connection with such acts, in addition to the amount of tax payable by the public-interest corporation, etc., as prescribed by Presidential Decree. <Amended on Jan. 1, 2010>

(9) Where public-interest corporations, etc. fall under any of the following subparagraphs, the head of the competent tax office, etc. shall impose an amount corresponding to 10/100 (or 200/100 of the amount specified in the same subparagraph if public interest corporations, etc. falling under Article 48 (2) 7 (a) fall under subparagraph 3 of this paragraph) of the amount classified as follows, in addition to the amount of tax payable by the public-interest corporations, etc., as prescribed by Presidential Decree; In such case, if subparagraphs 1 and 3 apply simultaneously, the larger amount shall apply. <Amended on Dec. 20, 2016; Dec. 31, 2023>

1. Where the public-interest corporation, etc. fails to use operating income less than the base amount prescribed by Presidential Decree pursuant to Article 48 (2) 5:

2. Where the public-interest corporation, etc. fails to use the proceeds from the sale less than the base amount prescribed by Presidential Decree pursuant to Article 48 (2) 5: Unused amount among the proceeds from the sale;

3. Where the public-interest corporation, etc. falls under Article 48 (2) 7: Amount calculated by subtracting the amount directly used for public-interest project from the base amount.

(10) Where a public-interest corporation, etc. falls under any of the following subparagraphs, the head of the competent tax office, etc. shall impose the amount in the relevant subparagraph, in addition to the amount of tax payable by the public-interest corporation, etc., as prescribed by Presidential Decree: <Amended on Jan. 1, 2010; Dec. 21, 2021>

1. Where a public-interest corporation, etc. fails to use an exclusive account in cases falling under any subparagraph of Article 50-2 (1): Amount corresponding to 5/1,000 of the amount that has not occupied an exclusive account;

2. Where a public-interest corporation, etc. fails to open or report an exclusive account prescribed in Article 50-2 (3): Whichever is the larger of the following items:

(a) An amount calculated in accordance with the following formula;

Number of persons entering a golf course x Number of holes actually played/Total number of holes

(b) Amount corresponding to 5/1,000 of the total amount of transactions conducted under the subparagraphs of Article 50-2 (1).

(11) Where a public-interest corporation, etc. fails to comply with a request by the Commissioner of the National Tax Service for providing public notice or making a correction by the specified deadline under Article 50-3 (2) as the public-interest corporation, etc. fails to provide public notice on the closing documents, etc. pursuant to Article 50-3, or erroneous information is included in the details of the public notice, the head of the competent tax office, etc. shall impose an amount corresponding to 5/1,000 of the total assets of the public-interest corporation, etc. as at the last day of the taxable period or business year subject to public notice, in addition to the amount of tax payable by such public-interest corporation, etc., as prescribed by Presidential Decree: Provided, That an additional tax under the provisions, with the exception of the subparagraphs of Article 50-3 (1) shall not be imposed with respect to any public notice on the closing documents, etc. for any taxable period or business year that began before Dec. 31, 2022. <Amended on Jan. 1, 2010; Dec. 31, 2019; Dec. 31, 2022>

(12) Where a person obligated to submit payment statements, etc. prescribed in Article 82 (1), (3), (4), or (6) fails to do so or submits them with omissions, or unclear matters prescribed by Presidential Decree are included in the submitted payment statements, etc., the head of the competent tax office, etc. shall collect an amount corresponding to 2/1,000 (2/10,000 in cases falling under Article 82 (3) and (4)) of the amount corresponding to those that are not submitted, omitted or unclear, in addition to income tax or corporate tax. In such cases, the additional tax shall be collected even if no amount of tax is calculated. <Amended on Jan. 1, 2010; Dec. 27, 2010>

(13) Where payment statements, etc. are submitted within one month after the deadline for submission has expired in applying paragraph (12), an amount corresponding to 1/1,000 (1/10,000 in cases falling under Article 82 (3) and (4)) shall be collected, in addition to income tax or corporate tax. In such cases, the additional tax shall be collected even if no amount of tax is calculated. <Amended on Jan. 1, 2010; Dec. 27, 2010>

(14) Where a public-interest corporation, etc. fails to report as required under Article 48 (13), the head of the competent tax office, etc. shall impose an amount corresponding to 5/1,000 of the total amount of its assets as of the last day of the taxable period or business year subject to reporting, being an amount prescribed by Presidential Decree, in addition to the tax payable by that public-interest corporation, etc. <Newly Inserted on Dec. 22, 2020>

(15) Where a person who need not provide security for tax payment under Article 74 (5) falls under any of the following, the head of the competent tax office, etc. shall collect an amount referred to in each subparagraph from that person: <Newly Inserted on Dec. 31, 2022; Aug. 8, 2023>

1. An amount corresponding to 1/100 of the amount of inheritance tax, the collection of which is deferred where the person fails to submit a holding status statement of State-designated cultural heritage, etc. or natural monument, etc. as required under Article 74 (6);

2. An amount corresponding to 20/100 of the amount of inheritance tax, the collection of which is deferred where the person fails to report the transfer of State-designated cultural heritage, etc. or natural monument, etc. as required under Article 74 (7).

[Title Amended on Jan. 1, 2010]

Article 79(Special Cases concerning Request for Correction) #

(1) Where any of the following cases occurs in respect of a person who has filed inheritance tax base return and tax amount under Article 67, or a person who has received a determination or collection of the tax base of inherited property and the amount of inheritance tax under Article 76, such person may request a determination or correction within six months from the date on which such case occurs, as prescribed by Presidential Decree:

1. Where the value of property inherited to each heir is changed as of the date of commencement of inheritance due to any ground prescribed by Presidential Decree, such as a lawsuit. to request the recovery of inheritance with respect to the inherited property;

2. Where the value of the inherited property significantly decreases by the date on which one year has elapsed since the commencement of inheritance due to any ground prescribed by Presidential Decree, such as expropriation of the inherited property.

(2) In any of the following cases, a request for determination or correction may be made within three months from the date on which the relevant reason occurs, as prescribed by Presidential Decree: <Amended on Dec. 20, 2016>

1. Where a person, on whom gift tax prescribed in Article 37 has been determined or corrected, inherits or receives the donation of the relevant real estate from the real estate owner during the gratuitous use period of real estate prescribed by Presidential Decree, or no longer gratuitously uses the relevant real estate due to any ground prescribed by Presidential Decree;

2. Where a person in whose case gift tax prescribed in Article 41-4 has been determined or corrected, inherits or receives the donation of the relevant money from the lender during the loan period prescribed in paragraph (2) of that Article, or is unable to borrow the relevant money without needing to repay it or at an interest rate lower than the reasonable interest rate for any grounds prescribed by Presidential Decree;

3. Where a person, in whose case gift tax prescribed in Article 42 has been determined or corrected because he or she borrowed money, etc. using other's property without compensation as collateral, inherits or receives the donation of the relevant property from the provider of the property during the period of use of the property prescribed in paragraph (2) of that Article, or is unable to borrow the relevant money without needing to repay it or at an interest rate lower than the reasonable interest rate for any grounds prescribed by Presidential Decree.

[This Article Wholly Amended on Jan. 1, 2010]

Article 82(Submission of Payment Statements) #

(1) Any of the following persons living in the Republic of Korea shall submit payment statements or details on the modification of titles to the head of the competent tax office, as prescribed by Presidential Decree: <Amended on Jan. 1, 2014>

1. A person who pays insurance proceeds (including surrender value and early withdrawal) or deals with modification of title of a life or non-life insurance policy stipulated under Articles 8 and 34;

2. A person who pays retirement grants, allowances, merit pay, or others (excluding pensions) similar thereto stipulated under Article 10.

(2) A person equipped with computer processing facilities among those referred to in paragraph (1) 1 shall submit payment statements via an information and communications network as defined in subparagraph 18 of Article 2 of the Framework Act on National Taxes or in electronic information storage devices, such as diskettes, as prescribed by Presidential Decree. <Amended on Jan. 1, 2014; Dec. 31, 2019>

(3) The following persons shall submit the details of the transfer or change of title to the head of the competent tax office, as prescribed by Presidential Decree: <Amended on Dec. 22, 2020>

1. A person (including a person entrusted with duties to verify the transfer or change of title by the State or a local government, and a person engaging in investment trading business referred to in Article 6 (1) 1 of the Financial Investment Services and Capital Markets Act or investment brokerage business referred to in subparagraph 2 of that paragraph) who deals with the transfer or change of titles to the any of the following;

(a) Stocks;

(b) Equity shares;

(d) Corporate bonds;

(e) Receivables;

(f) Collective investment schemes as defined in Article 9 (21) of the Financial Investment Services and Capital Markets Act or foreign collective investment schemes registered under Article 279 (1) of that Act;

(f) Titles, etc. to use specified establishments;

2. Depositors who redeposit foreign currency securities as defined in Article 3 (1) 8 of the Foreign Exchange Transactions Act, which were deposited in them by investors in Korea, in the Korea Securities Depository established under Article 294 of the Financial Investment Services and Capital Markets Act.

(4) A person who deals with trust business shall submit a detailed statement on any trust, the trustor of which is different from its beneficiary, among the trusted property, to the head of the competent tax office, as prescribed by Presidential Decree.

(5) Where any relevant matter, including payment statements referred to in paragraphs (1) through (3), is included in payment invoices under Article 164 of the Income Tax Act, detailed statements on changes of stocks, etc. to under Article 119 of the Corporate Tax Act, or statements on calculation and allocation of income of partnership firms under Article 100 of the Act on Restriction on Special Cases concerning Taxation, such payment statements are deemed to be submitted. <Amended on Dec. 22, 2020>

(6) A corporation that issues convertible bonds, etc. stipulated under Article 40 (1) (excluding a listed-stock corporation prescribed by the Financial Investment Services and Capital Markets Act that issues convertible bonds, etc. through public offering of securities pursuant to Article 9 (7) of that Act, but including an underwriter under that Act) shall submit details on the issuance of the relevant convertible bonds, etc. and on their underwriters to the head of the competent tax office, as prescribed by Presidential Decree.

(7) A financial investment business entity as defined in Article 8 (1) of the Financial Investment Services and Capital Markets Act shall submit a transfer statement to the head of the competent tax office, as prescribed by Presidential Decree, if stocks, etc. are transferred between securities accounts managed by the financial investment business entity (excluding transfer of stocks, etc. through conveyance). <Newly Inserted on Dec. 21, 2021>

[This Article Wholly Amended on Jan. 1, 2010]

Article 85(Collection and Management of Taxation Data by Each Taxpayer) #

(1) For the purpose of efficiently carrying out the affairs of imposing and collecting inheritance tax or gift tax on/from persons prescribed by Presidential Decree, in consideration of the scale of their property, income levels, etc., the Commissioner of the National Tax Service shall annually manage taxation data submitted by taxpayers, etc. pursuant to tax laws, or property data, including real estate, financial property, etc. collected for taxation and collection purposes by each taxpayer through a computer system so that such data can be used for the aforesaid purposes.

(2) The Commissioner of the National Tax Service shall neither use the taxation data of property collected and managed under paragraph (1) for purposes other than taxation, nor provide or divulge such data to any third party, and no person shall request the provision or use of taxation data of property under paragraph (1) to the Commissioner of the National Tax Service: Provided, That this shall not apply to any case falling under the subparagraphs of Article 81-13 (1) of the Framework Act on National Taxes. <Amended on Dec. 27, 2010>

(3) The provision of and request for taxation data of property pursuant to the proviso of paragraph (2) shall be made to the extent that the essence of guaranteeing confidentiality for taxpayers is not harmed by clearly stating the specific purpose of such provision or request, and the provided taxation data of property shall be used only for the original purposes requested, and shall not be divulged to any third party.

(4) A person who requests the taxation data of property to the Commissioner of the National Tax Service pursuant to the proviso of paragraph (2) shall do so in writing stating the following matters:

1. Personal details of the taxpayer, etc.;

2. Purpose of use;

3. Details of the requested taxation data of property.

(5) Detailed matters necessary for the management and operation of the computer system for each taxpayer pertaining to the taxation data of property under paragraph (1) shall be prescribed by the Commissioner of the National Tax Service.

[This Article Wholly Amended on Jan. 1, 2010]

INHERITANCE TAX AND GIFT TAX ACT

Article 1(Purpose) #

Article 2(Definitions) #

Article 3(Property Subject to Inheritance Tax) #

Article 3-2(Obligation to Pay Inheritance Tax) #

Article 4(Property Subject to Gift Tax) #

Article 4-2(Obligation to Pay Gift Tax) #

Article 5(Location of Inherited Property) #

Article 6(Jurisdiction over Taxation) #

Article 7 #

Article 8(Insurance Proceeds Deemed Inherited Property) #

Article 9(Trust Property Deemed Inherited Property) #

Article 10(Retirement Allowances Deemed Inherited Property) #

Article 11(Non-Taxation of Inheritance Tax on War Dead) #

Article 12(Non-Taxable Inherited Property) #

Article 13(Taxable Value of Inherited Property) #

Article 14(Public Imposts Deducted from Value of Inherited Property) #

Article 15(Presumption of Inheritance to Property Disposed of Prior to Date of Commencement of Inheritance) #

Article 16(Non-Inclusion of Property Contributed to Public-Interest Corporations in Taxable Value of Inherited Property) #

Article 17(Non-Inclusion of Property Placed in Public Trust in Taxable Value of Inheritance) #

Article 18(Basic Deduction) #

Article 18-2(Deduction for Succession to Family Business) #

Article 18-3(Deduction for Succession to Farming) #

Article 18-4(Exclusion of Simultaneous Application of Deduction for Succession to Family Business and Deduction for Succession to Farming) #

Article 19(Inheritance Deduction for Surviving Spouse) #

Article 20(Other Personal Deduction) #

Article 21(Blanket Deduction) #

Article 22(Inheritance Tax Deduction for Financial Property) #

Article 23(Casualty Loss Deduction) #

Article 23-2(Inheritance Tax Deduction for House in which Decedent and Heir Have Lived Together) #

Article 24(Limitation on Deduction to Be Applied) #

Article 25(Tax Base and Minimum Threshold of Inheritance Tax) #

Article 26(Inheritance Tax Rates) #

Article 27(Extra Taxation on Generation-Skipping Inheritance) #

Article 28(Gift Tax Credit) #

Article 29(Foreign Tax Credit) #

Article 30(Tax Credit for Short-Term Re-Inheritance) #

Article 31(General Principles for Calculation of Value of Donated Property) #

Article 32(Time of Acquisition of Donated Property) #

Article 33(Donation of Profit from Trust) #

Article 34(Donation of Insurance Proceeds) #

Article 35(Donation of Profit from Acquisition at Low Price or Transfer at High Price) #

Article 36(Donation Resulting from Exemption from Financial Obligation) #

Article 37(Donation of Profit Accruing from Gratuitous Use of Real Estate) #

Article 38(Donation of Profit from Merger) #

Article 39(Donation of Profit from Capital Increase) #

Article 39-2(Donation of Profit from Capital Reduction) #

Article 39-3(Donation of Profit from Investment in Kind) #

Article 40(Donation of Profit from Conversion of Convertible Bonds into Stocks) #

Article 41 #

Article 41-2(Donation of Profit from Excess Dividend) #

Article 41-3(Donation of Profit from Listing of Stocks) #

Article 41-4(Donation of Profit from Gratuitous Loan of Money) #

Article 41-5(Donation of Profit from Listing of Stocks Following Merger) #

Article 42(Donation of Profit from Use of Property or Provision of Services) #

Article 42-2(Donation of Profit from Corporate Reorganization) #

Article 42-3(Donation of Profit from Increase in Value of Property After Acquisition of Property) #

Article 43(Special Cases concerning Imposition of Gift Tax) #

Article 44(Presumption of Donation of Property Transferred to Spouse) #

Article 45(Presumption of Donation of Fund to Acquire Property) #

Article 45-2(Legal Fiction of Property Registered in Name of Another Person as Donation) #

Article 45-3(Legal Fiction of Profit from Transaction with Specially Related Corporation as Donation) #

Article 45-4(Legal Fiction of Profit from Business Opportunity Provided by Specially Related Corporation as Donation) #

Article 45-5(Legal Fiction of Profit from Transaction with Specific Corporation as Donation) #

Article 46(Donated Property Not Subject to Taxation) #

Article 47(Taxable Value of Gift) #

Article 48(Non-Inclusion in Taxable Value of Property Contributed to Public-Interest Corporation) #

Article 49(Upper Limits of Holding Stocks by Public-Interest Corporation) #

Article 50(Public-Interest Corporation’s Obligation to Undergo Tax Verification and Audit) #

Article 50-2(Public-Interest Corporation's Obligation to Open and Use Exclusive Account) #

Article 50-3(Public-Interest Corporation’s Obligation to Disclose Closing Documents) #

Article 50-4(Accounting Standards Applied to Public-Interest Corporation) #

Article 51(Duty to Prepare and Keep Books and Records) #

Article 52(Non-Inclusion of Property Placed in Public Trust in Taxable Value) #

Article 52-2(Non-Inclusion in Taxable Value of Property Donated to Person with Disability) #

Article 53(Gift Deduction) #

Article 53-2(Deduction of Property Donated by Marriage and Childbirth) #

Article 54(Provisions to be Applied Mutatis Mutandis) #

Article 55(Tax Base and Minimum Threshold of Gift Tax) #

Article 56(Gift Tax Rate) #