The Korea Chamber of Commerce and Industry analyzed that investment and employment are contracting due to one of the world's highest inheritance taxes, and that simply improving payment methods—such as extending the installment payment period—could deliver tangible effects by reducing taxpayers' burdens and capital outflows and boosting the economic growth rate.
KORCHAM, in a report released on the 3rd titled "Analysis of inheritance tax revenue outlook and study on diversification of payment methods," projected that if the current inheritance tax regime remains in place, inheritance tax revenue would rise from 9.6 trillion won in 2024 to 35.8 trillion won in 2072.
Inheritance tax revenue has grown for decades without changes to the system. The number of inheritance taxpayers jumped about 13-fold, from 1,661 in 2002 to 21,193 in 2024. The share of inheritance tax in total tax revenue rose from 0.29% to 2.14% over the same period.
KORCHAM noted that an excessive inheritance tax burden dampens investment and employment and hinders capital accumulation, negatively affecting economic growth. An analysis of statistics from 1970 to 2024 found a clear negative correlation in which the higher the ratio of inheritance tax revenue to gross domestic product (GDP), the slower the economic growth rate.
KORCHAM argued that improvements are needed, including: ▲ extending the general-property inheritance tax installment payment period from the current 10 years to 20 years or introducing a grace period of at least five years ▲ allowing in-kind payment with listed shares ▲ expanding the stock valuation period from two months before and after the base date to 2–3 years.
Under the installment payment system, which applies when the total inheritance tax due exceeds 20 million won, only small and midsize corporations in business succession are granted benefits of up to 20 years of installments or 10 years of grace followed by 10 years of installments, while individuals and large corporations are limited to 10 years of installments with no grace period.
The effective burden rate of the inheritance tax varies widely by installment period. The effective burden rate for the 10-year installment plan applied to general property is about 70% of a lump-sum payment, whereas the 20-year installment plan limited to small and midsize corporations in business succession lowers it to 51.4%, and the plan with a 10-year grace period plus 10 years of installments lowers it to 32.3%.
KORCHAM also pointed out that, for installment payments, national tax refund interest is imposed each year on the remaining balance after paying the annual tax, and that this year's rate of 3.1% is excessively high. It added that, given the long payment period for inheritance tax, the surcharge rate on installment payments should be reduced.
Kang Seok-gu, head of research at KORCHAM, said, "With the heavy inheritance tax burden, side effects such as reduced corporate investment, pressure from rising stock prices, and sales of management control are worsening," adding, "Even just improving inheritance tax payment methods can significantly reduce the taxpayer's real burden, which can in turn lead to expanded corporate investment and reinvigorate the economy, so flexible payment policy measures are needed."