To prevent tax avoidance through transferring assets to the companies of sons-in-law or daughters-in-law, the government has decided to expand the scope of individuals obligated to pay inheritance tax.
The system was amended to impose inheritance tax when heirs or direct descendants make a paid-in capital increase to a corporation they control. This is because there was a 'tax evasion blind spot' allowing heirs or direct descendants' spouses to avoid inheritance tax by transferring assets to companies they control.
On the 31st, the government held a tax development advisory committee meeting chaired by Lee Hyung-il, Vice Minister of Economy and Finance, where the '2025 tax reform plan' containing this content was deliberated and approved.
According to the Ministry of Economy and Finance, under the current tax system, if the deceased bequeaths assets to a corporation via a will, the corporation itself only pays corporate tax and does not pay inheritance tax.
Instead, if the shareholders of the corporation are the heirs or their direct descendants, they must bear inheritance tax according to their equity in the bequeathed assets.
There have been cases where the deceased evaded inheritance tax by transferring assets to a corporation controlled by a daughter-in-law or son-in-law by exploiting this structure. The government has decided to expand the scope of individuals obligated to pay inheritance tax to prevent such tax avoidance.
The requirements for detention of high delinquent taxpayers will also be restructured. Detention refers to the enforcement method of keeping individuals who have delayed tax payments for a long time in custody for a certain period to compel them to pay taxes.
The amendment states that if the detention system is not beneficial or if the taxpayer has a history of paying taxes diligently, detention will not be enforced.
Specifically, it has been specified that if more than 50% of the overdue amount is paid within two years, or if other material taxpayers like collateral holders are delinquent, detention will not be applied.
New regulations will be established to impose fines on foreign corporations' domestic liaison offices that fail to submit status reports or submit false reports.
Foreign corporations' domestic liaison offices conduct preliminary and auxiliary activities such as advertising, market research, and information gathering, but have effectively avoided tax obligations, making it difficult for tax authorities to manage them. The government plans to strengthen the responsibility of foreign corporations in submitting information and to supplement the tax base through this measure.
In addition, the mailing cost of collection notices sent to delinquent taxpayers will be included in the delayed tax increases. This aims to impose administrative costs due to delinquency on taxpayers. However, cases where the overdue amount is less than 1.5 million won will be excluded from this.