The tax reform plan the government released on the 3rd includes a provision that "for corporations whose stock price falls beyond a certain level ahead of inheritance or gifts, inheritance and gift tax will be surcharged." In the industry, some said, "It is unreasonable to demand more tax uniformly without asking about other circumstances just because the stock price fell."
In this tax reform plan, the government said it would impose higher inheritance and gift tax than the current level when ▲there was conduct in the past year that negatively affected corporate value and ▲the market price valuation fell 30% or more compared with market prices over the past three years. (Related article☞"Bottom 25% by PBR" KOSPI-listed companies will face at least a 30% surcharge on inheritance and gift tax)
The problem is that no clear standard has been presented to determine whether corporations intentionally pushed down their stock price to pay less inheritance or gift tax. Even with a normal management decision, a stock price decline can occur. A stock price drop can also happen depending on overall market conditions.
An industry official said, "How will you judge a paid-in capital increase that raises funds from shareholders to expand facilities?" A paid-in capital increase can immediately push down the stock price, but facility investments can later improve sales and operating profit. In fact, on Mar. 14 last year, when Samsung SDI said it would raise operating funds and announced a paid-in capital increase of 2 trillion won, the stock fell 6.2% that day to close at 191,400 won. But a year later, the stock rose to the 700,000-won range. In such a case, if inheritance or gifts are made during the period when the stock price fell, more tax would be paid, and if inheritance or gifts are made during the period when the stock price rose, less tax would be paid.
Another industry official said, "If you apply the Ministry of Finance and Economy's standard of a 30% stock price decline, in a sharp sell-off like now, many corporations will have no choice but to pay more inheritance and gift tax." Over the past month, among 833 KOSPI-listed companies, 42 saw their stock price fall by 30% or more. During the same period last year, there were only two.
The Ministry of Finance and Economy also decided to add a 30% surcharge to inheritance and gift tax, compared with the current method, when inheriting or gifting KOSPI listed shares (10% for KOSDAQ) whose price-to-book ratio (PBR) has been in the bottom 25% by industry over the past six years.