Kim Gap-rae Capital Market Research Institute "Should we follow Japan's failed Inheritance Tax... Alternative is Tax Exemption"

Photo= Son Min BlueMingBit Reporter

From January 1, 2025, the Inheritance Tax is expected to be implemented, and there is a claim that additional discussion is needed on the domestic Inheritance Tax law, which benchmarked Japan's failed Inheritance Tax law. In the current situation where the system related to Inheritance Tax is not well-prepared, tax exemption is the best alternative.

On the 28th, the 2nd legislative task seminar for the innovation of the Inheritance Tax industry and blockchain was held at the National Assembly Member's Hall, 3rd seminar room. On this day, Kim Gap-rae, a researcher at the Capital Market Research Institute, argued through a discussion that "in the current situation where a practical tax system is not in place, the alternative is only tax exemption," and stated that the implementation of Inheritance Tax without a consensus is an act of sailing against the wind in a recovering market.

He said, "The domestic Inheritance Tax law benchmarked Japan's inheritance tax system (domestic other income and interest)" and questioned, "Should we follow the path that failed in Japan?" He further pointed out that "in Japan's case, the Inheritance Tax market was also contracted after the implementation, and the usage rate of Inheritance Tax transactions decreased to less than 1%." At one time, Japan, which accounted for 50% of the global Inheritance Tax transaction volume, has now collapsed after the implementation of the tax, and is currently pushing for a plan to complete the regulations related to Inheritance Tax.

Naaga said, "In Japan's case, a systematic tax guideline is in place for individual parts such as lending and staking," and criticized that "in the domestic market where the tax system is not prepared, only the Inheritance Tax transaction fee is taxed." He further stated that "if the Inheritance Tax is implemented now, sincere taxpayers will face problems," and "the issue of tax equity may arise."

Before implementing the Inheritance Tax, an active interpretation of the rights regarding the definition of Inheritance Tax and the scope of necessary expenses must be prioritized.

"Let's allow a tax exemption period and prepare the system"

According to the Income Tax Act, Inheritance Tax is defined as 'other income that is unconditionally separated and taxed.' Currently, the Health Insurance Corporation does not impose health insurance premiums on 'other income that is unconditionally separated and taxed.' However, there is a point that there is no clear legal basis for this, and additional health insurance premiums may be imposed later.

Kim, a researcher, emphasized that "there was no discussion on health insurance premiums that can be up to 8% in the process of determining the Inheritance Tax," and stressed the need for additional discussion on this. He said, "There is no legal basis for excluding other income from health insurance premium imposition," and "administrative legislation, not parliamentary legislation, makes it possible to impose health insurance premiums."

He further emphasized that "a realistic and gradual approach is needed for legislative matters with many practical issues one month ahead of implementation," but added that "it should not be delayed like in the past." He further stated that "if a tax exemption is implemented this time, we need to request legislative requirements for the amendment of the Income Tax Act through the opinions of the Ministry of Strategy and Finance, and research roles on the acquisition cost of assets, etc., and the National Assembly should also continue monitoring."

Naaga mentioned that it is necessary to define Inheritance Tax as other income, not other income, and mentioned various discussions such as ▲whether to recognize the transfer of ownership of large investment assets ▲whether to recognize the consensus of the public, etc.