INHERITANCE TAX AND GIFT TAX ACT Wholly Amended by Act No. 5193, Dec. 30, 1996 Amended by Act No. 5493, Dec. 31, 1997 Act No. 5498, Jan. 8, 1998 Act No. 5582, Dec. 28, 1998 Act No. 6048, Dec. 28, 1999 Act No. 6124. Jan. 12, 2000 Act No. 6301, Dec. 29, 2000 Act No. 6780, Dec. 18, 2002 Act No. 7010, Dec. 30, 2003 Act No. 7335, Jan. 14, 2005 Act No. 7580, Jul. 13, 2005 Act No. 8139, Dec. 30, 2006 Act No. 8346, Apr. 11, 2007 Act No. 8347, Apr. 11, 2007 Act No. 8435, May 17, 2007 Act No. 8828, Dec. 31, 2007 Act No. 8852, Feb. 29, 2008 Act No. 9269, Dec. 26, 2008

(1) In cases where, owing to a succession (including a testamentary gift, a donation becoming effective due to the death of a donor (including the relevant donation in cases where the donor has deceased during the performance of the donation debts under Article 14 (1) 3; hereinafter the same shall apply), and a divisional donation of inherited property to a special relative under the provisions of Article 1057-2 of the Civil Act; hereinafter the same shall apply), there is inherited property falling under one of the following subparagraphs on the commencement date of the succession (in cases of succession being commenced due to a judicial declaration of disappearance, it means the day of such judicial declaration of disappearance; hereinafter the same shall apply), the inheritance tax shall be levied on such inherited property, pursuant to this Act: <Amended by Act No. 6048, Dec. 28, 1999; Act No. 6780, Dec. 18, 2002; Act No. 8828, Dec. 31, 2007>1. In cases of the death of a person who has either established a domicile in the country or established a temporary domicile in the country for not less than one year (hereinafter referred to as a “resident”), all of the resident’s inherited property (including property bequeathed by a person to be succeeded, or donated property entering into force due to the death of the person to be succeeded; hereinafter the same shall apply); and2. In case of the death of a person who is not a resident (hereinafter referred to as a “non-resident”), all of the non-resident’s inherited property within the territory of Korea.(2) Matters necessary with respect to domicile and temporary domicile, and definitions of resident and non-resident shall be prescribed by the Presidential Decree.

(1) In cases where, owing to donation from another person, (excluding donation which enters into force due to the death of a donor; hereinafter the same shall apply), there is donated property on the donation day falling under any of the following subparagraphs, in respect of such donated property, the gift tax shall be levied, pursuant to this Act: <Amended by Act No. 5582, Dec. 28, 1998; Act No. 7010, Dec. 30, 2003; Act No. 8828, Dec. 31, 2007>1. In case where a person who has received a donation of property (hereinafter referred to as a “donee”) is a resident (including a non-profit juristic person whose head or main office is located within the territory of Korea; hereafter in this paragraph and Articles 54 and 59, the same shall apply), all of the property received, as a donation, by the resident; and2. In case where the donee is a non-resident (including a non-profit juristic person whose head or main office is not located within the territory of Korea; hereafter in this paragraph and Articles 4 (2), 6 (2) and (3), the same shall apply), of the property received as a donation by the non-resident, all of the property which is found within the territory of Korea.(2) When, in respect of donated property as provided in the provisions of paragraph (1), the income tax under the Income Tax Act, the corporation tax under the Corporation Tax Act and the agricultural income tax under the Local Tax Act are levied on the donee, the gift tax shall not be levied. In this case, the same shall also apply to the case where the income tax, corporation tax and agricultural income tax are exempted from taxation or reduced or exempted under the Income Tax Act, Corporation Tax Act, Local Tax Act or the provisions of other laws. <Amended by Act No. 6780, Dec. 18, 2002; Act No. 7010, Dec. 30, 2003; Act No. 8828, Dec. 31, 2007>(3) The term “donation” in this Act means a free transfer (including the case where transferring at the remarkably cheap price) of the tangible or intangible properties whose economic values are calculable to another person in a direct or an indirect method, notwithstanding the title, form, purpose etc. of the relevant acts or transactions, or an increase of property values of other persons by the donation. <Newly Inserted by Act No. 7010, Dec. 30, 2003>(4) In case where it is admitted that the inheritance tax or gift tax are unjustly reduced by the indirect method through a third party or the method of going through two or more acts or transactions, the provisions of paragraph (3) shall be applied by deeming that the interested party has directly transacted or a continued single act or transaction in accordance with the relevant economic substances. <Newly Inserted by Act No. 7010, Dec. 30, 2003>

(1) In respect of the inheritance tax levied pursuant to this Act, a successor (referring to the successor under Articles 1000, 1001, 1003, and 1004 of the Civil Act, including a person who renounces succession under the provisions of Article 1019 (1) of the same Act and a special relative under the provisions of Article 1057-2 of the same Act; hereinafter the same shall apply) or a person who received a testamentary gift (including a person who acquires property in accordance with a donation which enters into force owing to the death of the donor, and hereinafter referred to as a “testamentary donee”) is obligated to pay inheritance taxes, in the ratio calculated under the conditions as prescribed by the Presidential Decree on the basis of the property, among inherited properties, received or to be received by each person: Provided, That in case that the special relative or the testamentary donee is a profit-making corporation, the profit-making corporation concerned shall be exempted from paying inheritance taxes. <Amended by Act No. 5582, Dec. 28, 1998; Act No. 6048, Dec. 28, 1999; Act No. 6301, Dec. 29, 2000; Act No. 8828, Dec. 31, 2007>(2) Deleted. <by Act No. 5582, Dec. 28, 1998>(3) Among the donated property being added to inherited property, pursuant to the provisions of Article 13, donated property received by the successor or testamentary donee shall be included in the inherited property under the provisions of paragraph (1).(4) Successors or testamentary donees are jointly and severally obligated to pay the inheritance tax under the provisions of paragraph (1), within limits of the property received or to be received by each successor or testamentary donee.

(1) A donee has an obligation to pay gift taxes pursuant to this Act: Provided, That in case where a donee is a profit-making corporation, the relevant profit-making corporation shall be exempted from paying gift taxes, but in case where the profit-making corporation that is a holder of the title has been exempted from paying the gift tax under Article45-2, the actual owner (excluding the profit-making corporation) shall be liable to pay the relevant gift tax. <Amended by Act No. 6780, Dec. 18, 2002; Act No. 7010, Dec. 30, 2003>(2) In a case where the donee is a non-resident on the day of the donation, he is obligated to pay gift taxes only in respect of that property found within the territory of Korea, which was received as a gift.(3) In applying the provisions of paragraphs (1) and (2), when the donee is admitted to be incapable of paying the gift tax, which are the cases falling under the provisions of Articles 35 through 37, and 41-4, all or part of the gift tax equivalent thereto shall be exempted. <Newly Inserted by Act No. 7010, Dec. 30, 2003>(4) In respect of the gift tax to be paid by the donee, in case where the donee falls under one of the following subparagraphs, the donor is jointly obligated to pay the gift tax: Provided, That in cases where the donee falls under the provisions of Articles 35, 37 through 41, 41-3 through 41-5, 42 and 48 (limited to the case as prescribed by the Presidential Decree, which is the case where the contributor is not responsible for the management of the relevant public service corporation), this shall not apply: <Amended by Act No. 5582, Dec. 28, 1998; Act No. 6301, Dec. 29, 2000; Act No. 6780, Dec. 18, 2002>1. A case where, owing to the unknown domicile or temporary domicile, it is difficult to secure the tax claim; and2. A case where the donee is deemed not to have the ability to pay the gift tax, such that even by instituting a process against the donee for the recovery of taxes in arrears, it is difficult to secure the tax claim.(5) In a case falling under the provisions of paragraph (2) and Article 45-2, even where the donee does not fall under any subparagraph of paragraph (4), the donor shall be obligated to pay the gift tax jointly with the donee. <Newly Inserted by Act No. 6780, Dec. 18, 2002; Act No. 7010, Dec. 30, 2003>(6) In case where the donor is compelled to pay the gift tax, pursuant to the provisions of paragraph (4), the head of tax office shall notify the donor of such cause. <Amended by Act No. 7010, Dec. 30, 2003>(7) This Act shall be applicable to the associations, foundations and other organizations without juristic personality that is regarded as juristic persons under the provisions of Article 13 (4) of the Basic Act for National Taxes, by deeming them to be non-profit juristic persons. <Amended by Act No. 7010, Dec. 30, 2003; Act No. 8828, Dec. 31, 2007>

(1) The location of inherited property or donated property shall be the place falling under any of the following subparagraphs: <Amended by Act No. 7010, Dec. 30, 2003; Act No. 8828, Dec. 31, 2007>1. With respect to real estate or a right pertaining to real estate, the location of such real estate;2. With respect to a mining claim or a mining concession right, the location of the mining area;3. With respect to a fishing right or a right of entry into a fishing area, the coast closest to the fishing area;4. With respect to a vessel, the location of the registry of the vessel;5. With respect to aircraft, the location of the parking hangar of the aircraft;6. With respect to stocks, contribution quotas, or debentures, the location of the main or head office of the corporation which issued, or in whom is invested, such stocks, contribution quotas, or debentures: Provided, That in respect of stocks, contribution quotas, or debentures issued within the territory of Korea by a foreign corporation, pursuant to the domestic Act, the location of the place of business of the financial institution handling such transactions;7. With respect to a money trust handled by a person operating a trust business which is subject to the application of the Trust Business Act and the Indirect Investment Asset Management Business Act, the location of the business place of such person who accepted the trust property concerned: Provided, That with respect to a trust property other than a money trust, the location of the property entrusted;8. With respect to financial property as prescribed by the Presidential Decree other than subparagraph 7, the location of the business place of the financial institution handling the property concerned;9. With respect to a claim on a loan, the location of the domicile of the debtor;10. With respect to other tangible assets or movables in addition to those of subparagraphs 2 through 9, the location of the tangible assets concerned, or the place where the movables are extant;11. With respect to a right requiring registration of trademark rights, patent rights, etc., the location of the administrative body with which such right is registered;12. With respect to a copyright (including publishing rights and neighboring rights), in case there is a published work which is the object of the copyright, the place of such publication; and13. Besides the property prescribed under the provisions of subparagraphs 1 through 12, with respect to rights pertaining to a business of a person who possesses a place of business, the location of such business place.(2) With respect to the location of property besides those prescribed under the provisions of subparagraphs 1 through 12, it shall be in accordance with the domicile of the rightful person of such property.(3) Decisions on the locations of properties under the provisions of paragraphs (1) and (2) shall be in accordance with the conditions at the time of the donation or commencement of the succession.

(1) The inheritance tax shall be levied by the head of tax office having jurisdiction over the place of the domicile (in case where either the person to be succeeded does not have a domicile or it is unknown, it means a temporary domicile of the person to be succeeded, hereinafter referred to as a “place of the commencement of succession”) of the successor (with respect to taxation matters of a succession that the Commissioner of the National Tax Service deems especially important, the inheritance tax shall be levied by the Director of the Regional Tax Office; hereinafter referred to as the “head of a tax office, etc.”): Provided, That when the place of the commencement of succession is overseas, the inheritance tax shall be levied by the head of a tax office, etc. having jurisdiction over the location of the property which is within the territory of Korea, and in case where the inherited property is within the jurisdictional areas of the heads of two or more tax offices, etc., the inheritance tax shall be levied by the head of tax office, etc. having jurisdiction over the location of the main property.(2) The gift tax shall be levied by the head of a tax office, etc. having jurisdiction over the place of the domicile (in case where either a donee does not have a domicile or it is unknown, it means the donee’s temporary domicile, hereafter in this paragraph the same shall apply) of the donee: Provided, That in case where the donee is a non-resident, or in case the domicile or temporary domicile of the donee is unknown, the gift tax shall be levied by the head of tax office, etc. having jurisdiction over the place of the domicile of the donor.(3) In cases where the donee and the donor are both non-residents, or the domiciles and temporary domiciles of the donee and donor are unknown, the gift tax shall be levied by the head of tax office, etc. having jurisdiction over the location of the donated property.

(1) As prescribed by Article 1, in the inherited property, as property accruing to the person to be succeeded, shall be included all things which may be realized as money and/or having economic value, and all de facto or de jure rights having asset value.(2) From inherited property pursuant to the provisions of paragraph (1), those belonging exclusively to the person to be succeeded himself which become extinct due to the death of the person to be succeeded, shall be excluded.

(1) Insurance money received from a life insurance or an accident insurance, due to the death of the person to be succeeded, in accordance with an insurance contract of which the person to be succeeded is the policyholder, shall be regarded as an inherited property.(2) Even in case where the policyholder is a person other than the person to be succeeded, when there is the person to be succeeded who in fact paid the insurance premium, the person to be succeeded shall be regarded as the policyholder, and the provisions of paragraph (1) shall be applicable.

(1) Property left in trust by the person to be succeeded shall be regarded as inherited property: Provided, That in case where a third party holds the rights to receive benefits of the trust, the value equivalent to such benefits shall be excluded.(2) In case where the person to be succeeded holds, as a result of a trust, the rights to receive benefits of the trust from a third party, a value equivalent to the benefits concerned shall be included in the inherited property.

With respect to the retirement allowance, severance pay, merit pay, pension, or other items similar thereto which are to be paid to the person to be succeeded, and being paid as a result of the death of the person to be succeeded, such amount shall be regarded as inherited property: Provided, That in case the amount falls under any of the following subparagraphs, this shall not apply: <Amended by Act No. 6124, Jan. 12, 2000; Act No. 8828, Dec. 31, 2007>1. A survivor’s pension, being paid pursuant to the National Pension Act, or a lump sum return, being paid owing to the death of the person to be succeeded;2. A survivor’s annuity, a survivor’s annuity supplement, a survivor’s annuity lump sum, a survivor’s lump sum, or a survivor’s compensation paid pursuant to the Public Officials Pension Act or the Pension for Private School Teachers and Staff Act;3. A survivor’s annuity, a survivor’s annuity supplement, a survivor’s annuity lump sum, a survivor’s lump sum, or a disaster compensation being paid pursuant to the Veterans’ Pension Act;4. A survivor’s compensation pension, a survivor’s compensation lump sum, or a survivor’s special salary being paid pursuant to the Industrial Accident Compensation Insurance Act;5. A survivor’s compensation or a disaster compensation or others similar thereto which are to be paid to the surviving family members of the employee concerned by the employer, as a result of the industrial death of the employee, by applying the Labor Standards Act, etc.; and6. Cases similar to subparagraphs 1 through 5, as prescribed by the Presidential Decree.

(1) In case where a succession commences due to death in battle, or other deaths corresponding to such, or warfare or other deaths corresponding to such caused by disease or injury suffered in the course of executing official duties, the inheritance tax shall not be levied.(2) The scope of deaths corresponding to death in battle, and the scope of official duties corresponding to warfare, under the provisions of paragraph (1), shall be prescribed by the Presidential Decree.

With respect to property under the provisions of the following subparagraphs, the inheritance tax shall not be levied: <Amended by Act No. 5582, Dec. 28, 1998; Act No. 6301, Dec. 29, 2000; Act No. 8828, Dec. 31, 2007>1. Property bequeathed (including donations which enter into force owing to the death of the person to be succeeded, and hereinafter referred to as a “testamentary gift, etc.”) to the State, a local government, or a public organization determined by the Presidential Decree (hereinafter referred to as the “public organization”);2. State-designated cultural heritage, City/Do-designated cultural heritage and lands in the protected area as prescribed by the Presidential Decree pursuant to the Cultural Heritage Protection Act;3. Among the properties pursuant to Article 1008-3 of the Civil Act, property within the scope of that as prescribed by the Presidential Decree;4. Property bequeathed, etc. to a political party pursuant to the Political Parties Act;5. Intra-company labor welfare fund, pursuant to the Intra-Company Labor Welfare Fund Act, or other property similar to such bequeathed, etc. to an organization as prescribed by the Presidential Decree;6. Socially accepted and recognized disaster relief funds and goods, medical fees, or other property similar to such, as prescribed by the Presidential Decree; and7. Of the inherited properties, property which a successor donates to the State, local government, or public organization within the period of report under Article 67.

(1) The taxable amount of inheritance tax shall be an amount obtained by adding the property value falling under any of the following subparagraphs after subtracting the amount described in the provisons of Article 14 from the value of inherited property: <Amended by Act No. 5582, Dec. 28, 1998; Act No. 6048, Dec. 28, 1999>1. The value of property donated, within 10 years prior to the commencement date of succession, by the deceased to his successor; and2. The value of property donated, within 5 years prior to the commencement date of succession, by the deceased to a person who is not his successor.(2) In case where the succession commences due to the death of a non-resident, in applying the provisions of paragraph (1) 1 and 2, only those cases of donations of property which are found within the territory of Korea shall be added.(3) The value of property under Articles 46, 48 (1), 52, and 52-2 (1) and the value of donated property excluding any summing-up under the provisions of Article 47 (1) shall not be included in the value of donated property being added to the taxable value of inheritance tax, pursuant to the provisions of paragraph (1). <Amended by Act No. 5582, Dec. 28, 1998; Act No. 7010, Dec. 30, 2003>

(1) In case where a succession commences due to the death of a resident, the equivalent values or expenses of the following subparagraphs relating to the inherited property or to the deceased, on the commencement date of the succession, shall be deducted from the value of the inherited property: <Amended by Act No. 5582, Dec. 28, 1998>1. Public imposts;2. Funeral expenses; and3. Debts (excluding the donation debts owed by the deceased to his successor within 10 years prior to the commencement date of succession, and the donation debts owed by the deceased to a person who is not his successor within 5 years prior to the commencement date of succession; hereafter in this Article the same shall apply).(2) In case where a succession commences due to the death of a nonresident, the values or expenses in the following subparagraphs shall be deducted from the value of the inherited property: <Amended by Act No. 7010, Dec. 30, 2003>1. Public imposts pertaining to the inherited property concerned;2. Debts secured with liens, pledges, right to lease on a deposit basis, right of lease (including the case of conclusion of de facto rental contract), right to property transferred for security, or mortgages for the purposes of the inherited property concerned; and3. Debts and public imposts, confirmed in accordance with books and records, of the place(s) of business within the territory of Korea belonging to the deceased at the time of his death.(3) The scope of the public imposts and funeral expenses deducted from the value of inherited property, pursuant to the provisions of paragraphs (1) and (2), shall be prescribed by the Presidential Decree.(4) The amount of debts deducted from the value of inherited property, pursuant to the provisions of paragraphs (1) and (2), shall be an amount substantiated in accordance with methods as prescribed by the Presidential Decree.

(1) In cases where the person to be succeeded has either disposed of his property or borne debts and falls under one of the following subparagraphs, such property or debts shall be presumed to have been inherited, and shall be included in the taxable amount of inheritance tax under Article 13: <Amended by Act No. 5582, Dec. 28, 1998; Act No. 6048, Dec. 28, 1999; Act No. 6780, Dec. 18, 2002>1. Where the amount obtained by disposing of the property of the person to be succeeded or by drawing from the property of the person to be succeeded is not less than 200 million won that is calculated according to the types of property within one year prior to the commencement date of succession or not less than 500 million won that is calculated according to the types of property within two years prior to the commencement date of succession, and the use of such amount is not objectively and clearly verified in accordance with the Presidential Decree; and2. Where the sum of the debts borne by the person to be succeeded is either not less than 200 million won within one year before the commencement date of succession or 500 million won within two years before the commencement date of succession, and the use of such sum is not objectively and clearly verified in accordance with the Presidential Decree.(2) Where any debt owed by a person to be succeeded to a person, other than the State, a local government, and a financial institution prescribed by the Presidential Decree, is presumed that the inheritor is not liable to repay such debt as prescribed by the Presidential Decree, such debt shall be added to the taxable value of the inheritance tax under Article 13.(3) The calculation of the amounts, etc. either received from disposing of property under the provisions of paragraph (1) 1, or withdrawn from such property, and the classification of property types shall be prescribed by the Presidential Decree.

(1) With respect to the value of property, among inherited property, contributed to a person operating a business for religious, charitable, academic or other purpose of public good (hereinafter referred to as a “public service corporation, etc.”), by a person to be succeeded or a successor, only those contributions made within the report deadline (in cases where a public service corporation, etc. is incorporated by contributing property acquired through succession, and an unavoidable cause exists otherwise, it refers to six months from the last day of the month to which the date of conclusion of such cause belongs) under the provisions of Article 67 shall not be included in the taxable amount of inheritance taxes. <Amended by Act No. 9269, Dec. 26, 2008>(2) In applying the provisions of paragraph (1), where stocks with voting rights or equity shares (hereafter referred to as the “stocks, etc.” in this Article, Articles 48, 49 and Article 78 (4) and (7)) of a domestic corporation are contributed and the aggregate of the stocks, etc. to be contributed and the stocks, etc. falling under any of the following subparagraphs is in excess of 5/100 [10/100 in cases of contributions to public service corporations, etc. which correspond to standards prescribed by the Presidential Decree, and conduct external audits pursuant to Article 50 (3), open and use exclusive accounts pursuant to Article 50-2 and make public announcement on their statement of accounts, etc. pursuant to Article 50-3 (hereinafter a “public service corporation in good faith, etc.”)] of total number of stocks with voting rights, which are issued by such domestic corporation or total amount of equity shares (hereafter referred to as the “total number, etc. of issued stocks” in this Article, Articles 48, 49 and Article 63 (3)), the excess amount shall be added to the taxable amount of inheritance tax: Provided, That this shall not apply to the case prescribed by the Presidential Decree where it falls under the proviso of other portions than each subparagraph of Article 49 (1), and where the stocks, etc. of domestic corporation, which is not specially related to the contributors to the relevant public service corporation, etc., are contributed to such public service corporation, etc. as is not specially related to the enterprise group subject to the limitations on mutual investment under Article 9 of the Monopoly Regulation and Fair Trade Act (hereinafter referred to as the “enterprise group subject to the limitations on mutual investment”): <Amended by Act No. 6048, Dec. 28, 1999; Act No. 6301, Dec. 29, 2000; Act No. 6780, Dec. 18, 2002; Act No. 8828, Dec. 31, 2007>1. The stocks, etc. of a domestic corporation, which are the same as the stocks, etc. that a public service corporation, etc. concerned owns at the time when investors make such contributions; and2. The stocks, etc. of a domestic corporation, which are the same as the stocks, etc. that are contributed by investors and their specially related persons for a public service corporation, etc. other than the public service corporation, etc. concerned.(3) In case where property not included in the taxable amount of inheritance taxes pursuant to the provisions of paragraph (1), and all or part of the benefits arising from such property, belong to the successor and/or a person(s) having a special relationship with the successor, the values as prescribed by the Presidential Decree shall be regarded as having been received through succession by the successor and/or a person(s) having a special relationship with such successor, and as such they shall be included in the taxable amount of inheritance taxes and the inheritance tax shall be promptly levied.(4) The scope of a public service corporation, etc., contribution method for inherited property, the method of calculating the value of stocks exceeding 5/100 (10/100 in cases of a public service corporation in good faith, etc.) of the total number, etc. of outstanding stocks, method of determining a public service corporation in good faith, etc., the scope of public service corporation, etc. which is not specially related to the enterprise group subject to limitations on mutual contribution, the scope of domestic corporation which is not specially related to the contributors to the relevant public service corporation, etc., the scope of persons who are specially related to the contributors, the scope of persons who are specially related to the successor, and other necessary matters as provided for in paragraphs (1) through (3) shall be prescribed by the Presidential Decree. <Amended by Act No. 6301, Dec. 29, 2000; Act No. 6780, Dec. 18, 2002; Act No. 8828, Dec. 31, 2007>

(1) The value of property, among inherited property, contributed by a person to be succeeded or a successor to a public service corporation, etc. as a public trust pursuant to the provisions of Article 65 of the Trust Act, through a trust for religious, charitable, academic or other purposes of public good (hereafter referred to as a “public trust” in this Article) shall not be included in the taxable amount of inheritance taxes. <Amended by Act No. 8828, Dec. 31, 2007>(2) In applying the provisions of paragraph (1), the scope and operation of the public trust and the time of commencement of the contribution and other necessary matters shall be prescribed by the Presidential Decree.

(1) Where succession commences due to the death of a resident or a non-resident, 200 million won shall be deducted from the taxable amount of inheritance taxes (hereinafter referred to as “basic deductions”). <Amended by Act No. 6301, Dec. 29, 2000>(2) Where succession commences due to the death of a resident and falls under any of the following subparagraphs, the following amount shall be deducted from the taxable amount of inheritance taxes: <Amended by Act No. 5582, Dec. 28, 1998; Act No. 8828, Dec. 31, 2007; Act No. 9269, Dec. 26, 2008>1. Succession (hereinafter referred to as “succession to a family business”) to a family business (referring to a small or medium enterprise prescribed by the Presidential Decree which has been continuously run by the predecessor for ten years or more; hereinafter the same shall apply): The amounts classified under the following items, whichever is larger:(a) An amount equivalent to 40/100 of the value of property of an inherited family business: Provided, That where such amount exceeds six billion won, six billion won shall be the limit; where the predecessor has continuously run the business for 15 years or more, eight billion won shall be the limit; and where the predecessor has continuously run the business for 20 years or more, ten billion won shall be the limit; and(b) 200 million won: Provided, That if the value of property of inherited family business is less than 200 million won, the amount shall be equivalent to the value of an inherited family business; or2. Succession to farming (including livestock raising, fishing, and forest management; hereafter the same shall apply in this Article): An amount of the value of the farming property to be inherited (where the amount exceeds 200 million won, it shall be limited to 200 million won).(3) A successor who succeeds to a family business or farming shall submit documents verifying that it falls under a succession to a family business or a succession to farming, to the head of tax office having the jurisdiction over the place of tax payment, pursuant to the provisions of Article 67.(4) In application of paragraph (2), the scope of succession to a family business and succession to farming, such as requirements for a predecessor and successor, the method of application in cases of succession to stocks, etc., and other necessary matters shall be prescribed by the Presidential Decree. <Amended by Act No. 5582, Dec. 28, 1998; Act No. 8828, Dec. 31, 2007>(5) In cases where, within ten years (five years, in cases of subparagraph 2) from the commencement date of succession, a successor who has received deduction pursuant to any subparagraph of paragraph (2) falls under any of the following subparagraphs, without justifiable grounds, as prescribed by the Presidential Decree, the amount of the deduction under paragraph (2) shall be included in the taxable amount of inheritance taxes at the time of the commencement of succession, and an inheritance tax shall be levied: <Amended by Act No. 5582, Dec. 28, 1998; Act No. 8828, Dec. 31, 2007; Act No. 9269, Dec. 26, 2008>1. In cases under paragraph (2) 1, when any of the following cases occurs:(a) In cases where the successor has disposed of 20/100 (10/100, in cases of five years or less from the commencement date of succession) or more of assets for the relevant family business;(b) In cases where the relevant successor is not engaged in such family business any more; and(c) In cases where the equity of the successor who succeeded to stocks, etc. has decreased: Provided, That the cases in which equity has decreased because stocks, etc. succeeded under Article 73 were paid in kind shall be excluded, however, in such cases, the successor shall fall under the largest shareholder or the largest investor under Article 22 (2); and2. In cases under paragraph (2) 2, when the successor either disposes of the inherited property used in farming, or is no longer engaged in farming.(6) The successor who has received deduction pursuant to paragraph (2) 1 shall submit the details of assets for the relevant family business, the family business and shares as prescribed by the Presidential Decree to the head of tax office having the jurisdiction over the place of tax payment. <Newly Inserted by Act No. 8828, Dec. 31, 2007>(7) In application of paragraph (5), the scope of assets for a family business, method of calculating the ratio of disposal of assets for a family business, method of determining decrease in the share, necessary matters for the method of including such deducted amount, etc. shall be prescribed by the Presidential Decree. <Newly Inserted by Act No. 8828, Dec. 31, 2007>

(1) The actual amount received through succession by a spouse, from the death of a resident, shall be deducted from the taxable amount of inheritance taxes: Provided, That the limit of such amount shall be the value derived by multiplying the value of the inherited property (excluding property which is received as a testamentary gift by a person who is not a successor, but including property under the provisions of Article 13 (1) 1) by the spouse’s statutory shares in succession (in cases where there is a person who has renounced his succession among co-successors, it means the statutory shares the spouse would be entitled to succeed if such person would have not renounced his succession), under the provisions of Article 1009 of the Civil Act; from the calculated amount of which is then deducted the tax base on the property (referring to the tax base under Article 55 (1)) donated to the spouse (in cases where such amount exceeds three billion won, the limit shall be three billion won), among donated property added to inherited property pursuant to the provisions of Article 13. <Amended by Act No. 6048, Dec. 28, 1999; Act No. 6301, Dec. 29, 2000; Act No. 6780, Dec. 18, 2002; Act No. 8828, Dec. 31, 2007>(2) The spousal inheritance deductions under paragraph (1) shall be applicable only to cases where the inherited property is distributed (in case where requiring the registration, entry, or change of holders, limited to those finished with the registration, entry, or change of holders; hereafter in this paragraph, the same shall apply) and the inherited property of the spouse has been returned not later than the date on which 6 months elapsed from that next to the deadline to file a tax base return of inheritance tax (hereafter in this paragraph, referred to as the “period to distribute the inherited property of a spouse”) under the provisions of Article 67: Provided, That in case where it is impossible to distribute the inherited property of a spouse not later than the period to distribute the inherited property of a spouse due to inevitable reasons prescribed by the Presidential Decree, and where the inherited property is distributed and reported not later than the date on which 6 months elapsed from that next to the period to distribute the inherited property of a spouse (in case where there is a decision on the tax base and the tax amount under the provisions of Article 76 as 6 months elapsed from the date next to the period to distribute the inherited property of a spouse, referring to the date of such decision), the report shall be regarded as having been made within the period to distribute the inherited property of a spouse. In this case, it shall be limited to a case where the successor makes a report of his cause within the period to distribute the inherited property of a spouse to the head of tax office having jurisdiction over the place of tax payment. <Amended by Act No. 6301, Dec. 29, 2000; Act No. 6780, Dec. 18, 2002>(3) In the case of paragraph (1), when there is no actual amount received through succession by the spouse or the amount received through succession by the spouse is not more than 500 million won, notwithstanding the provisions of paragraph (2), 500 million won shall be deducted. <Amended by Act No. 6048, Dec. 28, 1999>(4) Deleted. <by Act No. 6048, Dec. 28, 1999>

(1) In the case of succession commencing as a result of the death of a resident, when the successor falls under any of the following subparagraphs, the amount concerned shall be deducted from the taxable amount of inheritance taxes. In this case, when a person falling under subparagraph 1 falls under subparagraph 2, or when a person falling under subparagraph 4 falls under subparagraphs 1 through 3 or Article 19, such amount shall each be added together and deducted:1. With respect to one child, 30 million won;2. With respect to a successor (excluding spouse: the same shall be applicable in subparagraph 3) who is a minor or a minor among the successor’s family living together, an amount calculated by multiplying 5 million won by the number of years until the attainment of 20 years of age;3. With respect to a successor or a person among the successor’s family living together who is 60 years old or older, 30 million won; and4. With respect to a successor or a person among the successor’s family living together who is disabled, an amount calculated by multiplying 5 million won by the number of years until the attainment of 75 years of age.(2) The scope of family living together referred to in paragraph (1) 2 through 4, and of a handicapped person referred to in subparagraph 4 of the same paragraph, shall be prescribed by the Presidential Decree.(3) In applying the provisions of paragraph (1) 2 through 4, the period of less than one year shall be calculated as one year.

(1) In case where a succession commences as a result of the death of a resident, between the total amount of deductions, pursuant to the provisions of Articles 18 (1) and 20 (1), and the amount of 500 million won, the successor or testamentary donee may deduct the larger amount: Provided, That in case where there is no report, pursuant to the provisions of Article 67, the amount of the deduction shall be 500 million won. <Amended by Act No. 5582, Dec. 28, 1998>(2) In applying the provisions of paragraph (1), in case where the spouse of the person to be succeeded receives the inheritance independently, only the total amount of the deductions, pursuant to the provisions of Articles 18 and 20 (1), shall be deducted.(3) Deleted. <by Act No. 5582, Dec. 28, 1998>

(1) In cases of a succession, commencing as a result of the death of a resident, when, as of the commencement date of succession, there remains, among the taxable amount of inheritance taxes, a value obtained by deducting a financial debt determined by the Presidential Decree from the value of financial property prescribed by the same Decree (hereafter referred to as the “value of net financial property” in this Article), an amount pursuant to the classification of the following subparagraphs shall be deducted from the taxable amount of inheritance taxes, but when such amount exceeds 200 million won, 200 million shall be deducted: <Amended by Act No. 5582, Dec. 28, 1998>1. In cases where the value of the net financial property exceeds 20 million won, an amount equivalent to 20/100 of the value of the relevant net financial property: Provided, That in cases where such amount falls short of 20 million won, then 20 million won; and2. In cases where the value of the net financial property is not more than 20 million won, the value of the relevant net financial property.(2) In the financial property provided for in the provisions of paragraph (1), the shares or the contribution quotas possessed by the largest investor or the largest shareholder prescribed by the Presidential Decree shall not be included.

(1) In cases of a succession, commencing as a result of the death of a resident, where the inherited property is destroyed or damaged, due to disasters prescribed by the Presidential Decree, within the report deadline pursuant to the provisions of Article 67, the value of such losses shall be deducted from the taxable amount of inheritance taxes: Provided, That in cases where the receipt of insurance money pertaining to the value of such losses, or coverage of the amount equivalent to such losses, pursuant to the exercise of the rights of indemnification, is possible, the same shall not apply.(2) In cases of paragraph (1), the successor or the testamentary donee shall submit documentation of the value of his losses and the details, and documentation which may verify such matters, to the head of tax office having jurisdiction over the place of tax payment, pursuant to the Presidential Decree. <Amended by Act No. 8828, Dec. 31, 2007>

(1) Where succession begins due to the death of a resident and where a house at which a predecessor and a successor have lived together continuously for ten years or more retrospectively from the day when succession begins meets all of the following requirements, an amount equivalent to 40/100 of the price of the house (including the price of land appurtenant to the house) shall be deducted from the taxable amount of inheritance tax: Provided, That if the amount exceeds 500 million won, 500 million won shall be the limit:1. That the household has only one house (including an expensive house under Article 89 (1) 3 of the Income Tax Act) under the same subparagraph as at the day when succession begins; and2. That the house has been succeeded by a successor who does not have a house as at the day when succession begins.(2) Where the predecessor and successor have not lived together because they fell under the cause prescribed by the Presidential Decree, they shall be deemed to have lived together continuously in the application of paragraph (1), however, the period in which they have not lived together shall not be included in the period of living together as provided for in the same paragraph.[This Article Newly Inserted by Act No. 9269, Dec. 26, 2008]

Amounts to be deducted as provided for in Articles 18 through 23 and 23-2 shall be limited to the balance deriving from deducting the amounts falling under any of the following subparagraphs from the taxable amount of inheritance taxes: <Amended by Act No. 9269, Dec. 26, 2008>1. Value of the property bequeathed, etc., to a person who is not a successor;2. Value of the property inherited to the next-order successor due to a renunciation of inheritance by a successor; or3. Value of the donated property added to the taxable amount of inheritance taxes under the provisions of Article 13 (where there exists any amount deducted under Article 53 (1) or 54, referring to the amount obtained by deducting such amount from the value of such donated property).[This Article Wholly Amended by Act No. 6780, Dec. 18, 2002]

(1) The tax base of inheritance tax shall be the amount derived by deducting the amount falling under each of the following subparagraphs from the taxable amount of inheritance taxes pursuant to the provisions of Article 13: <Amended by Act No. 7010, Dec. 30, 2003>1. Inheritance deduction amount under the provisions of Articles 18 through 24; and2. Fees for appraisal and assessment of the inherited property as prescribed by the Presidential Decree.(2) When the tax base is under 500 thousand won, no inheritance taxes shall be levied. <Amended by Act No. 7010, Dec. 30, 2003>

The inheritance tax shall be the amount (hereinafter referred to as the “inheritance tax amount calculated”) calculated by applying the following tax rates to the tax base of inheritance tax pursuant to the provisions of Article 25: <Amended by Act No. 6048, Dec. 28, 1999> <Tax Base>
<Tax Rates>
100 million won and less
10 percent of the tax base
over 100 million won, but less than 500 million won
10 million won + 20 percent of amount in excess of 100 million won
over 500 million won, but less than 1 billion won
90 million won + 30 percent of amount in excess of 500 million won
over 1 billion won, but less than 3 billion won
240 million won + 40 percent of amount in excess of 1 billion won
over 3 billion won
1 billion 40 million won + 50 percent of amount in excess of 3 billion won

In case where the successor or testamentary donee is a lineal descendant other than a son or daughter of the person to be succeeded, an amount equivalent to 30 percent of the amount calculated by multiplying the inheritance tax amount calculated under Article 26 by the percentage of the property, among inherited property (among donated property added to inherited property pursuant to the provisions of Article 13, including the donated property received by the successor or testamentary donee), received or to be received by such successor or testamentary donee, shall be added: Provided, That the same shall not apply to succession by representation under Article 1001 of the Civil Act. <Amended by Act No. 8828, Dec. 31, 2007>

(1) The gift tax amount (it means the gift tax amount calculated relating to the donated property at the time of its donation), pertaining to donated property which was added to inherited property provided for in the provisions of Article 13, shall be deducted from the inheritance tax amount calculated: Provided, That in a case where, with respect to donated property being added to the taxable amount of inheritance taxes, the gift tax fails to be levied, owing to the expiration of the period, under the provisions of Article 26-2 (1) 4 or paragraph (3) of the same Article of the Basic Act for National Taxes, such shall not apply. <Amended by Act No. 6301, Dec. 29, 2000; Act No. 8828, Dec. 31, 2007>(2) The amount of the gift tax to be deducted under paragraph (1) shall be within the limit of the amount calculated by multiplying the percentage of tax base of donated property which was added to the tax base of the inherited property (including donated property being added to inherited property, under the provisions of Article 13; hereafter the same shall be applicable in this paragraph), by the inheritance tax amount calculated. In this case, when the donee of such donated property is a successor or a testamentary donee, within limits of the amount calculated by multiplying the percentage of the tax base of donated property which was added to the tax base calculated under the conditions as prescribed by the Presidential Decree of inherited property received or to be received by such successor or testamentary donee, by the inheritance tax amount to be paid by each successor or testamentary donee concerned, a deduction shall be made from the inheritance tax amount to be paid by each. <Amended by Act No. 6301, Dec. 29, 2000>

In case where, owing to the death of a resident, the inheritance tax is being levied, when, with respect to inherited property in a foreign country, the inheritance tax, levied in accordance with the Acts and subordinate statutes of the foreign country, is paid, an amount equivalent to such paid inheritance tax, pursuant to the Presidential Decree, shall be deducted from the inheritance tax amount calculated.

(1) In case where, within 10 years after the commencement of succession owing to death of the successor or testamentary donee, the succession re-commences, among inherited property on which the inheritance tax was previously levied, an amount of the previous inheritance tax pertaining to that part of the property being re-inherited shall be deducted from the inheritance tax amount calculated.(2) The tax amount being deducted, pursuant to the provisions of paragraph (1), shall be an amount derived by multiplying the amount calculated, pursuant to subparagraph 1, by the credit rate of subparagraph 2: Provided, That in case of subparagraph 1, when, among the value of previously inherited property, property which is again inherited exceeds the amount equivalent to the value of previously inherited property, such excess amount shall be regarded as being non-existent:
1. Previous
Inheritance Tax Amount Calculated

Value of
Re-SucceededPart
×
Value of Previous
Inheritance Taxables

×
Value of Previously
Inherited Property
Value of Previous Inheritance Taxables
2. Credit Rates:

<Re-Succession Period>
<Credit Rates>
Within 1 year
100 percent
Within 2 years
90 percent
Within 3 years
80 percent
Within 4 years
70 percent
Within 5 years
60 percent
Within 6 years
50 percent
Within 7 years
40 percent
Within 8 years
30 percent
Within 9 years
20 percent
Within 10 years
10 percent
(3) Of the formula under paragraph (2) 1, the property amount of re-succeeded portion shall refer to what obtained by deducting the amount equivalent to a previous inheritance tax from the value of a previous inherited property. <Newly Inserted by Act No. 6780, Dec. 18, 2002>

(1) Under the provisions of Article 2, the donated property, as property reverting to the donee, shall include all things which may be realized as money and/or having economic value, and all de facto or de jure rights having asset value.(2) Deleted. <by Act No. 5582, Dec. 28, 1998>(3) After the commencement of succession, with respect to inherited property, after the shares in succession of each successor are determined and a registration, record, and/or entry of a change of holders is made (hereinafter referred to as a “registration, etc.”), by means of a registration, etc., then, with respect to such inherited property, the value of property being received by a specific successor, in excess of the original shares in succession, in accordance with a distribution pursuant to an agreement between the co-successors, shall be included in the property received as a donation from the successor whose shares in succession decreased, due to the distribution concerned: Provided, That the same shall not apply to the case where acquiring in excess of the portion of original inheritance by a re-distribution within the deadline to file a tax base return of inheritance tax under the provision of Article 67, and where there is any justifiable cause, such as invalidity or revocation, etc. prescribed by the Presidential Decree with respect to redistribution of the original inherited property. <Amended by Act No. 6780, Dec. 18, 2002>(4) In case, after receiving the gift, such property (excluding money), in accordance with an agreement between the parties concerned, is returned within the report deadline, pursuant to the provisions of Article 68, it shall be regarded as there not having been a gift from the beginning: Provided, That in a case where, prior to the returning, the property whose tax base and tax amount are determined under Article 76, such shall not apply.(5) In case, within 3 months after the elapse of the report deadline, pursuant to the provisions of Article 68, the donee either returns the property (excluding money), received as a gift, to the donor or re-donates such property to the donor, with respect to such returned or re-donated property, gift taxes shall not be levied.

(1) In case where a truster, by means of a trust contract, has designated another person to be the beneficiary of the whole or part of the benefits of the trust, where such is provided for under one of the following subparagraphs, the value of rights to receive the benefits of the trust shall be considered as the value of donated property of the beneficiary. In this case, the value of donated property shall be calculated by the method as prescribed by the Presidential Decree if the principal and benefits are received by dividing into a few occasions: <Amended by Act No. 7010, Dec. 30, 2003>1. In case the right to receive benefits of the principal is shown to be owned by the beneficiary, when the beneficiary receives such capital: and2. In case the right to receive benefits is shown to be owned by the beneficiary, when the beneficiary receives such benefits.(2) In the case of paragraph (1), when the beneficiary is not specified or does not exist, the truster or his successor shall be regarded as the beneficiary, and when a beneficiary is either specified or comes to exist, it shall be regarded that there exists a new trust.

(1) In case where the beneficiary of insurance money and the payer of premiums are different in a life insurance or non-life insurance, the amount equivalent to insurance money shall be deemed to be the value of donated property of the beneficiary of insurance money in the case of an occurrence of insurance risk, and in case where the beneficiary of insurance money has paid the premiums by receiving a donation of property from another person within the insurance contract period, the amount obtained by deducting the paid amount of relevant premiums from the amount equivalent to the insurance money in return for the paid amount of such premiums shall be deemed to be the value of donated property of the beneficiary of insurance money. <Amended by Act No. 6780, Dec. 18, 2002; Act No. 7010, Dec. 30, 2003>(2) In case where the insurance money is regarded as being inherited property, pursuant to the provisions of Article 8, the provisions of paragraph (1) shall not be applicable.(3) In applying paragraph (1), in case where a beneficiary of the insurance money pays a portion of the premiums, only an amount proportionate to the possessory ratio of the insurance premiums paid by the person who is not the beneficiary of the insurance money from among the gross aggregate of premiums paid from the insurance money, shall be regarded as the value of donated property. <Amended by Act No. 7010, Dec. 30, 2003>

(1) With respect to a person falling under one of the following subparagraphs, the amount equivalent to the benefits as prescribed by the Presidential Decree, which is the amount equivalent to the difference between the original cost and the current market price of such property when the relevant property has been transferred or taken over, shall be deemed to be the value of donated property: <Amended by Act No. 7010, Dec. 30, 2003>1. In case where property is acquired by transfer from another person, for an equivalent value which is lower than the current market value, the transferee of such property; and2. In case where property is transferred to another person for an equivalent value which is higher than the current market value, the transferor of such property.(2) In applying the provisions of paragraph (1), if the property has been transferred or taken over between other persons than those in a special relationship, only in case where the property has been transferred or taken over by remarkably lower price or remarkably higher price than market values without any justifiable reasons in the common practices of transaction, the amount equivalent to the benefits as prescribed by the Presidential Decree shall be deemed to be the value of donated property of the person obtaining such benefits, by presuming that the amount equivalent to the difference between the original cost and current market values has been donated. <Amended by Act No. 7010, Dec. 30, 2003>(3) The persons in a special relationship under paragraph (2) and the scope of remarkably lower price or remarkably higher price shall be prescribed by the Presidential Decree. <Newly Inserted by Act No. 7010, Dec. 30, 2003>

In case where a person has obtained from an obligee an exemption from obligation, or received from a third party an acceptance or performance of obligation, the amount equivalent to the benefits arising from such exemption, acceptance, or performance (if there exists any payment of compensation, it shall be the amount less such compensation) shall be deemed to be the value of donated property of the person obtaining such benefits. <Amended by Act No. 7010, Dec. 30, 2003>

(1) In case where one has acquired the benefits prescribed by the Presidential Decree as he uses gratuitously the real estate of the person in a special relationship (excluding the housing in which one resides together with the owner of relevant real estate and the land appurtenant thereto), the amount equivalent to the relevant benefits shall be deemed to be the value of donated property of the gratuitous user of the real estate. <Amended by Act No. 7010, Dec. 30, 2003>(2) Deleted. <by Act No. 6780, Dec. 18, 2002>(3) In applying the provisions of paragraph (1), the scope of persons in a special relationship, the time of donation, the method for calculating benefits of gratuitous use of real estate, and other necessary matters shall be prescribed by the Presidential Decree. <Amended by Act No. 6780, Dec. 18, 2002; Act No. 7010, Dec. 30, 2003>

(1) As a shareholder (including an investor; hereafter the same shall apply in this Article) of a corporation eliminated or absorbed, or of a corporation newly established or surviving (hereinafter referred to as a “merged corporate party”) as a result of a merger of corporations having special relationship prescribed by the Presidential Decree (including a merger through division; hereafter in this Article the same shall apply) in case a large shareholder prescribed by the Presidential Decree has acquired benefits prescribed by the said Decree as a result of a merger, the amount equivalent to relevant benefits shall be deemed to be the value of donated property of a person obtaining such benefits on the day of relevant merger (referring to the date on which a merger registration was made). <Amended by Act No. 5582, Dec. 28, 1998; Act No. 7010, Dec. 30, 2003>(2) The amount equivalent to the benefits under the provisions of paragraph (1) shall be the difference of the values appraised on the basis of immediately before and immediately after the merger, under the conditions as prescribed by the Presidential Decree, for the stocks or equity shares possessed by shareholders of the merged corporate party. <Amended by Act No. 7010, Dec. 30, 2003>

(1) In case where the benefits have been obtained, which fall under any of the following subparagraphs as a corporation issues new stocks or equity shares (hereafter in this Article, referred to as “new stocks”) for increasing its capital (including the investment amount; hereafter in this Article and Article 39-2, the same shall apply), the amount equivalent to relevant benefits shall be deemed to be the value of donated property of the person who has acquired such benefits: <Amended by Act No. 7010, Dec. 30, 2003; Act No. 8828, Dec. 31, 2007>1. In case where new stocks are issued at lower price than the market price (referring to the price assessed under Articles 60 and 63; hereafter the same shall apply in this paragraph and Article 40), the benefits falling under any of the following items:(a) In case where a shareholder of the relevant corporation (including an investor; hereafter the same shall apply in this Article) renounced wholly or partially the right to receive new stocks, and where such renounced new stocks (hereafter referred to as “forfeited stocks” in this paragraph) are allocated (excluding the case where a corporation listed on the stock market or on KOSDAQ, pursuant to the Securities and Exchange Act allocates such new stocks by the method of solicitation of securities under Article 2 (3) of the same Act; hereafter the same shall apply in this paragraph), the benefits acquired by those who received the allocation of relevant forfeited stocks, by obtaining such allocation of forfeited stocks;(b) In case where a shareholder of the relevant corporation renounced wholly or partially the right to receive new stocks, and where such forfeited stocks are not allocated, the benefits acquired by those who are specially related to persons renouncing the right to receive the relevant new stocks, by receiving the new stocks; and(c) The benefits acquired by those who are not the shareholders of relevant corporation by directly obtaining the new stocks from the relevant corporation (including the case where they directly receive or acquire the relevant new stocks from the underwriter pursuant to the Securities and Exchange Act; hereafter the same shall apply in this paragraph), or by the shareholders of relevant corporation by directly obtaining the allocation of new stocks in excess of the number entitled to obtain the allocation under equal conditions in proportion to the number of stocks owned by him;2. In case where new stocks are issued at higher price than the market price, the benefits falling under any of the following items:(a) In case where a shareholder of the relevant corporation renounced wholly or partially the right to receive new stocks, and where such forfeited stocks are allocated as the person who is entitled to obtain the allocation of such forfeited stocks has accepted them, the benefits acquired by the person renouncing the receipt of new stocks who is specially related to such allotted person;(b) In case where a shareholder of the relevant corporation renounced wholly or partially the right to receive new stocks, and where such forfeited stocks are not allocated, the benefits acquired by the person renouncing the receipt of new stocks who is specially related to him, by accepting the relevant new stocks; and(c) In case where those who are not the shareholders of relevant corporation have directly obtained the allocation of new stocks from the relevant corporation, or the shareholders of relevant corporation have directly obtained the allocation of new stocks and accepted them in excess of the number entitled to obtain the allocation under equal conditions in proportion to the number of stocks they own, the benefits acquired by the person specially related to them; and3. In case where the methods and benefits are similar to those stipulated in subparagraph 1 or 2, the benefits acquired directly or indirectly from the person in special relationship, by accepting or not accepting the new stocks or forfeited stocks.(2) In applying the provisions of paragraph (1) 1, in case where the number of minor shareholders who renounced the right to receive new stocks allocated or who obtained the allocation in short of the number entitled to obtain the allocation under equal conditions in proportion to the number of their possessed stocks (including the case where new stocks are not allotted) is not less than 2, the benefits shall be calculated by considering that one of the minor shareholders has renounced or obtained the allocation insufficiently.(3) The persons in special relationship under paragraphs (1) and (2), the scope of minor shareholders, the method of calculating the benefits and other necessary matters shall be prescribed by the Presidential Decree.[This Article Wholly Amended by Act No. 6301, Dec. 29, 2000]

(1) In case where the large shareholder specially related to some shareholders has acquired the benefits, as a corporation retires the stocks or equity shares of the said shareholders in the retirement of its stocks or equity shares in order to decrease its capital, the amount equivalent to such benefits shall be deemed to be the value of donated property of the relevant large shareholders. <Amended by Act No. 7010, Dec. 30, 2003>(2) The scope of large shareholders in special relationship under paragraph (1) and the method of calculating the benefits shall be prescribed by the Presidential Decree.[This Article Newly Inserted by Act No. 6301, Dec. 29, 2000]

(1) In case where the benefits falling under one of the following subparagraphs have been acquired by taking over the stocks or equity shares issued by a corporation through the investment in kind (hereafter in this Article, referred to as the “stocks etc.”), the amount equivalent to the relevant benefits shall be deemed to be the value of donated property of the person who has acquired such benefits:1. Benefits acquired by the investor in kind by taking over the stocks etc. at the lower price than market prices (referring to the price assessed under the provisions of Articles 60 and 63; hereafter in this Article, the same shall apply): and2. Benefits acquired by the shareholders other than the investors in kind in a special relationship or the investors by taking over the stocks etc. at the higher price than market prices.(2) Matters necessary for the calculating method of the benefits referred to in paragraph (1), and the scope etc. of shareholders and investors in a special relationship shall be prescribed by the Presidential Decree.[This Article Newly Inserted by Act No. 7010, Dec. 30, 2003]

(1) In case where the benefits falling under any of the following subparagraphs have been acquired by converting into or exchanging with the convertible bonds, the debentures cum preemptive rights on new stocks (referring to the certificates for preemptive right to new shares, if they are separated) and other stocks, or by accepting, acquiring or transferring the debentures entitled to accept the stocks (hereafter in this Article, referred to as the “convertible bonds, etc.”), or by converting into or exchanging with the stocks with the convertible bonds or accepting the stocks, the amount equivalent to such benefits shall be deemed to be the value of donated property of the person who has acquired such benefits: <Amended by Act No. 7010, Dec. 30, 2003; Act No. 8828, Dec. 31, 2007>1. Benefits falling under any of the following items which are acquired by accepting or acquiring the convertible bonds, etc.:(a) Benefits acquired by the acquisition of the convertible bonds, etc. from the person in special relationship at the price lower than the market price;(b) Benefits acquired by the largest shareholder of the corporation issuing the convertible bonds, etc. (excluding the case where a corporation listed on the stock market or on KOSDAQ, pursuant to the Securities and Exchange Act issues the convertible bonds, etc. by the method of solicitation of securities under Article 2 (3) of the same Act; hereafter the same shall apply in this paragraph) or other shareholders in special relationship with him, by accepting or acquiring (including the case where they accept or acquire from the underwriters under the Securities and Exchange Act; hereafter referred to as the “acceptance, etc.” in this paragraph) the convertible bonds, etc. from the relevant corporation at the price lower than the market price and in excess of the number entitled to obtain the allocation under equal conditions in proportion to the number of their possessed stocks; and(c) Benefits acquired by those who are not the shareholders of the corporation issuing the convertible bonds, etc. and who are specially related to the largest shareholder of the relevant corporation, by accepting, etc. the convertible bonds, etc. from the relevant corporation at the price lower than the market price;2. Benefits falling under one of the following items which are acquired by converting into or exchanging with the stocks or accepting the stocks with the convertible bonds, etc., or by transferring the convertible bonds, etc.:(a) In case where the convertible bonds, etc. have been acquired from the person in special relationship, the benefits acquired 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 referred to as the “converting value, etc.” in this paragraph);(b) In case where the largest shareholder of the corporation issuing the convertible bonds, etc. or other shareholders in special relationship with him have accepted, etc. the convertible bonds, etc. from the relevant corporation in excess of the number entitled to obtain the allocation under equal conditions in proportion to the number of their possessed stocks, the benefits acquired as the value of the stocks received or to be received with the convertible bonds, etc. exceeds the value of the converting value, etc.;(c) In case where a person who is not a shareholder of the corporation issuing the convertible bonds, etc. and who is specially related to the largest shareholder has accepted, etc. the convertible bonds, etc. from the relevant corporation, the benefits acquired as the value of the stocks received or to be received with the convertible bonds, etc. exceeds the value of the converting value, etc.;(d) In case where the convertible bonds, etc. are converted into or exchanged with the stocks, or the stocks are accepted, the benefits acquired by the person specially related to those to whom the relevant stocks are delivered, as the value of stocks delivered against the convertible bonds, etc. becomes lower than the converting value, etc.; and(e) In case where the convertible bonds, etc. are transferred to those who are specially related, the benefits acquired as the transferred value exceeds the market price; and3. In case where the methods and benefits are similar to those stipulated in subparagraph 1 or 2, the benefits acquired directly or indirectly from the person who is specially related, by making the transaction of the convertible bonds, etc. or by converting the convertible bonds, etc. into the stocks.(2) The persons having a special relationship under paragraph (1), the largest shareholder, the persons having a special relationship with the largest shareholder, the values of stocks received or to be received, the method of calculating the benefits, and other necessary matters shall be prescribed by the Presidential Decree.[This Article Wholly Amended by Act No. 6301, Dec. 29, 2000]

(1) In case where any person in a special relationship with the shareholders or investors of a corporation, that has an amount of deficit, or faces a business suspension or close-down (hereafter in this Article, referred to as the “specific corporation”), transacts business falling under any of the following subparagraphs with the specific corporation, and the shareholders or investors of the relevant specific corporation have acquired the benefits, the amount equivalent to such benefits shall be deemed to be the value of donated property of the investors: <Amended by Act No. 6048, Dec. 28, 1999; Act No. 6780, Dec. 18, 2002; Act No. 7010, Dec. 30, 2003>1. Transactions in which property or services are provided or rendered without compensation;2. Transactions in which property or services are provided or rendered for significantly low prices in the light of the common practices of transactions;3. Transactions in which property or services are transferred or taken over in return for significantly high prices in the light of normal transaction practices; and4. Other transactions similar to those described in subparagraphs 1 through 3 and prescribed by the Presidential Decree.(2) The Presidential Decree shall govern the specific corporation, persons having special relationship, and the calculation of the benefits acquired by the shareholders or investors of the specific corporation, and the scope of remarkably low price and remarkably high price referred to in the provisions of paragraph (1). <Amended by Act No. 6048, Dec. 28, 1999; Act No. 6780, Dec. 18, 2002; Act No. 7010, Dec. 30, 2003>

(1) When the person, who has received a donation of relevant stocks or equity shares (hereafter in this Article and Article 41-5, referred to as the “stocks, etc.”) or acquired them with compensation, has earned the operating incomes in excess of the standards as prescribed by the Presidential Decree, by exceeding the original taxable amount of gift tax (excluding the case of acquiring the stocks, etc. with the donated property; hereafter in Article 41-5, the same shall apply), or exceeding the acquired value, the amount equivalent to such benefits shall be deemed to be the value of donated property of the person who has acquired such benefits; which is the case where the value of relevant stocks, etc. has been increased as they are listed on the Korea Exchange (referring to listing on the stock market or on KOSDAQ) pursuant to the Securities and Exchange Act within 5 years either from the date of receiving a donation or acquiring with compensation, in case where any person specially related to those falling under any of the following subparagraphs, who are deemed to be in a position to make use of undisclosed information on the corporate management, etc. (hereafter in this Article and Article 41-5, referred to as the “largest shareholder, etc.”), has received a donation of stocks, etc. of the relevent corporation or acquired them with compensation, or from the date of acquisition (hereafter in this Article and Article 41-5, referred to as the “donation date, etc.”), in case where he has acquired the stocks, etc. of relevant corporation from other person than the largest shareholder, etc. with the donated property (referring to the property donated by the largest shareholder within 3 years retroactively from the date of acquiring the stocks, etc. with compensation; hereafter in this Article and Article 41-5, the same shall apply): <Amended by Act No. 6780, Dec. 18, 2002; Act No. 7010, Dec. 30, 2003; Act No. 8828, Dec. 31, 2007>1. The largest shareholder or the largest investor described in the provisions of Article 22 (2); and2. A person who owns not less than 25/100 of the total number of the stocks issued or the total amount of the investment by a domestic corporation, and is prescribed by the Presidential Decree.(2) The operating income referred to in the provisions of paragraph (1) shall be calculated based on the date belonging to the last date of three months from the listing day (referring to the date of death, the date of donation or the date of transfer in case that a person who owns the stocks, etc. dies, donates or transfers the stocks, etc. during a period ranging from the listing day to the date belonging to the last date of three months; hereafter referred to as the “adjustment base day” in this Article and Article 68). In this case, where the operating income is confirmed to have come from the practical growth of corporate value that is substantiated by documents prescribed by the Presidential Decree including a financial report, etc. filed by a taxpayer, such tax amount shall be deducted as prescribed by the Presidential Decree. <Amended by Act No. 8828, Dec. 31, 2007>(3) In respect of any person who has acquired the operating income under paragraph (1), the tax base of gift tax and a tax amount shall be adjusted by adding the relevant operating income to the original taxable amount of gift tax (in case where the stocks, etc. have been acquired with the donated property, referring to the taxable amount of gift tax on the relevant donated property; hereafter in this Article, the same shall apply): Provided, That where the value of the stocks, etc. as of the adjustment base day is smaller than the original taxable amount of gift tax and the difference is wider than the standard prescribed by the Presidential Decree, a tax amount of gift tax (referring to the original tax amount of gift tax paid at the time that donation is made) equivalent to the difference may be refunded. <Amended by Act No. 6780, Dec. 18, 2002; Act No. 7010, Dec. 30, 2003>(4) The listing day referred to in paragraph (1) shall be deemed the day on which the trading of the stocks, etc. first commences on the securities market under the provisions of Article 2 (12) of the Securities and Exchange Act or KOSDAQ under the provisions of Article 2 (14) of the same Act. <Amended by Act No. 8828, Dec. 31, 2007>(5) In applying the provision of paragraph (1), in case where the acquisition of the stocks, etc. with the donated property is obscure since the donated property and other property are mixed, it shall be presumed that the relevant stocks, etc. have been acquired with the relevant donated property. In this case, if the stocks, etc. have been acquired with the money borrowed by offering the donated property as a security, it shall be deemed to have acquired them with the donated property. <Newly Inserted by Act No. 6780, Dec. 18, 2002>(6) In applying the provision of paragraph (1), the aquisition of stocks, etc. shall contain the new stocks which have been subscribed and appropriated as the corporation issues the new stocks in order to increase its capital (including the investment amount). <Newly Inserted by Act No. 6780, Dec. 18, 2002>(7) Where convertible bonds that may be converted to the stocks, etc. and other bonds prescribed by the Presidential Decree (hereafter referred to as the “convertible bond, etc.” in this paragraph) are donated or acquired with compensation (including the case of direct subscription and acquisition of the convertible bonds, etc. from issuers) and the convertible bonds, etc. are converted to the stocks, etc. within a period under paragraph (1) (referring to 5 years), such converted stocks, etc. shall be deemed to be donated or acquired at the time when the convertible bonds, etc. are donated or acquired, and the provisions of paragraphs (1) through (5) shall be applied thereto. In this case, where the convertible bonds, etc. are not converted to the stocks, etc. by the adjustment base day, such convertible bonds, etc. shall be deemed to be converted to the stocks, etc. on the adjustment base day and the provisions of paragraphs (1) through (4) shall be applied thereto, and where the convertible bonds, etc. are not converted to the stocks, etc. by the maturity date of convertible bonds, etc., the tax amount of gift tax imposed based on the adjustment base day shall be refunded. <Amended by Act No. 6780, Dec. 18, 2002>(8) Matters necessary for the scope, etc. of the specially-related persons under paragraph (1) shall be prescribed by the Presidential Decree. <Newly Inserted by Act No. 6780, Dec. 18, 2002>(9) The provisions of Article 42 (6) shall apply mutatis mutandis to the case of donations under the provisions of paragraph (1). <Newly Inserted by Act No. 7010, Dec. 30, 2003>[This Article Newly Inserted by Act No. 6048, Dec. 28, 1999]

(1) Where any person obtains money of not less than 100 million won on loan without compensation or at an interest rate lower than the appropriate interest rate from any specially-related person, the amount falling under any of the following subparagraphs shall be deemed to be the value of donated property of the person who has obtained such money on loan on the date on which such money is obtained on loan. In this case, where nothing is prescribed with respect to the loan period, such loan period shall be deemed one year and where the loan period is not less than one year, fresh money shall be deemed to be obtained on loan every year from the date following the date on which one year expires and then the relevant amount shall be calculated: <Amended by Act No. 7010, Dec. 30, 2003>1. An amount obtained by multiplying the loaned money by the appropriate interest rate in case that such money is loaned without compensation; and2. An amount obtained by deducting an amount equivalent to the amount actually paid as interest from the amount obtained by multiplying the loaned amount by the appropriate interest rate in case that the money is loaned at an interest rate lower than the appropriate interest rate.(2) The scope of the specially-related person described in paragraph (1), the method of calculating the money of not less than 100 million won, the appropriate interest rate and other necessary matters shall be determined by the Presidential Decree.[This Article Newly Inserted by Act No. 6048, Dec. 28, 1999]

(1) In case where any person specially related with the largest shareholder, etc. has received a donation of the stocks, etc. of relevant corporation, or acquired them with compensation from the largest shareholder, etc., or where he has acquired with the donated property the stocks, etc. of relevant corporation from other person than the largest shareholder, etc., or acquired the stocks, etc. of another corporation, and if the relevant corporation or another corporation has been merged with the specially-related corporation listed on the stock market or on KOSDAQ within five years from the donation date, etc. of relevant stocks, etc. and thus their values have been increased, and where the person having received a donation of relevant stocks, etc. or acquired them with compensation has gained the benefits in excess of the standards as prescribed by the Presidential Decree by exceeding the taxable amount of original gift tax or the acquired prices, the amount equivalent to relevant benefits shall be deemed to be the value of donated property of the person who has acquired such benefits. <Amended by Act No. 7010, Dec. 30, 2003; Act No. 8828, Dec. 31, 2007>(2) The scopes of the specially-related person under paragraph (1), of another corporation, and of the specially-related corporation listed on the stock market or on KOSDAQ, shall be prescribed by the Presidential Decree. <Amended by Act No. 8828, Dec. 31, 2007>(3) Provisions of Article 41-3 (2) through (7) shall apply mutatis mutandis to the donation of the benefits, such as the listing, etc., due to the merger under paragraphs (1) and (2). In this case, the term “listing day” shall be deemed “the registration date of merger”. <Amended by Act No. 7010, Dec. 30, 2003; Act No. 8828, Dec. 31, 2007>(4) The provisions of Article 42 (6) shall apply mutatis mutandis to the case of donation under the provisions of paragraph (1). <Newly Inserted by Act No. 7010, Dec. 30, 2003>[This Article Newly Inserted by Act No. 6780, Dec. 18, 2002]

(1) In case where the benefits not smaller than the standards as prescribed by the Presidential Decree have been acquired which are those falling under one of the following subparagraphs other than the donations under the provisions of Articles 33 through 41, 41-3 through 41-5, 44 and 45, the relevant benefits shall be deemed to be the value of donated property of the person who has acquired such benefits:1. Benefits acquired by using or let one use the property worthy of 100 million won or more (excluding immovables and money; hereafter in paragraph (2), the same shall apply) gratuitously or by paying other person the price lower than market price (referring to the value assessed pursuant to the provisions of Chapter Ⅳ; hereinafter the same shall apply) or by receiving from other person the price higher than market price. In this case, the relevant benefits shall be the difference between the market price and the price actually paid or received;2. Benefits acquired by receiving service (limited to what worthy of the paid price of 10 million won or more that is normal among many unspecified persons: hereafter in this subparagraph and paragraph (2), the same shall apply) gratuitously or by paying other person the price lower than market price, or by providing service to other person by receiving the price higher than market price. In this case, the relevant benefits shall be the difference between the market price and the price actually paid or received; and3. Benefits acquired from the transaction to increase or decrease a corporate capital (including the investment amount), such as the investment, reduction of capital, merger (including merger through division: hereafter in this Article, the same shall apply), division, conversion, acceptance, exchange of stocks with convertible bonds etc. under Article 40 (1) (hereafter in this Article, referred to as the “stock conversion, etc.”), or benefits acquired from a fluctuation of equity share or its value due to the transfer or takeover of business, exchange of business, organizational changes of a corporation, etc. In this case, the relevant benefits shall be the amount obtained by deducting the value of stock conversion, etc. from the stock prices at the time of stock exchange etc. in the case of stock exchange, and shall be the assessment difference of relevant properties before or after the fluctuation of equity share or its value in other cases than the stock exchange, etc.(2) In applying the provisions of paragraph (1) 1 and 2, if there exists no fixing of a use period of properties or a provision period of service, the said period shall be one year, and in case where the said period is one year or more, it shall be deemed that the property has been newly used or the service has been newly provided each year on the day next to that on which one year elapses.(3) In applying the provisions of paragraph (1), if it is admitted that there exists a reasonable cause in the transaction practices, it shall not apply among the persons other than the specially-related persons.(4) In case where the person prescribed by the Presidential Decree, such as minors etc., has acquired the property due to causes falling under each of the following subparagraphs, and within five years from the date of acquiring the said property, has acquired the benefits exceeding the standards as prescribed by the Presidential Decree, which are those accompanying an increase of the relevant property value due to the causes prescribed by the Presidential Decree, such as the execution of development project, form and quality alteration, partition of co-owned property, authorization or license of business, listing of stocks or equity shares and merger, etc. (hereafter in this Article, referred to as the “cause for increasing a property value”), the relevant benefits shall be deemed to be the value of donated property of the person who has acquired such benefits:1. Where a property has been donated by other person;2. Where an internal information on the corporate management that has not been published was received from the specially-related person, and a property related with the relevant information has been acquired for value; and3. Where a property has been acquired with the fund borrowed from the specially-related person or the fund borrowed with security of the property of the specially-related person.(5) Benefits under the provisions of paragraph (4) shall be the amount calculated under the conditions as prescribed by the Presidential Decree by taking account of the value of relevant property as of the date on which a cause for increasing property values occurred, aquisition value (referring to the taxable value of gift tax in the case of donated properties), portion of normal increase in values, portion of contribution to a value increase by the property acquirer etc. In this case, if the relevant property has been transferred before the date of occurrence of causes for an increase of relevant property value, the date of such transfer shall be considered as the date of occurrence of causes for an increase of relevant property value.(6) In applying the provisions of paragraph (4), if it is admitted that the inheritance tax or gift tax has been reduced by falsity or other illegal means, the same provisions shall apply to the donations among the persons other than those in a special relationship. In this case, the provisions for time period from among those of paragraph (4) shall be deemed to be nonexistent.(7) In applying the provisions of paragraphs (1), (3), (4) and (6), matters necessary for the value of stocks at that time, such as the scope of assets of 100 million won or more, scope of the specially-related person, computation method of the difference of assessment of the relevant asset before and after fluctuations in the equity share and its value, and conversion into stocks, etc.[This Article Wholly Amended by Act No. 7010, Dec. 30, 2003]

(1) Properties transferred to the spouse or lineal ascendants of descendants (hereafter in this Article, referred to as the “spouse, etc.”) shall be deemed to be the value of donated properties of the spouse, etc. by presuming that the spouse, etc. have obtained donations of the value of such properties when the transferor made a transfer of relevant properties.(2) Where the specially-related person (hereafter in this paragraph and paragraph (4), referred to as the “transferee”) has again transferred the assets transferred to the person in a special relationship as prescribed by the Presidential Decree, to the spouse, etc. of the original transferor within three years from the takeover date, the value of assets at the time of the transfer of relevant assets by the transferor shall be deemed to be the value of donated assets of the spouse, etc., by presuming that the relevant spouse, etc. received a donation of the said value of assets: Provided, That the same shall not apply in case where the aggregate of finalized tax amount under the Income Tax Act that are borne by the original transferor and transferee is larger than the gift tax in the case of presumption that the relevant spouse etc. received the donations. <Amended by Act No. 8828, Dec. 31, 2007>(3) Paragraphs (1) and (2) shall not apply to the cases falling under any of the following subparagraphs: <Amended by Act No. 8828, Dec. 31, 2007>1. Where being disposed of by an auction procedure under a court decision;2. Where being disposed of by a bankruptcy pronouncement;3. Where being auctioned pursuant to the National Tax Collection Act;4. Where the securities have been disposed of through the securities market under the provisions of Article 2 (12) of the Securities and Exchange Act or KOSDAQ under paragraph 14 of the same Article: Provided, That the case as prescribed by the Presidential Decree shall be excluded, which is the case where it is unable to deem that the securities have been disposed of by the transactions among the many unspecified persons; and5. Where being prescribed by the Presidential Decree, which is the case where the fact of transfer through a receipt of the price from the spouse etc. is clearly admitted.(4) Where the gift tax has been imposed on the relevant spouse, etc. under the provisions of the main sentence of paragraph (2), the income tax due to the relevant asset transfer shall not be imposed on the original transferor and transferee, notwithstanding the provisions of the Income Tax Act. <Amended by Act No. 8828, Dec. 31, 2007>[This Article Newly Inserted by Act No. 7010, Dec. 30, 2003]

(1) Where being prescribed by the Presidential Decree, which is the case where it is difficult to admit that the assets have been acquired by his own financial capacity in view of the occupation, age, income and property status, etc., it shall be presumed that the acquirer of relevant assets received a donation of funds to purchase the relevant assets when he has acquired the relevant assets, and the said funds shall be deemed to be the value of donated property of the acquirer of relevant assets.(2) Where being prescribed by the Presidential Decree, which is the case where it is difficult to admit that the debts have been repaid by his own financial capacity in view of the occupation, age, income and property status, etc., it shall be presumed that the debtor received a donation of funds for the relevant repayment when he has repaid the relevant debts, and the said funds shall be deemed to be the value of donated property of the relevant debtor.(3) Provisions of paragraphs (1) and (2) shall not apply to the cases where the relevant fund for acquisition or repayment is equivalent to the amount falling short of that as prescribed by the Presidential Decree by taking account of the occupation, age, income and property status, etc., and where there exists a sufficient vindication of the sources for the relevant fund for acquisition or repayment.[This Article Newly Inserted by Act No. 7010, Dec. 30, 2003]

(1) Where the actual owner and title holder are different in the assets requiring a registration, etc. for a transfer or exercise of the rights (excluding the land and building: hereafter in this Article, the same shall apply), the value of relevant assets shall be deemed to have been donated by the actual owner to the title holder on the date on which a registration etc. has been made in the name of the title holder (where the relevant assets require a transfer of the title, referring to the date next to the last day of the year next to that whereto belongs the date of ownership acquisition), notwithstanding the provisions of Article 14 of the Basic Act for National Taxes: Provided, That, the same shall not apply to a case falling under any of the following subparagraphs: <Amended by Act No. 8828, Dec. 31, 2007>1. Where a registration, etc. of assets has been made in the name of another person without any purpose of avoiding taxes, or where failing to make a transfer of tile in the name the actual owner who has acquired the ownership; and2. Where converting into the title of actual owner during the period until December 31, 1998 (hereafter in this Article, referred to as the “grace period”) for the stocks, etc. which have been entered on the shareholders roster or the members roster in the tile of another person or whose titles have been transferred pursuant to the trust or agreement prior to January 1, 1997, from among the stocks or equity shares (hereafter in this Article, referred to as the “stocks, etc.”): Provided, That the same shall not apply to the case where converting into the titles of the person in a special relationship with shareholders or investors of the corporation which has issued the relevant stocks, etc. (hereafter in this Article, referred to as the “shareholders, etc.”), or the titles of persons who are the minors as of January 1, 1997.(2) Where a registration of assets etc. in the title of another person has been made, where failing to make a transfer of title in the tile of actual owner, and where failing to convert the title of stocks, etc. into the title of actual owner during the grace period, it shall be deemed to have a purpose of avoiding taxes: Provided, That the same shall not apply to the cases where the transferor makes a report on the details of changes in ownership together with a report on tax base for transfer incomes under Articles 105 and 110 of the Income Tax Act or a report under Article 10 of the Securities Transaction Tax Act. <Amended by Act No. 8828, Dec. 31, 2007>(3) In applying the provisions of paragraph (1), where the shareholders roster or the members roster have not been prepared, whether or not a transfer of the title has been made shall be judged by the documents concerning the shareholders, etc. and the specification of fluctuation status of the stocks, etc. which were submitted to the head of tax office having jurisdiction over the place of tax payment under Articles 109 (1) and 119 of the Corporation Tax Act. <Amended by Act No. 8828, Dec. 31, 2007>(4) Provisions of paragraph (1) 2 shall apply only to the case where the person who converts the stocks, etc. into the title of actual owner during the grace period submits the details os such conversion to the head of tax office having jurisdiction over the main office or principal office of a corporation which has issued the relevant stocks or a corporation invested by it, under the conditions as prescribed by the Presidential Decree.(5) Provisions of paragraph (1) shall not apply to the cases where the registration etc. of facts of being the trust property under the Trust Business Act or the Indirect Investment Asset Management Business Act, and where any nonresident makes the registration, etc. in the name of the legal representative or the manager of property. <Amended by Act No. 8828, Dec. 31, 2007>(6) The term “taxes” in paragraphs (1) and (2) means the national tax and local tax as referred to in subparagraphs 1 and 7 of Article 2 of the Basic Act for National Taxes and the customs as referred to in the Customs Act. <Amended by Act No. 8828, Dec. 31, 2007>(7) The scope of persons in a special relationship under the proviso of paragraph (2) 2 shall be prescribed by the Presidential Decree.[This Article Newly Inserted by Act No. 7010, Dec. 30, 2003]

With respect to an amount falling under any of the following subparagraphs, the gift tax shall not be levied: <Amended by Act No. 5493, Dec. 31, 1997; Act No. 5582, Dec. 28, 1998; Act No. 6301, Dec. 29, 2000; Act No. 7010, Dec. 30, 2003; Act No. 8828, Dec. 31, 2007>1. The value of property received, as a donation, from the State or a local government;2. In case where a person who, as an employee of a domestic corporation, joined an employee association (hereinafter referred to as an “employee stockholders association”) satisfying the requirements as prescribed by the Presidential Decree, and acquired shares of the corporation concerned, through the employee stockholders association falls under the criteria of a minor shareholder, as determined by the Presidential Decree, the value equivalent to the benefits received as a result of the difference between the acquisition value of such shares and their current market value;3. The value of property received, as a donation, by a political party, pursuant to the provisions of the Political Parties Act;4. The value of property which is donated to an intra-company labor welfare fund, pursuant to the provisions of the Intra-Company Labor Welfare Fund Act, or other similar association as prescribed by the Presidential Decree;5. Socially recognized disaster relief funds and goods, medical fees, dependents’ living expenses and education fees or others similar to such, as prescribed by the Presidential Decree;6. The value of property which is donated to the Credit Guarantee Fund pursuant to the provisions of the Credit Guarantee Fund Act or other similar association as determined by the Presidential Decree;7. The value of property which is donated to the State, local government, or public organization; and8. Insurance money of the insurance, as prescribed by the Presidential Decree, whereunder a disabled person shall be an insurance beneficiary.

(1) The taxable amount of gift taxes shall be the amount derived from deducting the amount of donated property taken over by the donee, which is put up as security for debt (including the debt as prescribed by the Presidential Decree, such as the debts, etc. related to the relevant donated property), from the total amount of the value of donated property under the provisions of this Act [excluding the value of the donated property (hereinafter referred to as the “donated property excluding any summing-up”) under the provisions of Articles 40 (1) 2, 41-3, 41-5, 42 (4)] as of the donation date. <Amended by Act No. 6780, Dec. 18, 2002; Act No. 7010, Dec. 30, 2003>(2) In case, within 10 years prior to the donation date concerned, the total amount of the value of donated property received from the same person (in case the donor is a lineal ascendant, including the spouse of such lineal ascendant) is not less than 10 million won, such value shall be added to the taxable amount of gift taxes: Provided, That the same shall not apply to the case of the donated property excluding any summing-up. <Amended by Act No. 5582, Dec. 28, 1998; Act No. 7010, Dec. 30, 2003>(3) In applying the provisions of paragraph (1), with respect to an onerous gift between lineal ascendants or descendants or spouses (including the case where it is presumed to be a gift under the provisions of Article 44), even in case the donee assumed the obligations of the donor, the amount of the obligation concerned shall be presumed as not having been assumed by the donee: Provided, That in case the amount of the obligation concerned is an obligation, etc. with respect to the state or a local government which may be objectively recognized pursuant to the Presidential Decree, such shall not be applicable.

(1) The value of any property contributed by any public service corporation, etc. shall not be included in the taxable amount of gift tax: Provided, That where the stocks, etc. received by a public service corporation, etc., as a contribution, from a domestic corporation, which, when combined with the stocks, etc. falling under any of the following subparagraphs, exceed 5/100 (10/100 in cases of a public service corporation in good faith, etc.) of the total number, etc. of stocks issued with voting rights of such domestic corporation, [excluding cases falling under the proviso to the part other than subparagraphs of Article 16 (2)] an excess portion calculated according to the method prescribed by the Presidential Decree shall be excluded: <Amended by Act No. 6048, Dec. 28, 1999; Act No. 6301, Dec. 29, 2000; Act No. 8828, Dec. 31, 2007>1. The stocks, etc. of a domestic corporation, which are the same as the stocks, etc. the public service corporation, etc. is in possession at the time that the contributor makes contributions; and2. The stocks, etc. of a domestic corporation, which are the same as the stocks, etc. contributed by the contributor or the person in a special relationship with him to other public service corporation, etc. than the public service corporation, etc. concerned.(2) In case a public service corporation, etc. which received, as a contribution, property, under the provisions of paragraph (1) and Article 16 (1), falls under subparagraphs 1 through 4 and 5-1, the head of tax office, etc. shall regard the equivalent amount, as prescribed by the Presidential Decree, to have been received by the public service corporation, etc. as a donation, and promptly levy gift taxes, and in case where it falls under subparagraph 4-2, the additional tax under Article 78 (9) shall be levied: Provided, That among property received, as a contribution, from many and unspecified persons, those property whose calculation of equivalent value, classified according to contributors, is difficult, as prescribed by the Presidential Decree, shall be excepted: <Amended by Act No. 6048, Dec. 28, 1999; Act No. 6301, Dec. 29, 2000; Act No. 6780, Dec. 18, 2002; Act No. 8828, Dec. 31, 2007>1. Case of using property received, as a contribution, in projects (a case of operating such property for profit-making or as a profit-making business in order to apply it to activities for the purpose of direct public good, etc. included; hereafter in this subparagraph the same shall be applicable) other than that for the purpose of direct public good etc., or not putting such property to use, within 3 years from the date of the receipt of the contribution, in projects for the purpose of direct public good, etc.: Provided, That when, as in a case where a protracted period is required in the use of such property, etc. or there being compelling cause as prescribed by the Presidential Decree, there is submission of a report, pursuant to the provisions of paragraph (5), together with reporting of such fact to the head of tax office having jurisdiction over the place of tax payment, such case shall be excepted;2. Where the total of stocks, etc. of a domestic corporation, which are acquired by utilizing contributed property (including cases where such property is operated for profit-making or profit-making business, or yields any operating income) and stocks, etc. falling under any of the following items exceeds 5/100 (10/100 in cases of a public service corporation in good faith, etc.) of total number, etc. of outstanding stocks with voting right of the domestic corporation: Provided, That this shall not apply to the case where it falls under the proviso to the part other than the subparagraphs of Article 49 (1), and public service corporations, etc., which are not specially related to the enterprise group subject to the limitations on mutual investment, acquire the stocks, etc. of a domestic corporation which is not specially related to the contributors to the relevant public service corporation, etc., and is prescribed by the Presidential Decree, and to the case where an industry-academic cooperation group pursuant to the Promotion of Industrial Education and Industry-Academic Cooperation Act acquires stocks, etc. prescribed by the Presidential Decree:(a) The stocks, etc. that are the same as the stocks, etc. owned by the public service corporation, etc. concerned at the time that the stocks, etc. are acquired; and(b) The stocks, etc. of a domestic corporation, which are the same as the stocks, etc. contributed by a contributor in a special relationship with the domestic corporation concerned to a public service corporation, etc. other than the public service corporation, etc. concerned;3. Where property received as a contribution is operated for profit-making or as a profit-making business, a case where such operating income is used in projects other than that for the purpose of direct public good;4. Where property received as contribution is sold, and the proceeds from such sale (including the property that is increased by such proceeds from sale, and excluding the public charges, etc. prescribed by the Presidential Decree) are used in other projects than those for public good, or have not been used in public projects until the date when 3 years have passed since the date of sale under the conditions as prescribed by the Presidential Decree;4-2. Where the operating income under subparagraph 3 is used in short of the standard amount as prescribed by the Presidential Decree, or the proceeds from sale under subparagraph 4 have been used in short of the standard amount as prescribed by the Presidential Decree for the period of 3 years since the date of sale; and5. With respect to other property received as contribution and/or operation of projects for the purpose of direct public good, where the property or project is not being operated pursuant to the Presidential Decree.(3) In case a public service corporation, etc., which received property, etc., as a contribution under the provisions of paragraph (1), allows a person falling under one of the following subparagraphs to use or have benefit of the property concerned through method of lease, loan for consumption, and/or loan for use, etc., the public service corporation, etc. shall be presumed as having received an amount as prescribed by the Presidential Decree as a donation, and the gift tax shall promptly be levied: Provided, That where, in connection with the projects of the public service corporation, etc. for the purpose of direct public good, services are rendered and regular costs are being paid, etc., as determined by the Presidential Decree, this shall not be applicable:1. Contributor and his relative;2. Other public service corporation, etc. to whom the contributor gave a contribution; and3. Persons having special relationships with those of subparagraphs 1 and 2.(4) In applying the provisions of paragraphs (1) through (3) and (8), the scope of persons having special relationship, the decision criteria for whether or not being used in public projects, the scope of the public service corporations, etc. which are not specially related to the enterprise group subject to the limitations on mutual investment, the scope of domestic corporations which are not specially related to the contributors to relevant public service corporations, the scope of the contributors in a special relationship, and other necessary matters shall be prescribed by the Presidential Decree. <Amended by Act No. 6301, Dec. 29, 2000; Act No. 6780, Dec. 18, 2002>(5) In case where a public service corporation, etc. received property as a contribution, pursuant to the provisions of paragraph (1) and Article 16 (1), the public service corporation, etc. shall submit a report pertaining to the plan and progress on the use of such property, to the head of tax office having jurisdiction over the place of the tax payment, pursuant to the Presidential Decree.(6) In case where the head of tax office levies gift tax or inheritance tax on a public service corporation, etc., he shall inform the competent authorities of the public service corporation, etc. concerned of such fact.(7) In case the competent authority of a public service corporation, etc. grants an incorporation license to the public service corporation, etc., revokes it incorporation license, or gives it a corrective order, or it is discovered that the public service corporation, etc. falls under paragraphs (1) (proviso), (2), and (3) as a result of supervision, it shall inform the head of tax office having jurisdiction over the place of tax payment of the public service corporation, etc. concerned of such fact, pursuant to the Presidential Decree.(8) Where contributors or persons in a special relationship with such contributors hold office in excess of 1/5 (in case that the current number of directors falls short of 5, it shall be deemed 5) of the current number of directors, or officers and employees (excluding directors; hereinafter the same shall apply) of the public service corporation, etc. prescribed by the Presidential Decree, the additional tax under the provisions of Article 78 (6) shall be imposed. <Newly Inserted by Act No. 6048, Dec. 28, 1999>(9) Where the public service corporation, etc. (excluding a public service corporation, etc. established by the State or local governments and a public service corporation, etc. corresponding thereto as prescribed by the Presidential Decree, public service corporation in good faith, etc.) are in possession of the stocks, etc. of a domestic corporation that is in the special relationship prescribed by the Presidential Decree with such public service corporation and the value of such stocks, etc. is in excess of 30/100 [50/100 in cases of a public service corporation, etc. that conducts external audit pursuant to Article 50 (3), opens and uses of exclusive accounts pursuant to Article 50-2 and makes public announcement of their statement of accounts pursuant to Article 50-3] of the value of total assets of such domestic corporation, the additional tax under the provisions of Article 78 (7) shall be imposed. In this case, the calculation of such excess value of the stocks, etc. of such domestic corporation shall be determined by the Presidential Decree. <Newly Inserted by Act No. 6048, Dec. 28, 1999; Act No. 8828, Dec. 31, 2007>(10) Where the public service corporation, etc. advertises or publicizes without receiving justifiable prices for the purpose of boosting interest of a domestic corporation in a special relationship with it, the additional tax under the provisions of Article 78 (8) shall be levied. In this case, the scope of domestic corporation in a special relation, the method of advertisement and public relations, and other necessary matters shall be prescribed by the Presidential Decree. <Newly Inserted by Act No. 6048, Dec. 28, 1999; Act No. 6301, Dec. 29, 2000>(11) Where a public service corporation, etc. fall under any of the following subparagraphs in relation to the contribution, acquisition and possession of stocks, etc., it shall be included in the taxable value of inheritance tax or gift tax pursuant to the main text of the part other than the subparagraphs of Article 16 (2) or pursuant to Article 48 (1) as prescribed by the Presidential Decree, or the gift tax shall be imposed immediately: <Amended by Act No. 8828, Dec. 31, 2007>1. Where a public service corporation in good faith, etc. does not fall under public service corporations in good faith, etc. after it has received contributions (including cases of acquiring stocks, etc. with the contributed property) of stocks, etc. in excess of 5/100 of the total number, etc. of outstanding stocks with voting right of a domestic corporation; or2. Where a public service corporation, etc. pursuant to the proviso to the part other than the subparagraphs of Article 16 (2) or to the proviso to Article 48 (2) 2 does not fall under public service corporations, etc. pursuant to the proviso to the part other than the subparagraphs of Article 49 (1), or possesses in excess of 5/100 of the total number, etc. of outstanding stocks, etc. of a domestic corporation that has special relationship with the relevant contributor.

(1) In case where a public service corporation, etc., on December 31, 1996, is in possession of stocks, etc. of the same domestic corporation in excess of 5 percent of the total number, etc. of issued stocks, the public service corporation, etc. concerned shall be made, until a period falling under one of the following subparagraphs, not to be in possession of stocks, etc. in excess of 5 percent of the total number, etc. of issued stocks in question (hereinafter referred to as the “possession standard of stocks, etc.”): Provided, That this shall not apply to a public service corporation, etc. meeting the standards as determined by the Presidential Decree by taking into account the actual use of such stocks, etc. towards projects for the purpose of direct public good and other contribution levels, etc. to public good by the public service corporation, etc. concerned, and a public service corporation, etc. established through contributions of the State and/or a local government and public service corporations, etc. conforming to such, as determined by the Presidential Decree: <Amended by Act No. 5582, Dec. 28, 1998>1. In case the equity ratio of the stocks, etc. in the possession of the public service corporation, etc. concerned is in excess of 5 percent but 20 percent and less than the total number, etc. of issued stocks, until December 31, 1999; and2. In case the equity ratio of the stocks, etc. in the possession of the public service corporation, etc. concerned is in excess of 20 percent of the total number, etc. of issued stocks, until December 31, 2001.(2) In applying the provisions of paragraph (1), the calculation method of the possession standard of the stocks, etc. and other necessary matters shall be prescribed by the Presidential Decree.

(1) The public service corporation, etc. shall, by taxation period or business year, select not fewer than two attorneys-at-law, certified public accountants, or certified tax accountants who meet the requirements as determined by the Presidential Decree and receive a tax verification (hereinafter referred to as the “tax verification by outside experts”) with respect to whether or not property received as a contribution is being used in public projects: Provided, That to public service corporations, etc. that receive financial audit pursuant to paragraph (3) and to public service corporations, etc. prescribed by the Presidential Decree in consideration of the special qualities in the operations of projects by the public service corporations, etc. and the size of contributed property, etc., such shall not apply. <Amended by Act No. 8828, Dec. 31, 2007>(2) A public service corporation, etc. which received a tax verification by outside experts, pursuant to the provisions of paragraph (1), shall report the findings of such tax verification to the head of tax office having jurisdiction over the place of tax payment, pursuant to the Presidential Decree. In this case, the head of tax office shall have the findings, of the tax verification by outside experts pertaining to whether or not the public service corporation, etc. is using the contributed property in public projects, so as to allow for their perusal by the general public.(3) Public service corporations, etc. shall receive financial audit from auditors pursuant to Article 3 of the Act on External Audit of Stock Companies by taxation period or business year: Provided, That to public service corporations, etc. falling under any of the following subparagraphs, this shall not apply: <Newly Inserted by Act No. 8828, Dec. 31, 2007>1. Public service corporations, etc. whose size of property is smaller than the size prescribed by the Presidential Decree; or2. Public service corporations, etc. prescribed by the Presidential Decree in consideration of the characteristics of business.(4) In applying the provisions of paragraphs (1) through (3), the tax verification items, the tax verification procedure and methods, the drawing-up of the report and the reporting procedure, method, etc. of external audit of the findings of the tax verification, and other necessary matters shall be prescribed by the Presidential Decree. <Amended by Act No. 8828, Dec. 31, 2007>

(1) Where revenue and expenditure that are received or disbursed in relation to a direct public project by public service corporations, etc. fall under any of the following subparagraphs, public service corporations, etc. (excluding public service corporations, etc. prescribed by the Presidential Decree in consideration of the characteristics of project; hereinafter the same shall apply) shall use exclusive accounts (hereinafter “exclusive accounts”) for a direct public project:1. Where revenue and expenditure relating to a direct public project are received or settled through a financial institution prescribed by the Presidential Decree;2. Where donations, contributions or membership fees are received: Provided, That to cases where cash is received directly as prescribed by the Presidential Decree, this shall not apply;3. Where personnel expenses and rent are disbursed;4. Where expenses for a direct public project prescribed by the Presidential Decree, such as donations, scholarship, research expenses, etc. are disbursed: Provided, That it shall be limited to cases exceeding 1 million won; or5. Where the money obtained by disposing assets for profit-making or profit-making business and other operating income are transferred to the accounting of an essential business (applicable only when the transfer of fund, such as cash is accompanied).(2) Where it does not fall under any of the subparagraphs of paragraph (1) with regard to a direct public project, public service corporations, etc. shall separately prepare and keep details: Provided, That to the revenue and expenditure prescribed by the Presidential Decree, such as the case, etc. of getting ready with the evidencing documents falling under Article 160-2 (2) 3 or 4 of the Income Tax Act, this shall not apply.(3) Public service corporations, etc. shall open an exclusive account within 3 months from the day they initially fall under public service corporations, etc., and shall report to the head of the tax office having jurisdiction over the place of tax payment of the public service corporation, etc.(4) Where public service corporations, etc. intend to change an exclusive account or open additional exclusive account, they shall report it as prescribed by the Presidential Decree.(5) The opening, report, change and addition of exclusive accounts of a public service corporation, etc. and the method of reporting thereof, extent of using exclusive account, necessary matters for such details, etc. shall be prescribed by the Presidential Decree.[This Article Newly Inserted by Act No. 8828, Dec. 31, 2007]

(1) A public service corporations, etc. (excluding a public service corporation, etc. whose size of property is under the size prescribed by the Presidential Decree and public service corporations, etc. prescribed by the Presidential Decree in consideration of the characteristics of the project; hereafter in this Article the same applies) shall publicly announce documents, etc. in the following subparagraphs (hereafter in this Article the “statement of accounts, etc.”) by having them available on the internet homepage of the National Tax Service within 4 months from the end of taxation period or business year of the public service corporation, etc. concerned as prescribed by the Presidential Decree:1. Balance sheets;2. Income statements (including statement of revenue and expenditure, etc. equivalent to income statement);3. Detail of collection and disbursement of donations;4. Matters concerning the representative, directors, contributors, location and object project of the public service corporation, etc. concerned; and5. Matters prescribed by the Presidential Decree, such as the present status of the stocks in possession.(2) Where public service corporations, etc. fail to announce the statement of accounts in public pursuant to paragraph (1) or there is a mistake in the details of public announcement, the Commissioner of the National Tax Service may set a period not exceeding one month and have such public service corporation, etc. concerned announce in public during the period, or may request them to correct such mistake.(3) In applying paragraphs (1) and (2), matters necessary for the public announcement of statement of accounts, procedures for requesting for the correction thereof, etc. shall be prescribed by the Presidential Decree.[This Article Newly Inserted by Act No. 8828, Dec. 31, 2007]

(1) The public service corporation, etc. shall draw up books and records pertaining to properties received as contributions as well as the details, etc. of operating public projects, classified according to the income tax taxable periods or the corporation tax fiscal years, and shall keep important documentary evidence in connection with the books and records. <Amended by Act No. 8828, Dec. 31, 2007>(2) The books, records and important documentary evidence, pursuant to the provisions of paragraph (1), shall be preserved for 10 years fromthe expiration date of the income tax taxable period or corporation tax fiscal year of the public service corporation, etc. concerned.(3) The books, records and important documentary evidence, with respect to a profit-making business of the public service corporation, etc., drawn up and kept, pursuant to the provisions of Article 160 of the Income Tax Act and the proviso of Article 112 of the Corporation Tax Act, shall be regarded as books and records and important documentary evidence drawn up and kept, pursuant to the provisions of paragraph (1). In this case, the books, records and important documentary evidence concerned shall include those drawn up and kept by means of microfilms, magnetic tapes, diskettes, and other information preserving devices. <Amended by Act No. 5582, Dec. 28, 1998; Act No. 6048, Dec. 28, 1999; Act No. 8828, Dec. 31, 2007>(4) Necessary matters pertaining to the drawing up and keeping of the books, records and documentary evidence, pursuant to the provisions of paragraphs (1) through (3), shall be prescribed by the Presidential Decree.

The provisions of Article 17 (1) shall be applicable mutatis mutandis with respect to the gift tax. In this case, in Article 17 (1), the term “among inherited property, the person to be succeeded or the successor” shall be regarded as “among donated property, the donor”, and the term “taxable amount of inheritance taxes” shall be regarded as “taxable amount of gift taxes”.

(1) Where a disabled person as prescribed by the Presidential Decree receives a donation of property (referring to that which can be entrusted to a trust company under the Trust Business Act, as prescribed by the Presidential Decree; hereafter in this Article the same shall apply) from his lineal ascendants and descendants or other relatives as prescribed by the Presidential Decree, and the following requirements are all satisfied within the time limit of report under Article 68, the value of the donated property (the total value of property which, within the limit of five hundred million won, is donated to the disabled person for his life) shall not be included in the taxable amount of gift taxes: <Amended by Act No. 8828, Dec. 31, 2007>1. The disabled person shall entrust all of the donated property to a trust company under the Trust Business Act;2. The disabled person shall be the beneficiary who receives all profits accruing from the trust; and3. The period of trust shall be until the time of the disabled person’s death: Provided, That where the period of trust expires before the disabled person dies, the period shall be extended to the time of his death.(2) Where a disabled person who receives a donation of property under paragraph (1) falls under any of the following subparagraphs, the head of tax office, etc. shall forthwith impose gift taxes on the disabled person, deeming that the value of the property is donated to the disabled person on a day prescribed by the Presidential Decree: Provided, That this shall not apply where there exist any inevitable causes as prescribed by the Presidential Decree:1. Where the trust is rescinded for the future, or the period of trust is not extended after its expiration;2. Where the beneficiary is changed during the period of trust or the value of the donated property under paragraph (1) 1 is decreased; and3. Where it is confirmed that all or part of the profits accruing from the trust is reverted to a person other than the disabled person.(3) A person who desires to be subject to the provisions of paragraph (1) shall, within the period of report under Article 68, apply to the head of tax office having jurisdiction over the place of tax payment under the conditions prescribed by the Presidential Decree.(4) The calculation of the amount of the gift taxes under paragraph (2) and other necessary matters shall be prescribed by the Presidential Decree.[This Article Newly Inserted by Act No. 5582, Dec. 28, 1998]

(1) In case where a resident received a donation from a person falling under any of the following subparagraphs, an amount based on classification by the following subparagraphs shall be deducted from the taxable amount of gift taxes. In this case, should the total of an amount for which a deduction is to be received within 10 years prior to the relevant donation by the standard of the donee, and an amount for which a deduction was received from the taxable amount of gift taxes, be in excess of an amount as stipulated in the following subparagraphs, the excess part shall not receive such deduction: <Amended by Act No. 5582, Dec. 28, 1998; Act No. 6780, Dec. 18, 2002; Act No. 7010, Dec. 30, 2003; Act No. 8828, Dec. 31, 2007>1. In case where a donation was received from a spouse, 600 million won;2. In case where a donation was received from a lineal ascendant or lineal descendant, 30 million won: Provided, That in case where a minor received a donation from a lineal ascendant, the deduction shall be 15 million won; and3. In case where a donation was received from a relative who is not a spouse or a lineal ascendant or descendant, 5 million won.(2) The scope of relatives, under the provisions of paragraph (1), shall be prescribed by the Presidential Decree.

The provisions of Article 23 shall be applicable mutatis mutandis with respect to the gift tax. In this case, within Article 23 (1), the term “a succession commencing as a result of the death of a resident” shall be regarded as “property donated by a third party”, the term “Article 67” as “Article 68”, the term “inherited property” as “donated property”, the term “taxable amount of inheritance taxes” as “the taxable amount of gift taxes”, and within paragraph (2) of the same Article, the term “successor or testamentary donee” shall be regarded as “donee”. <Amended by Act No. 7010, Dec. 30, 2003>

(1) The tax base of gift tax shall be an amount derived by deducting the fees for appraisal and assessment of the donated property as prescribed by the Presidential Decree from the amount falling under any of the following subparagraphs: <Amended by Act No. 7010, Dec. 30, 2003>1. In the legal fiction of title trust property under the provisions of Article 45-2, the amount of relevant title trust property;2. In the donated property excluding any summing-up, the amount derived by deducting 30 million won from the value of relevant donated property; and3. In other cases than subparagraphs 1 and 2, the amount derived by deducting the amount under the provisions of Articles 53 and 54 from the taxable amount of gift tax is levied under the provisions of Article 47 (1).(2) When the tax base is below 500 thousand won, the gift tax shall not be levied. <Amended by Act No. 7010, Dec. 30, 2003>

The gift tax shall be the calculated amount (hereinafter referred to as the “gift tax amount calculated”) derived by applying the tax rate, under the provisions of Article 26, to the tax base, under the provisions of Article 55.

In case where the donee is a lineal descendant who is not an offspring of the donor, an amount equivalent to 30 percent of the gift tax amount calculated shall be added: Provided, That in case where, through the death of a lineal descendant who is the closest relative of the donor, the lineal descendant who is the closest relative of the deceased receives the donation, such shall not be applicable.

(1) The amount of gift tax (meaning the gift tax amount calculated pertaining to donated property concerned at the time of donation) paid or to be paid with respect to the value of donated property (meaning the aggregated amount of the values of donated properties when there are not less than two donations) which was added to the taxable amount of gift taxes, pursuant to the provisions of Article 47 (2), shall be deducted from the gift tax amount calculated: Provided, That in case where, owing to the expiration of the period under the provisions of Article 26-2 (1) 4 or 26-2 (3) of the Basic Act for National Taxes, the gift tax with respect to donated property being added to the taxable amount of gift taxes is not being levied, such shall not apply. <Amended by Act No. 6301, Dec. 29, 2000; Act No. 8828, Dec. 31, 2007>(2) The amount of the gift tax to be deducted, in the case of paragraph (1), shall be within the limit of the amount calculated by multiplying the gift tax amount calculated by the ratio occupied by the tax base of donated property, which is added to the tax base of aggregated amounts of the value of relevant donated property and of the value of the donated property added under Article 47 (2). <Amended by Act No. 6301, Dec. 29, 2000>

The provisions of Article 29 shall be applicable mutatis mutandis with respect to the gift tax. In this case, in Article 29, the term “owing to death of a resident, the inheritance tax is being levied” shall be regarded as “property donated another person”, each “inheritance tax” as “gift tax”, “inherited property” as “donated property”, and “inheritance tax amount calculated” as “gift tax amount calculated”. <Amended by Act No. 7010, Dec. 30, 2003>

(1) The value of a property on which the inheritance tax or the gift tax is levied, pursuant to this Act, shall be based on its current market value at the donation date or the commencement date of succession (hereinafter referred to as the “appraisal base day”). In this case, the value (excluding cases falling under the provisions of Article 63 (2)) appraised in accordance with the appraisal methods under the provisions of Article 63 (1) 1 (a) and (b) shall be regarded as the current market value of the property.(2) The current market value, under the provisions of paragraph (1), shall be the value recognized as having been arranged under normal conditions in the case of transactions effected freely between many and unspecified persons, and shall include the public sale price from expropriation and appraised price, etc., current market values recognized pursuant to the Presidential Decree.(3) In case where, in applying the provisions of paragraph (1), the calculation of the current market value is difficult, it shall be based on the appraised value calculated in accordance with methods under the provisions of Articles 61 through 65, by taking into consideration the type, size, and transaction circumstances, etc. of the property concerned.(4) In applying the provisions of paragraph (1), the value of donated property added to the value of inherited property, pursuant to the provisions of Article 13, shall be based on the current market value at the donation date.

(1) Real estate shall be appraised by the method falling under one of the following subparagraphs: <Amended by Act No. 5582, Dec. 28, 1998; Act No. 6048, Dec. 28, 1999; Act No. 7335, Jan. 14, 2005; Act No. 7580, Jul. 13, 2005>1. Lands: An individual public notification of the value of the land (hereinafter referred to as an “individual public notification of land value”) pursuant to the Public Notice of Values and Appraisal of Real Estates Act: Provided, That in the case of the equivalent value of land not having an individual public notification of land value, it shall be an amount appraised by the head of tax office having jurisdiction over the place of tax payment, by taking into consideration the individual public notifications of land values of similar neighboring lands, in accordance with methods as prescribed by the Presidential Decree. With respect to land of a region determined by the Presidential Decree as being one where the land values are rising quickly, it shall be based on the value appraised in accordance with a multiplication method;2. Buildings: The value that the Commissioner of the National Tax Service calculates and publishes once or more every year taking into account the prices of newly constructed buildings (excluding buildings falling under the provisions of subparagraph 3 or 4), structures, purposes, locations and the year of such new construction, etc. of buildings;3. Office/residential mixed use buildings and commercial buildings: With respect to office/residential mixed use buildings and commercial buildings (including lands annexed thereto) whose lands annexed thereto are jointly owned and their buildings are divisionally owned and they are prescribed by the Presidential Decree taking into account the purposes of use and the area of the buildings and the number of buildings that are divisionally owned, the value of the lands and the buildings that the Commissioner of the National Tax Service calculates and publishes in the block not less than once every year taking into account kinds, scales, transactions and locations, etc. of the buildings; and4. Housing: The prices of the individual housing and the prices of the collective housing provided for in the Public Notice of Values and Appraisal of Real Estate Act: Provided, That when the Commissionerof the National Tax Service determines and publishes the prices of the collective housing pursuant to the provisions of the proviso of Article 17 (1) of the same Act, the prices of the collective housing shall be governed by the prices that are determined and published by him.(2) Deleted. <by Act No. 6301, Dec. 29, 2000>(3) Deleted. <by Act No. 7580, Jul. 13, 2005>(4) “Multiplication method”, as stated in the proviso of paragraph (1) 1 means a calculating method which is in accordance with amounts calculated by multiplying individual public notifications of land values by a rate as determined by the Presidential Decree.(5) With respect to rights to acquire real estate and surface rights and to use specific facilities, they shall be in accordance with equivalent values appraised, pursuant to methods as prescribed by the Presidential Decree, by taking into account the residual period, nature, substance, transaction circumstances, etc., of the rights, etc. concerned.(6) With respect to other facilities and constructed structures, they shall be in accordance with values appraised, pursuant to methods as prescribed by the Presidential Decree, by taking into account the values required when such facilities or constructed structures are either constructed again or acquired again on the appraisal base day.(7) The value of property the lease contract of which is de facto concluded or the lease of which is registered shall be the larger amount between the appraised value based on its rental in accordance with the provisions of the Presidential Decree and the appraised value under the provisions of paragraphs (1) through (6). <Newly Inserted by Act No. 5582, Dec. 28, 1998>(8) The provisions of Articles 99 (4) through (6) of the Income Tax Act and Article 99-2 of the same Act shall apply mutatis mutandis to the hearing of opinions of owners and persons interested about the value that is calculated and published by the Commissioner of the National Tax Service as well as the application filed for recalculating the value and publishing the recalculated value. <Newly Inserted by Act No. 7580, Jul. 13, 2005>

(1) With respect to vessels, aircraft, vehicles, machinery and equipments, and living trees subject to the application of the Standing Timber Act, they shall be appraised in accordance with methods as prescribed by the Presidential Decree by taking account of the type, size, trade situation, etc. of the relevant assets. <Amended by Act No. 7010, Dec. 30, 2003; Act No. 8828, Dec. 31, 2007>(2) With respect to goods, products, paintings and writings, antiques, animals subject to ownership and other tangible assets, they shall be inaccordance with equivalent values appraised, pursuant to methods as prescribed by the Presidential Decree, by taking into account the type, size, transaction circumstances of the property concerned.(3) In the case of the assets for which the de facto lease contract has been concluded or a right of lease has been registered, the value of the relevant assets shall be the larger amount between the value assessed under conditions prescribed by the Presidential Decree based upon the standard of the relevant rents and the value assessed under the provisions of paragraphs (1) and (2). <Newly Inserted by Act No. 7010, Dec. 30, 2003>

(1) Securities shall be appraised by methods falling under one of the following subparagraphs: <Amended by Act No. 5582, Dec. 28, 1998; Act No. 6048, Dec. 28, 1999; Act No. 6301, Dec. 29, 2000; Act No. 8828, Dec. 31, 2007>1. Appraisal of stocks and equity shares:(a) With respect to stocks and equity shares of stock-listed corporations traded on the Korea Exchange, the average value of the daily Korea Exchange closing market value (irrespective of existence or non-existence of actual trading) publicly announced for 2 months prior to and after the appraisal base day: Provided, That in case where, concerning the calculation of the average value, there occurs during the period of 2 months prior to and after the appraisal base day a cause such as an increase in capital, a merger, etc., thus rendering unfitness to an appraisal based on the average value, the appraisal then shall be based on the average value of the period calculated under the conditions as prescribed by the Presidential Decree among the period of 2 months before and after the appraisal base day respectively;(b) With respect to stocks and equity shares prescribed by the Presidential Decree, from among those of a KOSDAQ-listed corporation pursuant to the Securities and Exchange Act, the provisions of item (a) shall be applicable mutatis mutandis; and(c) With respect to stocks and equity shares not listed on the Korea Exchange in addition to those of item (b), they shall be appraised in accordance with methods as prescribed by the Presidential Decree, by taking into account the assets, profits, etc. of the relevant corporation; and2. Appraisal of public bonds, state bonds, etc. and other securities in addition to those of subparagraph 1 shall be in accordance with methods prescribed by the Presidential Decree, by taking into account the type, size, transaction circumstances, etc. of the relevant property.(2) Notwithstanding the provisions of paragraph (1) 1, with respect to the stocks or equity shares (hereafter referred to as “stocks, etc.” in this paragraph and paragraph (3)) falling under any of the following subparagraphs, they shall be appraised by the methods prescribed in the Presidential Decree, by taking into account the nature of the business, transaction circumstances, etc. of the relevant corporation: <Amended by Act No. 5498, Jan. 8, 1998; Act No. 5582, Dec. 28, 1998; Act No. 6301, Dec. 29, 2000; Act No. 6780, Dec. 18, 2002; Act No. 8828, Dec. 31, 2007; Act No. 8852, Feb. 29, 2008>1. Stocks, etc. of a corporation for which a securities report was filed with the Financial Services Commission for the purpose of going public within the period prescribed by the Presidential Decree;2. Among stocks, etc. under the provisions of paragraph (1) 1 (c), those stocks, etc. of a corporation for which an application for listing was filed with the Korea Exchange under Article 172-2 of the Securities and Exchange Act within the period prescribed by the Presidential Decree, for the purpose of transactions of stocks, etc. on the KOSDAQ market under the same Act; and3. Among stocks of a corporation listed on the Korea Exchange, those new stocks acquired as a result of an increase in capital of the relevant corporation but not listed as at the appraisal base day.(3) In applying paragraphs (1) 1 and (2), and Article 60 (2), the stocks, etc. (excluding the stocks, etc., prescribed by the Presidential Decree, such as those of any corporation that has continued to register an operating loss under the provisions of the Article 14 (2) of the Corporation Tax Act from the business year three years prior to the business year to which the appraisal base day belongs) of the largest shareholder or the largest investor prescribed by the Presidential Decree and a shareholder or an investor in a special relationship with such largest shareholder or such largest investor (hereafter referred to as the “largest shareholder, etc.” in this paragraph) shall be calculated by adding 20/100 (in cases of a small or medium enterprise prescribed by the Presidential Decree, it shall be 10/100) of the value appraised in accordance with paragraphs (1) 1 and (2) or the value recognized in accordance with Article 60 (2) to such value, but where the largest shareholder, etc. owns in excess of 50/100 of the total number, etc. of stocks issued by the relevant corporation, 30/100 (in cases of a small or medium enterprise prescribed by the Presidential Decree, it shall be 15/100) shall be added. In such cases, the calculation of stocks, etc. in possession of the largest shareholder, etc. shall be determined by the Presidential Decree. <Amended by Act No. 6048, Dec. 28, 1999; Act No. 6780, Dec. 18, 2002; Act No. 8828, Dec. 31, 2007; Act No. 9269, Dec. 26, 2008>(4) Deposits, savings, installment savings, etc. shall be appraised based on the value derived by deducting an amount equivalent to the withholding tax, under Article 127 (1) of the Income Tax Act from the aggregate of the total amount of deposits and receipts as at the appraisal base day and the amount of outstanding interest already passed as at the same date. <Amended by Act No. 8828, Dec. 31, 2007>

(1) The value of purchased intangible property rights shall be appraised based on an amount derived by deducting the depreciation cost under the Corporation Tax Act, accrued from the purchase date to the appraisal base day, from the purchase price. <Amended by Act No. 8828, Dec. 31, 2007>(2) In addition to those of paragraph (1), other intangible property rights, such as industrial property rights, shall be appraised by the methods prescribed in the Presidential Decree, by taking into account the value required in the acquisition of the relevant property or the future economic benefits, etc. of the relevant property.

(1) With respect to conditional rights, rights whose durations are undetermined, rights to receive benefits of trusts, rights which are in litigation, and rights to receive money payable by periodical installments prescribed by the Presidential Decree, their values shall be appraised in accordance with methods prescribed by the Presidential Decree, with the nature, substance, duration, etc. of the relevant right as the criteria.(2) Other property whose appraisal methods are not provided for separately in this Act shall be appraised by applying mutatis mutandis the appraisal methods provided for in paragraph (1) of this Article and Articles 60 through 64.

The property falling under any of the following subparagraphs, notwithstanding the provisions of Article 60, shall be the value appraised pursuant to the Presidential Decree, taking into account the amount of claim be secured with the relevant property or the value appraised pursuant to the provisions of Article 60, whichever is larger: <Amended by Act No. 5582, Dec. 28, 1998>1. Property whose mortgage or pledge is settled;2. Property transferred for security;3. Property registered for lease on a deposit basis (including property leased with lease deposit); and4. Deleted. <by Act No. 5582, Dec. 28, 1998>

(1) A successor or a testamentary donee having an inheritance tax payment obligation pursuant to the provisions of Article 3 shall, within six months from the last day of the month to which the date of commencement of succession belongs, report the tax base and the taxable amount of his inheritance taxes, under the provisions of Articles 13 and 25 (1), to the head of tax office having jurisdiction over the place of tax payment, pursuant to the Presidential Decree. <Amended by Act No. 9269, Dec. 26, 2008>(2) In cases of paragraph (1), in such report shall be appended supporting documentation, etc., as prescribed by the Presidential Decree, which can prove the type, quantity, appraised value, distribution of property, and all types of deductions, etc. of the inherited property necessary for the calculation of the inheritance tax base, and such documentation, etc. shall be submitted to the head of tax office having jurisdiction over the place of tax payment.(3) With respect to the executor of the will or the administrator of the property to be inherited, the period of paragraph (1) shall be reckoned starting from the date on which he begins his duties by being designated or selected.(4) Where the person to be succeeded or the successor has established a domicile in a foreign country, the period of paragraph (1) shall be nine months.(5) Where a successor is not determined within the report deadline of paragraph (1), within 30 days from the date on which a successor is determined, the nature of the relationship of the determined successor to the succession shall be entered in a report separate from that of paragraph (1) and submitted to the head of tax office having jurisdiction over the place of tax payment.

(1) A person having a gift tax liability under the provisions of Article 4 shall, within three months from the last day of the month to which the date of donation belongs, report the taxable amount and the tax base of his gift tax, under the provisions of Articles 47 and 55 (1), to the head of tax office having jurisdiction over the place of tax payment, pursuant to the Presidential Decree: Provided, That the deadline for filing a return on the adjustment of the tax base of the gift tax with respect to listing of unlisted stocks or merger, etc. of a corporation in accordance with the provisions of Articles 41-3 and 41-5 shall be the day on which three months pass from the last day of the month to which the adjustment base day belongs. <Amended by Act No. 6048, Dec. 28, 1999; Act No. 6780, Dec. 18, 2002; Act No. 9269, Dec. 26, 2008>(2) In cases of paragraph (1), in such report shall be appended supporting documentation, etc., as prescribed by the Presidential Decree, which can prove the type, quantity, appraised value, distribution of property, and all types of deductions, etc. of the donated property, necessary for the calculation of the gift tax base, and such documentation, etc. shall be submitted to the head of tax office having jurisdiction over the place of tax payment.

(1) In cases where the inheritance tax base is reported, pursuant to the provisions of Article 67, an amount equivalent to 10/100 of the amount derived from deducting the amounts of the following subparagraphs from the inheritance tax amount calculated (including amounts added to the tax amount calculated, pursuant to the provisions of Article 27) shall be deducted from the inheritance tax amount calculated:1. An amount the collection of which is deferred pursuant to the provisions of Article 74; and2. An amount which was deducted, reduced or exempted from the tax assessment, pursuant to the provisions of this Act or other Acts.(2) In cases where the gift tax base is reported pursuant to the provisions of Article 68, an amount equivalent to 10/100 of the amount derived fromdeducting an amount prescribed in any subparagraph of paragraph (1) from the gift tax amount calculated (including amounts added to the tax amount calculated, pursuant to the provisions of Article 57) shall be deducted from the gift tax amount calculated.

(1) A person who reports the inheritance tax or gift tax, pursuant to the provisions of Article 67 or 68, shall pay to the tax office having jurisdiction over the place of tax payment, the Bank of Korea, or a postal office, an amount derived by deducting an amount prescribed in one of the following subparagraphs from each tax amount calculated, within the report deadline of each tax:1. An amount under the provisions of Article 69 (1) 1 and 2;2. In cases of inheritance tax, an amount deducted pursuant to the provisions of the main sentence of Article 69 (1);3. In cases of gift tax, an amount deducted pursuant to the provisions of Article 69 (2);4. An amount on which an application for payment by annual installments was submitted pursuant to the provisions of Article 71; and5. An amount on which an application for payment in kind was submitted pursuant to the provisions of Article 73.(2) In cases where the amount to be paid under paragraph (1) is in excess of 10 million won, a part of such payable amounts may be paid in installments within two months after the elapse of payment term under conditions prescribed by the Presidential Decree: Provided, That the same shall not apply to cases where the payment by annual installments is permitted under Article 71. <Newly Inserted by Act No. 6301, Dec. 29, 2000; Act No. 9269, Dec. 26, 2008>

(1) In cases where the amount of inheritance tax or gift tax is in excess of 20 million won, the head of tax office having jurisdiction over the place of tax payment may permit payment by annual installments upon an application by the taxpayer, pursuant to the methods prescribed by the Presidential Decree. In such cases, the taxpayer shall offer a security, and where the taxpayer applies for permission for payment by annual installments after offering security as provided for in subparagraphs 1 through 5 of Article 29 of the Basic Act for National Taxes, he shall be deemed to have been permitted on the date of such application. <Amended by Act No. 8828, Dec. 31, 2007; Act No. 9269, Dec. 26, 2008>(2) The period applied by the relevant taxpayer shall be the period of payment by annual installments under paragraph (1), which is within the extent of period according to classification in the following subparagraphs: Provided, That the period of annual installments shall be fixed so that the amount of tax for each installment exceed ten million won: <Amended by Act No. 8828, Dec. 31, 2007>1. Five years from the date when two years have passed after permission for annual installments in cases of the property of an inherited family business: Provided, That twelve years from date when three years have passed after permission for annual installments, in cases of the ratio of the property of an inherited family business is 50/100 or more among the inherited property (excluding property bequeathed to a non-successor); and2. Five years from the day of permission for annual installments except for cases of subparagraph 1.(3) In applying paragraph (2), the calculation method of the amount subject to payment by annual installments shall be prescribed by the Presidential Decree. <Amended by Act No. 8828, Dec. 31, 2007>(4) In cases where a taxpayer who received permission for payment by annual installments under the provisions of paragraph (1), falls under any of the following subparagraphs, the head of tax office having jurisdiction over the place of tax payment may cancel or change such permission for payment by annual installments as prescribed by the Presidential Decree, and may collect all or a part of the amount related to payment by annual installments: <Amended by Act No. 8828, Dec. 31, 2007; Act No. 9269, Dec. 26, 2008>1. In cases where he fails to pay the amount of the tax payment by annual installments by the designated deadline for payment (referring to the scheduled date of payment by annual installments where he is deemed to have been permitted under the latter part of paragraph (1));2. In cases where the security is modified or where he fails to comply with the orders of the head of competent tax office necessary for the coverage of the security;3. In cases where, by his falling under the provisions of any subparagraph of Article 14 (1) of the National Tax Collection Act, it is deemed that the full tax amount related to the payment by annual installments cannot be collected by the deadline for payment by annual installments; and4. In cases where he falls under Article 18 (5) 1.(5) In cases where the head of tax office having jurisdiction over the place of tax payment either permits payment by annual installments pursuant to the provisions of 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 by annual installments pursuant to the provisions of paragraph (4), he shall notify the taxpayer of such intent. <Amended by Act No. 9269, Dec. 26, 2008>

A person who received permission for payment by annual installments pursuant to the provisions of Article 71, shall make the payment by adding an amount stipulated in any of the following subparagraphs to each tax installment: <Amended by Act No. 6048, Dec. 28, 1999>1. With respect to the first tax installment, an amount calculated by firstly multiplying the rate prescribed by the Presidential Decree by the number of days until the deadline for payment of the tax installment in question, starting with the day following the day belonging to the deadline for filing a return under the provisions of Articles 67 and 68, and the deadline for making a tax payment according to a tax notice, the sum shall then be multiplied by the total tax amount for which payment by annual installments is permitted; and2. With respect to tax installments, other than that of subparagraph 1, an amount calculated by firstly multiplying the rate prescribed by the Presidential Decree, by the number of days until the deadline for payment of the relevant tax installment from the following day of the deadline for payment of the immediately preceding tax installment, the sum shall then be multiplied by the balance derived by deducting the total amount of the tax installments paid, up to the immediately preceding tax installment, from the total amount for which payment by annual installments is permitted.

(1) Where, among property received through succession or donation, the equivalent value of real estate and securities [excluding the stocks and equity shares of a corporation which is not listed on the Korea Exchange (hereafter referred to as “unlisted stock, etc.” in this paragraph), however, the same shall not apply to cases where such grounds prescribed by the Presidential Decree exist, such as cases where no inherited property exists except for unlisted stocks, etc.; hereafter the same shall apply in this Article] exceeds 1/2 of the value of the relevant property, and the amount of the inheritance tax or gift tax paid is in excess of 10 million won, the head of tax office having jurisdiction over the place of the tax payment may, upon application by the taxpayer, permit a payment in kind, limited to the real estate and securities concerned, pursuant to the Presidential Decree: Provided, That where the management and disposal of a property for which an application has been filed for a payment in kind are recognized as inappropriate, permission for such payment in kind may not be granted. <Amended by Act No. 6048, Dec. 28, 1999; Act No. 8828, Dec. 31, 2007>(2) The scope of securities payable in kind, the case where management and disposal are recognized as inappropriate, and other necessary matters concerning procedures for payment in kind shall be prescribed by the Presidential Decree. <Newly Inserted by Act No. 6048, Dec. 28, 1999>

(1) In case where inherited property includes property falling under one of the following subparagraphs, the head of a tax office having jurisdiction over the place of the tax payment shall defer the collection of the amount of inheritance tax which is proportionate to the equivalent value of such property, calculated pursuant to the Presidential Decree: <Amended by Act No. 6301, Dec. 29, 2000; Act No. 6780, Dec. 18, 2002; Act Nos. 8346 & 8347, Apr. 11, 2007>1. Cultural heritage data pursuant to Article 2 (2) 3 of the Cultural Heritage Protection Act and the registered cultural property pursuant to Article 47 (2) of the same Act (hereafter referred to as “cultural heritage data, etc.” in this Article) and the lands within the protected area pursuant to Article 9 (1) of the same Act, which are the lands as prescribed by the Presidential Decree; and2. As museum material or art gallery material (hereafter referred to as “museum material” in this Article) registered pursuant to the provisions of the Museum and Art Gallery Support Act, property which is being exhibited or preserved in a museum or an art gallery (with respect to private museums or private art galleries, limited to cases falling under public service corporations, etc.) pursuant to the provisions of the Museum and Art Gallery Support Act.(2) In case where a successor or a testamentary donee who received, through succession, cultural heritage data, etc. or museum data either transfers such property, for counter value, or owing to other causes, as prescribed by the Presidential Decree, withdraws the museum data, the head of tax office having jurisdiction over the place of the tax payment shall promptly collect such inheritance tax whose collection was originally deferred. <Amended by Act No. 6780, Dec. 18, 2002>(3) In cases where, during the period of the deferment of collection, under the provisions of paragraph (1), through the death of the successor or the testamentary donee who holds in his possession cultural heritage data, etc. or museum data, the succession commences again, the head of tax office having jurisdiction over the place of the tax payment shall revoke the levy decision pertaining to such inheritance tax amount whose collection was deferred, and he shall not levy such revoked inheritance tax amount again. <Amended by Act No. 6780, Dec. 18, 2002>(4) A person who desires to receive a deferment of collection, pursuant to the provisions of paragraph (1), shall offer security equivalent to such deferred amount of inheritance tax. In such cases, with respect to the offering of the security, the provisions of Article 71 shall apply mutatis mutandis.(5) In applying the provisions of paragraph (1), it shall include cases where the successor chooses to exhibit or preserve in such a museum or art gallery as prescribed by the Museum and Art Gallery Support Act, pursuant to the Presidential Decree, those museum material or art gallery material, among inherited property, within the report deadline (in cases where the museum or the art gallery is being established, should there be compelling cause, it means six months from the last day of the month to which the date of expiration of such cause belongs) under the provisions of Article 67. <Amended by Act No. 8828, Dec. 31, 2007; Act No. 9269, Dec. 26, 2008>

The provisions of Article 74 (1) 2 and (2) through (4) shall apply mutatis mutandis to the gift tax. In such cases, in the main sentence of Article 74 (1), the term “inherited property” shall be regarded as “donated property”, the term “amount of inheritance tax” as “amount of gift tax”, and in paragraph (2) of the same Article, the term “successor or testamentary donee who received through succession” shall be regarded as “donee”, the term “inheritance tax” as “gift tax”, and in paragraph (3) of the same Article, the term “successor or testamentary donee” shall be regarded as “donee”, the term “cases where succession commences again” as “cases where succession commences”, and in paragraphs (3) and (4) of the same Article, the term “inheritance tax amount” shall be regarded as “gift tax amount”, respectively.

(1) The head of tax office, etc. shall determine the tax base and the tax amount based on the report, pursuant to the provisions of Article 67 or 68: Provided, That in case where the taxpayer has not filed a report or there is an omission or an error in the reported tax base or the tax amount, the head of tax office, etc. shall investigate such tax base and tax amount, and make a determination.(2) In case where there is a cause falling under one of the subparagraphs of Article 14 (1) of the National Tax Collection Act, the head of tax office, etc. notwithstanding the provisions of paragraph (1), may at any time, even prior to the time limit for payment, pursuant to the provisions of Article 67 or 68, determine the tax base and the tax amount. <Amended by Act No. 8828, Dec. 31, 2007>(3) The head of tax office, etc. shall determine the tax base and the tax amount within a period (hereinafter referred to as a “legal decision period”), as prescribed by the Presidential Decree, starting from the date on which he received the report, pursuant to the provisions of paragraph (1): Provided, That in case where the head of tax office, etc. is unable to make a determination within such a period, due to there being compelling cause such as an extended period, etc. required in the investigation of inherited property or donated property, or appraisal, etc. of such property, he shall notify the successor, testamentary donee, or donee of such cause.(4) In case where the head of tax office, etc. is either unable to determine the tax base or the tax amount, pursuant to the provisions of paragraph (1) or (2), or after determination, discovers that there is an omission or an error in such tax base or tax amount, he shall promptly investigate such tax base and tax amount and make a determination or a revision.(5) In view of the equivalent value of the inherited property determined pursuant to the provisions of paragraph (1) or (2) being not less than 3 billion won, in applying the provisions of paragraph (4), in case, after the commencement of succession and within a period as prescribed by the Presidential Decree, the equivalent value of the real estate, stocks, or other major assets, as prescribed by the Presidential Decree, held in possession by the successor significantly increased, in comparison with the value of such property at the time of the commencement of succession, the head of tax office, etc. shall investigate, pursuant to the Presidential Decree, as to whether or not there is an omission or an error in such determined tax base or tax amount: Provided, That this shall not apply to such cases where the successor has proven the origin of the funds pertaining to such increased property under the conditions as prescribed by the Presidential Decree.

The head of tax office, etc. shall notify the successor, testamentary donee, or donee, pursuant to the Presidential Decree, of the tax base and the tax amount, determined by the provisions of Article 76. In this case, should the successors or the testamentary donees be not less than two, only one person of the two need be notified, pursuant to the Presidential Decree, and the force of such notification shall extend to all of the successors or testamentary donees.

(1) and (2) Deleted. <by Act No. 8139, Dec. 30, 2006>(3) In case where the report which is to be submitted, pursuant to the provisions of Article 48 (5), is either not submitted, pursuant to the provisions of the same paragraph of the same Article, or the submitted report is unclear, pursuant to the Presidential Decree, the head of tax office, etc. shall collect an amount equivalent to 1 percent of the amount of the inheritance tax or the amount of the gift tax that is equivalent to the amount of the portion of such tax for which a report was not submitted or about which is unclear.(4) The head of tax office, etc. shall, where a public service corporation, etc., after the elapse of the time limit referred to in any subparagraph of Article 49 (1), holds the stocks, etc. in excess of the possession standard of the stocks, etc. described in the provisions of the same paragraph as of the last day of the time limit set in any subparagraph of the same paragraph (as of the last day of the taxation period for the income tax falling short of such possession standards or as of the last day of the business year for the corporation tax in case that the provisions of the proviso of the same paragraph are applied), add an amount equivalent to 5/100 of the market price as of the end of every year of such stocks, etc. held by such public service corporation to a tax amount to be paid by such public service corporation, etc. under the conditions as prescribed by the Presidential Decree. In this case, the period for imposition of such additional tax shall not exceed 10 years. <Amended by Act No. 6048, Dec. 28, 1999>(5) In a case where a public service corporation, etc. fails to perform its reporting duty, etc. pertaining to tax verification by outside experts, under the provisions of Article 50 (1) and (2), or fails to perform its duty of drawing up and keeping its books and records, pursuant to the provisions of Article 51, the head of tax office, etc. shall collect as inheritance taxes or gift taxes an amount calculated by multiplying 0.0007 by the sum total of the receipt amounts of the income tax taxable period or the corporation tax fiscal year, as prescribed by the Presidential Decree, and the value of property received through contribution during the taxable period or the fiscal year: Provided, That this shall not apply to such cases where the Presidential Decree determines it, by taking into account the special qualities of the public service corporation, etc., the size of the property received through contribution, and the actual results of its operation of public projects.(6) The head of tax office, etc. shall, where there are directors in excess of the fixed number of directors, or officers and employees in excess of the fixed number of directors described in the provisions of Article 48 (8), additionally impose a full amount equivalent to direct and indirect expenses that are prescribed by the Presidential Decree and paid in relation to those persons every year to the calculation of a tax amount to be paid by a public service corporation, etc. concerned under the conditions as prescribed by the Presidential Decree. <Newly Inserted by Act No. 6048, Dec. 28, 1999>(7) The head of tax office, etc. shall, where any public service corporation, etc. holds the stocks, etc. in excess of the possession standard of the stocks, etc. for any domestic corporation under the provisions of Article 48 (9), additionally impose an amount equivalent to 5/100 of the market price of the stocks, etc. held by such public service corporation, etc. in excess of the possession standard of the stocks, etc. as of the end of every business year to the calculation of the tax amount to be paid by such public service corporation, etc. under the conditions as prescribed by the Presidential Decree. <Newly Inserted by Act No. 6048, Dec. 28, 1999>(8) The head of tax office, etc. shall, where any public service corporation, etc. advertises or publicizes under the provisions of Article 48 (10), additionally impose an amount equivalent to expenses paid directly in relation to such act to the calculation of an tax amount to be paid by such public service corporation, etc. under the conditions as prescribed by the Presidential Decree. <Newly Inserted by Act No. 6048, Dec. 28, 1999>(9) The head of tax office, etc. shall, in case where the public service corporation, etc. falls under Article 48 (2) 4-2, levy the amount equivalent to 10/100 of unused amounts from among the operating income or proceeds from sale by adding it to the tax amount payable by the relevant public service corporation, etc. under the conditions as prescribed by the Presidential Decree. <Newly Inserted by Act No. 6301, Dec. 29, 2000>(10) Where a public service corporation, etc. falls under any of the following subparagraphs, the head of tax office, etc. shall impose the amount in the relevant subparagraph by adding to the tax amount that the relevant public service corporation, etc. shall pay as prescribed by the Presidential Decree: <Newly Inserted by Act No. 8828, Dec. 31, 2007>1. Where an exclusive account is not used, among the cases falling under any subparagraph of Article 50-2 (1): Amount equivalent to 5/1,000 of the amount that has not used an exclusive account; or2. Where an exclusive account pursuant to Article 50-2 (3) has not been opened or reported: The larger amount among amounts in the following items:(a) Amount equivalent to 5/1,000 of the total amount of revenue relating to a direct public project of the taxation period or business year during which an exclusive account has not been opened or reported; and(b) Amount equivalent to 5/1,000 of the total amount of turnover pursuant to subparagraphs of Article 50-2 (1).(11) Where a public service corporations, etc. fails to make public announcement or correction requested by the Commissioner of the National Tax Service within the specified period of time, in cases of not making public announcement on the statement of accounts pursuant to Article 50-3 or there are mistakes in the details of public announcement, the head of tax office, etc. shall impose an amount equivalent to 5/1,000 of the total amount of assets of the public service corporation, etc. concerned as of the last day of taxation period or business year in which public announcement has to be made by adding to the tax amount to be paid by the relevant public service corporation, etc. <Newly Inserted by Act No. 8828, Dec. 31, 2007>(12) Where the person obligated to submit payment details, etc. under Article 82 (1), (3), (4) or (6) fails to submit the payment details, etc., or has submitted them with omissions, or part of the submitted payment details, etc. is obscure, the head of tax office, etc. shall collect an amount equivalent to 2/100 (2/10,000 in cases of Article 82 (3) and (4)) of the amount corresponding to those which have not been submitted, or which have been submitted with omissions or to the part which is obscure by adding it to the income tax or corporation tax. In such cases, additional tax shall be collected even if no tax amount calculated exists. <Newly Inserted by Act No. 9269, Dec. 26, 2008>(13) Where payment details, etc. are submitted within one month after the elapse of deadline for submission in applying paragraph (12), an amount equivalent to 1/100 (1/10,000 in cases of Article 82 (3) and (4)) shall be collected by adding it to the income tax or corporation tax. In such cases, additional tax shall be collected even if no tax amount calculated exists. <Newly Inserted by Act No. 9269, Dec. 26, 2008>

(1) In cases where a person makes a report on his inheritance tax base and tax amount pursuant to the provisions of Article 67, or a person is subject to the determination or revision of the inheritance tax base and tax amount pursuant to the provisions of Article 76, and there arises a cause falling under any of the following subparagraphs, he may request a determination or a revision, pursuant to the Presidential Decree, within six months from the date on which such cause arose:1. In cases where, due to a cause determined by the Presidential Decree, such as an action, etc. to demand the recovery of succession pertaining to the inherited property, there is a change in the relationship of the successors, as at the commencement date of succession, to the value of inherited property; and2. In cases where, due to a cause determined by the Presidential Decree, such as an expropriation of the inherited property, etc. for up to one year after the commencement of inheritance, the value of the inherited property significantly depreciates.(2) In cases where the person subjected to a determination or revisionof the gift tax under Article 37, inherits or receives a donation of the relevant real estate from the real estate owner during the period of gratuitous use of real estate prescribed by the Presidential Decree, pursuant to the method of calculating the benefits of gratuitous use of real estate under paragraph (3) of the same Article, or comes not to use the relevant real estate gratuitously due to the reasons prescribed by the Presidential Decree, he may request the determination or revision under conditions prescribed by the Presidential Decree within three months from the date of occurrence of the said reasons. <Amended by Act No. 7010, Dec. 30, 2003>

(1) The head of the administrative agency which received a death report, pursuant to the provisions of the Act on the Registration, etc. of Family Relationship, shall inform the head of competent tax office, pursuant to the Presidential Decree, of such fact. <Amended by Act No. 8435, May 17, 2007>(2) The head of the administrative agency which received a report of a burial, etc., pursuant to the provisions of the Funeral Services, etc. Act, shall inform the head of tax office concerned, pursuant to the Presidential Decree, of such fact. <Amended by Act No. 8828, Dec. 31, 2007>(3) The Minister of Public Administration and Security, Special Metropolitan City Mayor, Metropolitan City Mayor, Do governor or Special Autonomous Do governor shall annually notify the Commissioner of the National Tax Service of data on the land, structures and houses which are subject to property tax as prescribed by the Presidential Decree. <Newly Inserted by Act No. 5582, Dec. 28, 1998; Act No. 8828, Dec. 31, 2007; Act No. 8852, Feb. 29, 2008>

(1) Persons, within Korean territory, falling under any of the following subparagraphs shall submit payment details to the head of tax office having jurisdiction over the place of payment, pursuant to the Presidential Decree:<Amended by Act No. 8828, Dec. 31, 2007>1. Persons who pay insurance benefits (including surrender value and early withdrawal) of life insurance or property insurance prescribed in Articles 8 and 34; or2. Persons who pay retirement allowances, severance pays, merit pays, or other amounts similar to these (excluding pensions).(2) Among persons paying out insurance moneys, pursuant to the provisions of paragraph (1) 1, persons who possess facilities for computer processing shall submit, through tapes and diskettes those payment details which were processed by computer, pursuant to the Presidential Decree. <Amended by Act No. 8828, Dec. 31, 2007>(3) Persons within Korean territory (including persons who have been entrusted with the duty of verifying the change or modification of holders or by the State or local governments) handling the change of holders or modifications in rights to use stocks, investment quotas, public loans, debentures, and specific facilities, shall submit the details on change or modification of holders to the head of tax office having jurisdiction over the place of tax payment, pursuant to the Presidential Decree. <Amended by Act No. 8828, Dec. 31, 2007>(4) Persons handling trust operations shall submit the particulars of trusts, among property entrusted pursuant to the Presidential Decree, whose trusters and beneficiaries are different to the head of the competent tax office.(5) In case there are matters of the payment records, etc. of paragraphs (1) through (3) corresponding to the payment records or the detailed statement of changed matters of stocks, etc. submitted, pursuant to the provisions of Article 119 of the Corporation Tax Act or Article 164 of the Income Tax Act, the payment details, etc. in question shall be regarded as having been submitted. <Amended by Act No. 5582, Dec. 28, 1998; Act No. 8828, Dec. 31, 2007>(6) The corporation issuing the convertible bonds, etc. stipulated in Article 40 (1) (excluding the corporation published by a corporation on the stock market or on KOSDAQ under the Securities and Exchange Act by means of soliciting the securities under Article 2 (3) of the same Act, and including the underwriters pursuant to the same Act), shall submit the details on the issuance of the relevant convertible bonds, etc. and on their underwriters to the head of competent tax office, under the conditions as prescribed by the Presidential Decree. <Newly Inserted by Act No. 6301, Dec. 29, 2000; Act No. 7010, Dec. 30, 2003; Act No. 8828, Dec. 31, 2007>

(1) In an inquiry for the determination or revision of the inheritance tax or gift tax by the head of tax office, etc. pursuant to the provisions of Article 76, the Commissioner of the National Tax Service (including the Commissioner of the Regional Tax Office; hereafter in this Article the same shall apply), notwithstanding the provisions of Article 4 of the Act on Real Name Financial Transactions and Guarantee of Secrecy, inquire en bloc heads of financial institutions described in the provisons of subparagraph 1 of Article 2 of the same Act as to the financial property to be used as taxation data of any successor or any person to be succeeded, or any donor or any donee who is subject to the application of the provisions of Article 85 (1) and suspected of evading his inheritance tax or gift tax in the light of his occupation, age, financial state and income return, etc. (hereafter in this article referred to as a “person to be succeeded, etc.”). <Amended by Act No. 5493, Dec. 31, 1997; Act No. 6048, Dec. 28, 1999; Act No. 8828, Dec. 31, 2007>(2) The head of the financial institution which received an inquiry pertaining to financial property, pursuant to the provisions of paragraph (1), shall, without delay, submit such data for assessment for which an inquiry was received, to the Commissioner of the National Tax Service.(3) In applying the provisions of paragraph (1), the Commissioner of the National Tax Service shall make a requisition from the head of the financial institution, based on a document with the mentioned items of the following subparagraphs: <Amended by Act No. 5493, Dec. 31, 1997>1. Personal matters of the person to be succeeded, etc.;2. Purpose of utilization; and3. Summary details of data, etc. being requested.

In case it is necessary in the execution of his duty or in an investigation pertaining to an inheritance tax or a gift tax, a public official engaged in tax affairs, may, with respect to persons falling under one of the following subparagraphs, question such persons, or investigate related books and records, documents, and other things, or order the submission of such:1. A taxpayer or a person deemed to have a tax liability;2. A person to be succeeded, or a person either deemed to have given or received property of a person of subparagraph 1, or deemed to have a right to receive or give such property; and3. A person having a duty to submit payment records, etc., under the provisions of Article 82.

(1) With respect to persons as prescribed by the Presidential Decree, by taking into account the size of their properties, income levels, etc., the Commissioner of the National Tax Service, for the purpose of efficiently carrying out levy and collection operations of inheritance taxes or gift taxes against such persons, shall annually manage, by individual classification, the data for assessment being submitted by the taxpayers, etc., pursuant to the Acts relating to taxes, and the property data of real estate, financial properties, etc., gathered for taxation or collection purposes, by means of a computer system, so as to be able to be used for the aforementioned purpose.(2) The Commissioner of the National Tax Service shall neither use the data for assessment of property for purposes other than taxation nor leak or offer such data to a third party, and no persons shall request the provision or use of the data for assessment of property, under the provisions of paragraph (1): Provided, That the above shall not apply to such cases which fall under one of the provisions of the subparagraphs of Article 81-8 (1) of the Basic Act for National Taxes. <Amended by Act No. 8828, Dec. 31, 2007>(3) The request and provision of the data for assessment of property, pursuant to the provisions of the proviso of paragraph (2), shall be such that the specific purpose of such request and provision shall be clearly expressed, and shall be within the scope of such that it does not give harm to the essence of the taxpayer’s confidentiality guarantee, and the provided data for assessment of property shall be used only for the original purposes requested, and shall not be leaked to a third party.(4) A person making a requisition of the data for assessment of property, as prescribed under the provisions of the proviso of paragraph (2), shall make the requisition from the Commissioner of the National Tax Service, based on a document with the mentioned items of the following subparagraphs:1. Personal matters of the taxpayer;2. Purpose of utilization; and3. Summary details of the property and assessment data being requested.(5) Detailed matters necessary with respect to the management and operation of the individual classification computer system pertaining to the data for assessment of property, under the provisions of paragraph (1), shall be prescribed by the Presidential Decree.

Local governments and other public organizations shall not levy value added taxes on inheritance taxes or donation gift taxes.

ADDENDA

This Act shall enter into force on January 1, 1997.

This Act shall be applicable beginning with the very first succession which commences or property being donated, after this Act enters into force.

Among designated cultural heritage whose taxes were deferred from collection, pursuant to the preceding provisions of Article 8-3 (1) 1, in case, at the time this Act enters into force, there is heritage which falls under one of the amended provisions of subparagraph 2 of Article 12, the head of tax office concerned shall revoke the levy decision on the amount of such inheritance taxes whose collection was deferred and the amount of such revoked inheritance taxes shall not again be levied.

(1) The amended provisions of Articles 16 (1) and 48 (2) 1 through 3 and 5, and paragraph (3) of the same Article shall be applicable beginning with the occurrence of the main taxable cause, with respect to property received, through contribution, pursuant to the preceding provisions, at the time this Act enters into force.(2) The amended provisions of Article 48 (2) 4 shall be applicable beginning with the very first sale of property received, through contribution, under the preceding provisions, at the time this Act enters into force.

At the time this Act enters into force, should an inheritance deduction, pertaining to farmland, grazing land, forest land, etc., be received, pursuant to the provisions of the preceding Article 11-3 (1) and (2), in case which falls under the provisions of the preceding Article 11-3 (4), after the enforcement of this Act, inheritance tax shall be levied, pursuant to the preceding provisions.

The amended provisions of Articles 28 and 58 shall be applicable beginning with the very first inheritance tax or gift tax being determined after the enforcement of this Act.

With respect to stocks, etc. either entered in the register of stockholders or in the register of members under the names of third parties, or entered with a change of holders at the time this Act enters into force, the amended provisions of Article 43 (1) 2 shall be applicable beginning with the very first stocks, etc. which is being converted back to the name of the true owner, after the enforcement of this Act.

(1) The amended provisions of Articles 50 and 51 shall be applicable beginning with the tax whose taxable period or fiscal year commences the earliest, after the enforcement of this Act.(2) A public service corporation, etc. incorporated prior to the enforcement of this Act shall receive an initial tax verification by outside experts with respect to the period up to the expiration date of the taxable period or the fiscal year within which falls the day previous to the date on which it becomes 2 years after the enforcement of this Act.(3) A public service corporation, etc. incorporated at the outset, after the enforcement of this Act, shall receive an initial tax verification by outside experts with respect to the period up to the expiration date of the taxable period or the fiscal year within which falls the date on which 2 years has elapsed from the incorporation date of the public service corporation, etc. concerned.

(1) The amended provisions of Article 61 (1) 1 being applicable with respect to property for which the succession commenced prior to December 31, 1990, the appraisal of the lands among such inherited property reported within the report deadline of the inheritance tax shall be based on the value appraised pursuant to one of the following subparagraphs, as of the commencement date of succession:1. Concerning specific regions, as determined by the Commissioner of the National Tax Service, the value appraised in accordance with a multiplication method, pursuant to the provisions of Article 9 (1) of the Amended Provisions Among Inheritance Tax and Gift Tax Act, of Act No. 4022; and2. With respect to regions besides those of subparagraph 1, the current base value used taxation under the Local Tax Act; prior to it being amended to Act 4995.(2) Appraised values, prior to the enforcement of this Act, pertaining to properties having values appraised pursuant to the provisions of the preceding Article 9 (2), shall be regarded as values appraised pursuant to the amended provisions of Article 61 (2), and appraisals, after the enforcement of this Act, pertaining to buildings assessed and publicly notified by the Commissioner of the National Tax Service, pursuant to the amended provisions of Article 61 (2), shall be applicable beginning with those buildings either being donated or unto which succession commences, after January 1, 1998.

The amended provisions of Articles 71 and 73 shall be applicable beginning with the first tax for which payment in kind and payment by annual installments is applied.

The amended provisions of Article 82 (1) through (4) shall be applicable beginning with the first payment being paid out or such fact being handled, after the enforcement of this Act.

The amended provisions of Article 83 shall be applicable beginning with the first inheritance tax being determined, after the enforcement of this Act.

Prior to the enforcement of this Act, any inheritance taxes or gift taxes levied or to be levied with respect to successions which commenced or property donated shall be pursuant to the preceding provisions.

In case, at the time of the enforcement of this Act, the preceding Inheritance Tax and Gift Tax Act or a provision thereof has been cited in other Acts and subordinate statutes, and if, among this Act, there is a provision falling into such Acts and subordinate statutes, then the citation shall be regarded as having been of this Act or a provision falling into this Act, in place of the preceding provisions.

ADDENDA <Act No. 5493, Dec. 31, 1997>

This Act shall enter into force on the date of its promulgation.

(1) The amended provisions of the Inheritance Tax and Gift Tax Act as referred to in Article 13 (3) of the Addenda shall be applicable beginning with the inheritance tax or gift tax determined for the first time after this Act enters into force.(2) Omitted.

ADDENDA <Act No. 5498, Jan. 8, 1998>

This Act shall enter into force on April 1, 1998. (Proviso Omitted.)

ADDENDA <Act No. 5582, Dec. 28, 1998>(1) (Enforcement Date) This Act shall enter into force on January 1, 1999.(2) (General Application Example) This Act shall apply to successions commencing or donations made on or after the enforcement date of this Act.(3) (Applicable Cases on Notification of Data on Taxables of Aggregate Land Tax) The amended provisions of Article 80 (3) shall apply to the aggregate land taxes imposed (including those which are subject to non-taxation, reduced or exempted, and not collectable because the amount is too small) on or after the enforcement date of this Act.(4) (Transitional Measures due to Extension of Total Period) In the imposition of the inheritance and gift taxes the duty for payment of which is established after the enforcement of this Act, the value of a donation for which the total period has not passed under the previous provisions of Articles 13 (1), 14 (1) 3, 47 (2), and 53 (1) shall, notwithstanding their amendments, be the total value of donations made prior to the enforcement of this Act calculated by applying the total period under the respective previous provisions concerned, and the value of the donation for which the total period has passed under the previous provisions of Articles 13 (1), 14 (1) 3, 47 (2), and 53 (1) shall not include the value of a donation made prior to the enforcement of this Act as prescribed by the amendments of the said Articles.(5) Omitted.ADDENDA <Act No. 6048, Dec. 28, 1999>

This Act shall enter into force on January 1, 2000: Provided, That the amended provisions of Article 78 (4) shall enter into force on the date its promulgation and the amended provisions of Article 61 (1) 2 shall enter into force on July 1, 2000.

This Act shall apply starting with the portion of any inheritance or any donation made for the first time after the enforcement of this Act: Provided, That the amended provisions of Article 41-3 shall apply starting with the portion of the stocks, etc. and convertible bonds, etc. acquired for the first time after the enforcement of this Act.

The amended provisions of Article 48 (8) through (10) and Article 78 (6) through (8) shall apply to the portion of the business year commencing for the first time after the enforcement of this Act.

The amended provisions of Articles 71 through 73 shall apply to the portion of any payment in annual installments and any payment in kind for which an application is filed for the first time after the enforcement of this Act.

In imposing any inheritance tax and any gift tax that come into a tax payment liability after the enforcement of this Act, where the portion of a donation made prior to the enforcement of this Act is taxed by adding up in accordance with the provisions of Articles 13 and 47 and such added-up tax base exceeds 3 billion won, a tax amount to be calculated shall be calculated according to the classification falling under any of the following subparagraphs notwithstanding the amended provisions of Article 26:1. An amount added up by an amount falling under any of the following items in case that the portion of any donation prior to the enforcement of this Act exceeds 3 billion won: and(a) A tax amount calculated according to the previous provisions of Article 26 with respect to the portion of any donation made prior to the enforcement of this Act; and(b) An amount calculated by multiplying a tax base corresponding to a property inherited or donated after the enforcement of this Act by 50/100;2. An amount added up by the amount falling under any of the following items in case that the portion of a donation made prior to the enforcement of this Act falls short of 3 billion won:(a) With respect to the portion of any donation made prior to the enforcement of this Act, a tax amount calculated according the previous provisions of Article 26;(b) An amount obtained by deducting the amount of (a) from an amount calculated by applying the tax rates described in the provisions of Article 26 with 3 billion won taken as a tax base; and(c) An amount obtained by multiplying the balance resulting from the deduction of 3 billion won from a tax base added up by the portion of a donation made prior to the enforcement of this Act by 50/100.

In applying the amended provisions of Articles 41 and 41-4, any person who receives financial loans, property and rendering of services, etc. as of the day that this Act is enforced shall be deemed to receive them anew on January 1, 2000.

(1) Where any public service corporation, etc. that holds the stocks, etc. in excess of the possession standard of the stocks, etc. in accordance with the amended provisions of Article 48 (1) and (2) 2 as of the day that this Act is enforced disposes of such excess stocks, etc. by December 31, 2001, the amended provisions of Article 78 (4) shall not apply thereto.(2) Where any public service corporation, etc. in which contributors and any persons in a special relationship with such contributors hold office as directors in excess of 1/5 of the fixed number of directors in accordance with the amended provisions of Article 48 (8) as of the day that this Act is enforced reduces the excess number of directors corresponding to not less than 50/100 by December 31, 2000 and the remaining excess number of directors by December 31, 2001, the amended provisions of Article 78 (6) shall not apply thereto.(3) Where any public service corporation, etc. that holds the stocks, etc. in excess of the possession standard of the stocks, etc. for domestic corporations in accordance with the amended provisions of Article 48 (9) as of the day that this Act is enforced disposes of not less than 50/100 of such excess stocks, etc. by December 31, 2000 and the remaining stocks, etc. by December 31, 2001, the amended provisions of Article 78 (7) shall not apply thereto.

ADDENDA <Act No. 6124, Jan. 12, 2000>

This Act shall enter into force on the date of its promulgation.

ADDENDA <Act No. 6301, Dec. 29, 2000>

This Act shall enter into force on January 1, 2001: Provided, That the amendments to Articles 48 (2) 3, 4, 4-2 and 78 (9) shall enter into force on the date of its promulgation.

This Act shall be applicable from the portion of inheritance first commenced or first gifted after the enforcement of this Act.

The amendments to subparagraph 2 of Article 12 and Article 74 (1) 1 shall be applicable from the portion of decision on the inheritance tax first done after the enforcement of this Act.

(1) The amendments to Articles 16 (2), 48 (1) and (2) 2 shall be applicable from the portion of decision on the inheritance tax or the gift tax first done after the enforcement of this Act.(2) The amendments to Articles 48 (2) 3, 4, 4-2 and 78 (9) shall be applicable from the portion of business year within which falls the date of promulgation of this Act.

(1) The amendments to Article 40 (1) 2 shall be applicable from the portion of first acceptance or acquisition of the convertible bonds, etc. after the enforcement of this Act.(2) The amended provisions of Article 82 (6) shall be applicable from the portion of first issuance of the convertible bonds, etc. after the enforcement of this Act.

The amended provisions of Articles 70 (2) and 71 (2) 2 shall be applicable from the portion of first application for the payment in installments and annual installments after the enforcement of this Act.

The amended provisions of Article 81 (3) shall be applicable from the portion of first application for payment of inherited property to the financial institution by the successors, etc. who are non-residents after the enforcement of this Act.

ADDENDA <Act No. 6780, Dec. 18, 2002>

This Act shall enter into force on January 1, 2003: Provided, That the amended provisions of Articles 16 (2) and (4), and 48 (2) and (4) shall enter into force on the date of its promulgation.

This Act shall be applicable from the portion of inheritance first commenced or first gifted after the enforcement of this Act.

The amended provisions of Articles 16 (2) and (4), 48 (2) and (4) shall be applicable from the portion of business year whereto belongs the date of promulgation of this Act.

The amended provisions of Article 34 (1) shall be applicable from the portion of paying the premiums with the money first donated after the enforcement of this Act.

The amended provisions of Article 41-2 (1) and (2) shall be applicable from the portion of ownership first acquired after the enforcement of this Act.

The amended provisions of Articles 41-3 and 41-5 shall be applicable from the portion of the stocks, etc. first donated or acquired with compensation after the enforcement of this Act.

The amended provisions of Article 74 (1) through (3) shall be applicable from the portion of application first filed after the enforcement of this Act.

The amended provisions of Article 78 (2) 2 shall be applicable from the portion for which the deadline of payment first arrives after the enforcement of this Act.

With regard to the portion whose ownership has been acquired before the enforcement of this Act, and the change of holders under amended provisions of Article 41-2 (1) and (2) has not been made as of the date of enforcement of this Act, it shall be deemed to have acquired an ownership on the date of enforcement of this Act.

In case where the amount deducted under the previous provision for the portion of donation before the enforcement of this Act exceeds 300 million won, such excessive amount shall be deducted from the taxable amount of gift taxes, notwithstanding the amended provisions of Article 53 (1) 1.

With regard to the dispositions to be made by applying the provisions of Article 9 (1) of the previous Inheritance Tax and Gift Tax Act (referring to the Act prior to the amendment by Act No. 4805 on December 22, 1994), and those to have been made (limited to those against which any objection, request for examination, request for adjudication, or administrative litigation, has been instituted), the provisions of Article 9 (1) and (2) of the previous Inheritance Tax and Gift Tax Act (referring to what has been amended by Act No. 4805) shall be applicable.

ADDENDA <Act No. 7010, Dec. 30, 2003>

This Act shall enter into force on January 1, 2004.

This Act shall be applicable from the portion of commencing inheritance or of donating after the enforcement of this Act.

The amended provisions of Article 34 (1) shall be applicable from the portion of paying the premiums with the assets donated after the enforcement of this Act.

The amended provisions of Article 35 shall be applicable from the portion of taking over or transferring after the enforcement of this Act.

The amended provisions of Article 37 shall be applicable from the portion of using real estate gratuitously after the enforcement of this Act. In this case, with regard to the portion of gratuitous use of real estate from prior to the enforcement of this Act, and the portion of continued gratuitous use at the time of the enforcement of this Act, it shall be deemed to newly use the real estate on the date of enforcement of this Act.

The amended provisions of Articles 39-3 shall be applicable from the portion of investments in kind after the enforcement of this Act.

The amended provisions of Article 41-5 (1) shall be applicable from the portion of receiving a donation of stocks, etc. or acquiring for value after the enforcement of this Act.

(1) The amended provisions of Article 42 (1) 1 and 2 shall be applicable from the portion of using the assets or letting to use and of providing service or receiving its provision after the enforcement of this Act.(2) The amended provisions of Article 42 (1) 3 shall be applicable from the portion of trade to increase or decrease the corporate capital (including the investment amount), or the portion of making the transfer or takeover of business, exchange of business and organizational change of corporation etc. after the enforcement of this Act.(3) The amended provisions of Article 42 (4) shall be applicable from the portion of occurrence of causes for increasing the assets value under the same paragraph after acquiring the assets due to the causes falling under each of the same paragraph, after the enforcement of this Act.

The amended provisions of proviso of Article 44 (2) and (4) shall be applicable from the portion of determining the gift tax after the enforcement of this Act.

The amended provisions of Article 45-2 (3) shall be applicable from the portion of submitting the documents for shareholders, etc. and the specifications of changing status of stocks, etc. under the provisions of Articles 109 (1) and 119 of the Corporation Tax Act after the enforcement of this Act.

The amended provisions of Article 71 (2) 2 shall be applicable from the portion of filing an application for payment by annual installments after the enforcement of this Act.

The amended provisions of Article 78 (1) and (2) shall be applicable from the portion of arrival of the deadline for payment after the enforcement of this Act.

The amended provisions of Article 82 (6) shall be applicable from the portion of issuing the convertible bonds, etc. after the enforcement of this Act.

ADDENDA <Act No. 7335, Jan. 14, 2005>

This Act shall enter into force on the date of its promulgation.

ADDENDA <Act No. 7580, Jul. 13, 2005>

This Act shall enter into force on the date of its promulgation.

This Act shall apply, starting with the portion of any inheritance that is first commenced and any donation that is first made after its promulgation.

In case where the prices of the collective housing provided for in the amended provisions of Article 61 (1) 4 are nonexistent at the time of the enforcement of this Act, the previous provisions of Article 61 (3) shall apply to the calculation and the publication of the prices of the collective housing on or before the time that the Commissioner of the National Tax Office determines and publishes the prices of the relevant collective housing pursuant to the provisions of the proviso of Article 17 (1) of the Public Notice of Values and Appraisal of Real Estate Act, notwithstanding the amended provisons of Article 61 (1) 4.

The amended provisions of Article 61 (8) shall apply, starting with the portion that is first calculated and published after the enforcement of this Act.

ADDENDA <Act No. 8139, Dec. 30, 2006>

This Act shall enter into force on January 1, 2007. (Proviso Omitted.)

The additional tax that was imposed or is to be imposed pursuant to the provisions of the tax-related Act falling under each of the following subparagraphs before this Act enters into force, shall be governed by the previous provisions of the corresponding tax-related Act, notwithstanding the corresponding tax-related Act amended by Article 15 (1) through (7) of the Addenda:1. and 2. Omitted;3. The Inheritance Tax and Gift Tax Act: Article 78 (1) and (2); and4. through 7. Omitted.

ADDENDA <Act No. 8346, Apr. 11, 2007>

This Act shall enter into force on the date of its promulgation. (Proviso Omitted.)

ADDENDA <Act No. 8347, Apr. 11, 2007>

This Act shall enter into force on the date of its promulgation. (Proviso Omitted.)

ADDENDA <Act No. 8435, May 17, 2007>

This Act shall enter into force on January 1, 2008. (Proviso Omitted.)

ADDENDA <Act No. 8828, Dec. 31, 2007>

This Act shall enter into force on January 1, 2008: Provided, That the amended provisions of Articles 48 (9) and 78 (10) shall enter into force on January 1, 2009.

This Act shall apply beginning from a case where inheritance commences or a gift is made for the first time after this Act enters into force.

The amended provisions of the main text of the part other than the subparagraphs of Article 16 (2), proviso to the part other than the subparagraphs of Article 48 (1), and paragraphs (2) 2 and (11) of the same Article shall apply beginning from a case where stocks, etc. are contributed to a public service corporation, etc., or a public service corporation, etc. acquire stocks, etc. for the first time after this Act enters into force.

The amended provisions of Article 48 (9) shall apply beginning from a case where taxation period or business year begins for the first time after January 1, 2009.

The amended provisions of Article 50 (1) and (3) shall apply beginning from a case where taxation period or business year begins for the first time after this Act enters into force.

The amended provisions of Article 50-2 shall apply beginning from a case where revenue or expenditure received or disbursed by a public service corporation, etc. for the first time after this Act enters into force.

The amended provisions of Article 50-3 shall apply beginning from a case where taxation period or business year begins for the first time after this Act enters into force.

The amended provisions of Article 71 (1), (2) and (4) shall apply beginning from a case where the payment by annual installments is applied over the portion for which inheritance commences or a gift is made for the first time after this Act enters into force.

The amended provisions of the main text of Article 73 (1) shall apply beginning from a case where the payment in kind is applied over the portion for which inheritance commences or a gift is made for the first time after this Act enters into force.

(1) The amended provisions of Article 78 (10) shall apply beginning from a case where taxation period or business year begins for the first time after January 1, 2009.(2) The amended provisions of Article 78 (11) shall apply beginning from a case where taxation period or business year begins for the first time after this Act enters into force.

The amended provisions of Article 80 (3) shall apply beginning from a case where that is notified to the Commissioner of the National Tax Service for the first time after this Act enters into force.

(1) The amended provisions of Article 82 (1) 1 shall apply beginning from a case where a payment is made for the first time after this Act enters into force.(2) The amended provisions of Article 82 (3) shall apply beginning from a case where the details of the change of names or of modification are submitted for the first time after this Act enters into force.

Where a corporation falls under public service corporations, etc. at the time when this Act enters into force or falls under public service corporations, etc. before March 31, 2008, it may open and report an exclusive account between the date this Act enters into force and June 30, 2008, notwithstanding the amended provisions of Article 50-2 (3).

ADDENDA <Act No. 8852, Feb. 29, 2008>

This Act shall enter into force on the date of its promulgation. (Proviso Omitted.)

ADDENDA <Act No. 9269, Dec. 26, 2008>

This Act shall enter into force on January 1, 2009.

This Act shall apply beginning from the first inheritance or donation that commences or is given after this Act enters into force.

The amended provisions of Article 63 (3) shall apply beginning from the first succeeded or donated securities that are appraised after this Act entersinto force.

The amended provisions of Article 71 (1), (4) and (5) shall apply beginning from the first payment by annual installments that is applied after this Act enters into force.

The amended provisions of Article 78 (12) and (13) shall apply beginning from the first obligation to submit payment details, etc. that comes into existence after this Act enters into force.