Govn't to Close Gift and Estate Tax Loopholes

The government, in a move to curve the passing on of wealth by conglomerate owners and the rich through convertible bonds and bonds with warrants, will introduce amendments to the current gift and estate tax laws.

The Ministry of Finance and Economics announced on August 18 that it will introduce a bill to amend gift and estate taxes in the fall regular sesssion of the National Assembly to have the new laws in effect by next year.

When the bill becomes law, corporations issuing convertible bonds and bonds with warrants will be required to make a complete reporting, including the quantity, yield, and the names of the purchasers, to the tax authorities at the time of issuance. The move is intended to expedite investigations into possible illegal gifts and inheritances through the issuance of the convertible securities. The current laws require the issuer to report when the holders convert the securities to stocks for tax purposes.

A Ministry of Finance and Economy official said that the current gift and estate tax laws list specific cases when gifts and inheritance are illegal which makes it possible people to evade tax through the different loopholes in the current laws. The official added, "We plan to introduce amendments to close the loopholes that have allowed some people to evade taxes."

by Suh Kyung-ho