A Study on the Introduction of Capital Gain Taxation in Corporate Succession
Asian Tax Journal Vol. 21 No. 1 (2020), pp. 165-184
Abstract
Long－term companies are disappearing as business owners are considering giving up their succession and considering the sale because of excessive inheritance tax burden. Companies that are the roots and stems of the national economy should not be reduced or dismantled because of the inheritance tax burden due to the legal formality of inheritance. In major foreign countries, the question of taxation performance and its effects are being abolished, and the inheritance tax has been abolished and replaced by capital gain tax. It is becoming counter to international trend. Considering the impact of corporate succession on the continuity of the enterprise and further on the national economy, the inheritance tax system needs to be reformed. The revised tax law of 2019 cannot be a fundamental solution by mitigating some after－care requirements, so it is necessary to reinforce the introduction of Settlement taxation when inheriting and easing the valuation of the largest shareholder premium. As a fundamental alternative, succession acquisition taxation(capital gain taxation) should be introduced to remove the obstacles to corporate succession due to excessive inheritance tax while maintaining tax equity. The succession of the company will be facilitated through the introduction of capital gain taxation on corporate succession, and it will not be a problem in terms of tax equilibrium because the capital gains for both the deceased and the heirs are taxed when the assets are disposed. As a concrete measure, the biggest problem of the current Taxation on Family Company Succession is the subject of limited application, so succession acquisition taxation should be applied to all companies, and the pre and post requirements must be greatly reduced.
Keywords
- Inheritance Tax
- Taxation on Family Company Succession
- Capital Gain Taxation
- Tax Equity
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