The Korea Chamber of Commerce and Industry (KCCI) released a study Tuesday projecting that inheritance tax revenue would surge from 9.6 trillion won ($6.63 billion) in 2024 to 35.8 trillion won by 2072 if the current tax regime remains unchanged.
The sharp rise is attributed to an aging population, the KCCI projected, with the number of deaths among those aged 70 and above expected to increase by 2.6 times from 264,000 in 2025 to 687,000 in 2072.
Following the growth in elderly numbers, those subject to inheritance tax in Korea jumped roughly 13-fold to 21,193 in 2024 from 1,661 in 2002, while the tax share of total government revenue rose to 2.14 percent from 0.29 percent during the same period. The KCCI said this trend is transforming inheritance tax from a levy on the ultra-wealthy into one increasingly felt by middle-class households.
The chamber cited data from British immigration consultancy Henley & Partners showing Korea's net outflow of wealthy individuals trailing only the United Kingdom, China and India.
The United States and Canada are the most favored destinations among Korean millionaires seeking to relocate, according to the consultancy.
"Inheritance tax rates reaching 50 to 60 percent could be a primary factor accelerating capital flight overseas," the KCCI said in its report.
While ranking as the top 13th largest economy in the world by nominal GDP, South Korea's top rate of 50 percent is the second-highest after Japan's 55 percent, and can reach 60 percent when a surcharge on controlling stakes is applied.
The chamber's analysis of domestic economic data from 1970 to 2024 found a negative correlation between the ratio of inheritance tax revenue to gross domestic product and economic growth rates.
Under the current system, heirs of small and medium-sized enterprises engaged in family business succession can pay inheritance tax over a maximum of 20 years or defer payment for 10 years before beginning a 10-year installment plan.
Individual taxpayers and large corporations, however, are limited to 10-year installments with no grace period.
To ease the burden on taxpayers without significantly reducing government revenue, the KCCI proposed extending the installment payment period for general inherited assets from the current 10 years to 20 years, or introducing a minimum five-year grace period.
It also called for allowing in-kind tax payments using listed shares and extending the stock valuation period from two months to two or three years around the inheritance date.
"Mounting inheritance tax obligations are dampening corporate investment, creating upward pressure on stock prices during succession and forcing some business owners to sell their management stakes," said Kang Seok-gu, head of the KCCI's research division
"Flexible payment options for inheritance tax could boost business investment and revitalize the economy," Kang added.
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