Published : 2014-01-13 19:48
Updated : 2014-01-13 20:31
South Korea needs to redefine what constitutes close family relations in its basic tax code law to reflect realistic social and economic conditions, a think tank belonging to an association of conglomerates said Monday.
According to the Korea Economic Research Institute, the research arm of the Federation of Korean Industries, South Korea maintains outdated taxation rules that define close blood and in-law relatives based on revisions made in 1974. It said such rules do not reflect the way people define relatives in the 21st century and conduct economic transactions.
The boundary of familial relations is important for conglomerates, which face stiffer taxes on business transactions that are conducted between people that by law are in “special relations.”
The law is meant to prevent unfair trading or tax evasion by using family members.
At present, the country’s tax codes define close family as direct ancestors, parents, spouses, siblings and up to second cousins who share the same great grandparents. It also includes first cousins by marriage. (Yonhap News)