Nine out of 10 young Korean entrepreneurs concerned about high inheritance tax

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Nine out of 10 young entrepreneurs in South Korea are concerned that the country’s current inheritance tax rate contracts entrepreneurial spirit.

According to a survey conducted by the Korea Enterprises Federation (KEF) on Sunday on 140 chief executive officers of venture startups in their 30s and 40s, 93.6 percent of respondents expressed concerns that the current inheritance tax undermines their willingness and entrepreneurial spirit.

The survey targeted entrepreneurs who have been in business for at least 3 years with annual sales of over 2 billion won ($1.47 million) in 2022.

The survey showed that 85 percent of those surveyed suggest that the country’s highest inheritance tax rate of 50 percent should be either abolished and replaced with a capital gains tax or reduced to the average level of the Organization for Economic Cooperation and Development (OECD) level at 25 percent.

Only 9.3 percent said that the current level is adequate while 4.3 percent believed it should be raised.

Korea’s top rate of inheritance tax is the second highest among OECD countries after Japan’s 55 percent and double the OECD average.

Furthermore, 96.4 percent of respondents said that the burden of inheritance tax leads business owners to be passive about boosting share prices or even prefer lower stock prices.

Almost 7 out of 10 respondents, in the meantime, said they do not wish to pass their businesses on to their children, citing management burdens.