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Pedestrians walk past luxury fashion shops in the Gangnam district of Seoul on June 3, 2022. Photo by AFP |
According to The Korea Times, a Tuesday report by British consultancy Henley & Partners estimated that the number of Korean millionaires leaving the country last year doubled compared with the 1,200 recorded in 2024. The figure ranked South Korea fourth globally in millionaire outflows, behind the U.K., China and India. Korea JoongAng Daily reported that the U.S. and Canada were the most preferred destinations for wealthy Koreans relocating abroad.
The Global Wealth Report 2025, released by Swiss investment bank UBS in June last year, estimated that South Korea ranked 10th worldwide in the number of millionaires in 2024, with about 1.3 million individuals holding wealth exceeding US$1 million, reported The Korea Herald.
Business groups and industry observers have increasingly warned that South Korea’s inheritance tax system is accelerating the migration of capital and affluent residents.
“Korea’s inheritance tax rate of up to 60% may have been the main factor accelerating the migration of capital,” an official from the Korea Chamber of Commerce and Industry (KCCI) said.
According to KED Global, South Korea’s top inheritance tax bracket stands at 50%, the second-highest among OECD countries after Japan’s 55%. However, South Korea imposes an additional surcharge on controlling shareholders, pushing the effective rate to as high as 60%, more than double the OECD average of 27.1%.
While South Korea provides certain tax benefits for the inheritance of family businesses, the policy applies only to small- and mid-sized companies with assets below 500 billion won (US$419 million).
Under current regulations, only successors of small- and medium-sized enterprises are allowed to pay inheritance taxes in installments over 20 years. Heirs inheriting wealth from individuals or conglomerate founders must complete payments within 10 years.
Despite calls for reform, the National Assembly has suspended discussions on legislation aimed at reducing inheritance tax rates. The KCCI projects that inheritance tax revenue could surge to 35.8 trillion won by 2072, up from 9.6 trillion won in 2024, largely due to the rising number of taxpayers and delays in legal revisions.
Kang Seog Gu, executive director of the KCCI’s research division, warned that heavy inheritance taxes could have wider economic consequences.
“Heavy inheritance taxes have weakened corporate investment, put downward pressure on stock prices and forced the sale of controlling stakes,” Kang said.
The KCCI has urged policymakers to allow heirs of large family-run conglomerates to pay inheritance taxes in installments over 20 years. The business group also proposed expanding payment options by allowing inheritance taxes to be settled using publicly traded shares. It suggested that the government assess such shares based on their average market price over two to three years instead of the current two-month valuation period, which can expose heirs to market volatility.
“Diversifying payment methods is a practical way to avoid problems, as it can minimize declines in tax revenue and help preserve family-run businesses,” the KCCI said in a statement. “It can help preserve family-owned businesses while minimizing declines in tax revenue.”
Several major conglomerates have recently faced substantial inheritance tax burdens. LG Group Chairman Koo Kwang Mo, who inherited an 8.8% stake in LG Corp. in 2018, paid 720 billion won in inheritance tax. Lotte Group Chairman Shin Dong Bin also faced a tax bill exceeding 300 billion won following the death of the group’s founder and his father Shin Kyuk Ho in 2020.
Meanwhile, the family of late Samsung Group Chairman Lee Kun Hee has been paying inheritance taxes following his death in 2021, with the payments scheduled to be completed by April this year. Lee’s heirs, including his wife Hong Ra Hee and children Lee Jae Yong, Lee Boo Jin and Lee Seo Hyun, have sold Samsung Electronics shares multiple times to meet the tax obligations.
