Article 30-7 (Postponement of Payment of Gift Tax upon Succession of Family Business)

The head of the tax office with jurisdiction over the place of tax payment may grant postponement of payment for the amount determined by Presidential Decree, when a resident applies for postponement of gift tax payment, meeting all of the following requirements: 1. A resident aged 18 or over has received a gift of shares or equity interests (hereinafter referred to as "shares, etc." in this Article) in a family business (limited to small and medium-sized enterprises as prescribed by Presidential Decree. This shall apply mutatis mutandis hereinafter in this Article) for the purpose of succeeding the family business from parents aged 60 or over, in accordance with Presidential Decree. 2. Has not applied for the special tax treatment on gift tax under Article 30-5 or Article 30-6.

The head of the tax office with jurisdiction over the place of tax payment shall cancel or modify the permission under paragraph ① and collect the tax amount under the relevant subparagraph and the amount equivalent to interest calculated according to Presidential Decree, when a resident falls under any of the following subparagraphs without justifiable grounds prescribed by Presidential Decree: 1. When the resident ceases to be engaged in the family business: The entire amount of tax payment postponed. 2. When the equity interest of the resident who received the gift of shares, etc. decreases: The tax amount according to the classification of the following sub-paragraphs. a. When the decrease occurs within 5 years from the date of gift: The entire amount of tax payment postponed. b. When the decrease occurs after 5 years from the date of gift: The tax amount calculated according to Presidential Decree, considering the ratio of decrease in equity interest, among the tax payment postponed. 3. When both of the following sub-paragraphs are met: The entire amount of tax payment postponed. a. When the overall average number of full-time regular employees (hereinafter referred to as "full-time regular employees" in this sub-paragraph) as prescribed by Presidential Decree for 5 years from the date of gift is less than 70 percent of the average number of full-time regular employees for the two business years preceding the business year to which the date of gift belongs. b. When the overall average total salary as prescribed by Presidential Decree for 5 years from the date of gift is less than 70 percent of the average total salary for the two business years preceding the business year to which the date of gift belongs. 4. When the resident dies and inheritance is commenced: The entire amount of tax payment postponed.

The head of the tax office with jurisdiction over the place of tax payment may cancel or modify the permission and collect all or part of the tax payment postponed and the amount equivalent to interest calculated according to Presidential Decree, when a person who has received permission for postponement of payment under paragraph ① falls under any of the following subparagraphs. 1. When the person fails to comply with the order of the head of the competent tax office necessary for the change of collateral or other preservation of collateral. 2. When it is recognized that the entire amount of tax payment postponed cannot be collected, as the person falls under any of the subparagraphs of Article 9 (1) of the 「National Tax Collection Act」.

) may apply for postponement of payment of the relevant tax amount and interest equivalent to interest to the head of the tax office with jurisdiction over the place of tax payment, notwithstanding paragraphs ③ and ④, if any of the following subparagraphs is met. 1. In the case of subparagraph 2 of paragraph ③, where the donee has applied for the special tax treatment under Article 30-6 or has received permission for postponement of payment under paragraph ①. 2. In the case of subparagraph 4 of paragraph ③, where the heir has received the family business inheritance deduction under Article 18-2 (1) of the 「Inheritance and Gift Tax Act」 or has received permission for postponement of payment under Article 72-2 (1) of the same Act with respect to the family business inherited. ⑦ Regarding the postponement of payment under paragraph ⑥, paragraphs ② through ⑤ (excluding subparagraph 3 of paragraph ③) shall apply mutatis mutandis. In this case, in subparagraph 2 a of paragraph ③, "the entire amount of tax payment postponed" shall be considered as "the tax amount calculated according to Presidential Decree, considering the ratio of decrease in equity interest, among the tax payment postponed," and when permission for postponement of payment is granted under subparagraph 2 of paragraph ⑥, in paragraphs ③ through ⑤, "resident" shall be considered as "heir," "received a gift" as "inherited," and "date of gift" as "date of commencement of inheritance."

When applying the provisions of paragraphs ① through ⑧, the procedures for applying for postponement of payment, matters concerning the provision of collateral, matters concerning whether to impose delinquency surcharge related to the timing of permission for postponement of payment, methods for determining whether one is engaged in the family business, and other necessary matters shall be prescribed by Presidential Decree.