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Acquisition Tax
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Local taxes are levied primarily to raise capital needed to provide administrative services to local residents. The additional objectives of local taxes are income redistribution, regional industrial and economic growth, and balanced development of the country. Local taxes are divided into taxation of property, taxation of income, and taxation of consumption. Property taxation includes property tax, aggregate land tax, automobile tax, acquisition tax, and registration tax. Income taxation is comprised of agricultural income tax, income-proportional resident tax, etc. Consumption taxation includes license tax, leisure tax, motor fuel tax, tobacco consumption tax, butchery tax, regional development tax, and local education tax. Do tax, Si tax, and Gun tax are the categories of tax at the local level.

Acquisition Tax

Acquisition tax is levied on individuals when acquiring certain assets.

The tax base of the acquisition tax is the value of the asset at the time of acquisition. The value of an asset means all costs which have been paid or shall be paid to the other party of the transaction for the acquisition of taxable objects at the time of acquisition. In principle, the value at the time of acquisition shall be as reported by the acquirer, but when there is no such declaration, mark of a declared price, or when the declared price does not meet the standard market value, the standard market value shall be applied. However, the acquisition price will be recognized as the tax base in cases of an acquisition from the national/local government, an acquisition from overseas, an acquisition in which the acquisition price is proven by corporate account books/rulings, or an acquisition through public auction. In addition, in cases of construction (new construction and reconstruction excluded) and repair, change of the type of vehicle/machinery, and change of land category, the value increased from such occurrence shall be the tax base.

Here is the standard tax rate of acquisition taxes, and tax rates can change within 50% range.

Tax rates
  Tax rates
Acquistion of
real estate
Acquistion by inheritance 2.80%
(2.30% for farm land)
Free acquisitino other than acquisitino by inheritance 3.5%
(2.8% for non-profit businesses)
Original acquisition 2.80%
ransfer of trust estate from trustees to benefiter 3.00%
(2.5% for non-profit business)
Acquisition by division of public property 2.30%
Acquisition by division of common property 2.30%
Acquistion by reasons other than described above 4.00%
(3.00% for farm land)
  Ships
Ships subject to registration
Acquistion by inheritance 2.50%
Free acquisition other than acquisition by inheritance 3.00%
Original acquisition 2.02%
Acquisition by income and shipbuilding order 2.02%
Transfer of trusted property from trustees to benefiters 3.00%
Acquisition by reasons other than described above 3.00%
Compact ships   2.02%
Ships other than compact ships   2.00%
Vehicles Vehicles for business 4.00%
Non-business vehicles 5.00%
(4.00% for light vehicles)
Non-business cars 7.00%
(4.00% for compact cars)
Two-wheeled vehicles 2.00%
Other vehicles 2.00%
Machinery
Equipment
Machinery equipement that requires registration according to Construction Machinery Management Act. 3.00%
Machinery equipment that requires no registration according to Construction Machinery Management Act. 2.00%
Aircraft Aircraft subject to civil aeronautics law article 3 2.00%
Aircraft whose maximum take-off weight is more than 5700kg 2.01%
Aircraft whose maximum take-off weight is less than 5700kg 2.02%
Standing tree 2.00%
Mining and fishing rights 2.00%
Membership for golf courses, condominium, riding, sports facilities 2.00%

However, higher tax rates are applied to the following properties.

<Heavy Tax Rate of Acquisition Tax>
  Heavy Tax Rate
Type A Acquisition of taxable goods for business in order to newly build or to expand a factory within the overpopulation control area of the Seoul metropolitan area (excluding industrial complex/ region bidding for industrial complex / industrial area subject to Act on Industrial Concentration Revitalization and Factory Establishment and Act on the planning and use of land) Standard tax rate and two times of 2%
Acquisition of real estate for use as headquarters or for business purposes within overpopulation control area of the Seoul metropolitan area
Type B Acquisition of luxury property (vacation home, golf course, luxury recreation place, luxury house/boat) Standard tax rate and 4 times of 2%
Type C Acquisition of real estate in big cities for use as headquarters or for business purposes, including new construction and expansion of buildings for headquarters, as well as auxiliary land)
 
(3 times that of standard tax rate) minus two times of 2%
Acquisition of land for business in order to newly build or to expand a factory in big cities (excluding industrial complex/ region bidding for industrial complex / industrial area subject to Act on Industrial Concentration Revitalization and Factory Establishment and Act on the planning and use of land)  
In case when type A and C are applied at the same time 3 times that of general tax rate
In case when type B adn C are applied at the same time 3 times that of general tax rate and two times of 2%
<Non-Taxable Objects for Acquisition Tax>
Category Applicable Objects
Non-Taxation
  • Non-taxation to the state, etc. (acquisition of real estate by the central/local governments, etc.)
  • Non-taxation due to specific purposes (Acquisition of real estate for the purposes of public service, joint ownership by residents, and special post office operation)
  • Non-taxation due to alternative acquisition due to natural disasters, etc. (within two years)
  • Alternative acquisition due to land expropriation, etc. (within one year)
  • Ownership acquisition in formality (acquisition by corporate merger, special acquisition by inheritance, etc.)
  • Acquisition whose value is 500,000 won or less at duty free shops