Moving forward, if the practice of intentionally depressing stock prices—known as "stock price suppression" to reduce inheritance and gift taxes—is detected, taxes will be levied by increasing the stock value by at least 30%.

The objective is to extend the stock valuation period and levy taxes based on the "normal price" rather than the "suppressed market price."

The Ministry of Economy and Finance announced the "2026 Tax Revision Plan" containing these measures today (August 3).

The revision clearly specifies two conditions under which "stock price suppression" can be presumed.

First, it can be presumed that stock price suppression has occurred if a company is a low-PBR firm whose price-to-book ratio (PBR) over the past six years falls into the bottom 25% for KOSPI industries or the bottom 10% for KOSPI-listed venture firms on the Kosdaq.

The presumption also applies if there were actions over the past year that could negatively impact corporate value, such as dual-listing or issuing exchangeable bonds, and the market evaluation value has dropped by 30% or more compared to the market prices over the past three years.

If a company that reported inheritance or gift taxes using the current valuation method meets either of these two conditions, it will be considered to have engaged in "stock price suppression," and the case will be submitted to the Evaluation Deliberation Committee for review.

Companies confirmed to have engaged in stock price suppression through the committee's deliberation will have their listed stocks re-evaluated by extending the valuation period.

For low-PBR companies, the inheritance property value will be determined by taking the greater amount between the "average closing price over the past 6 months to 6 years and 6 months" and "1.3 times the market price according to the current valuation method."

This effectively raises the taxation baseline by at least 30% compared to before.

Companies meeting the condition of a recent sharp drop in stock prices will be subject to the maximum value among the "average closing prices over the past 6 months to 3 years."

This new valuation method will also apply identically when taxing gift profits generated from trading listed stocks between a controlling shareholder and related parties, while regular on-exchange trading (excluding block deals after hours) will be excluded.

However, if taxpayers prove that they do not fall under stock price suppression, the current valuation method will be maintained.

As the nature of treasury shares was clarified as "capital" through the amendment of the Commercial Act last March, the related tax system will also be completely streamlined.

Accordingly, starting with shareholders who acquire treasury shares on or after January 1 of next year, they will be unconditionally taxed as "deemed dividends" regardless of the purpose of acquisition.

However, the adjustment for double taxation on dividend income will only apply in cases where the purpose is profit cancellation.

Corporations will also exclude profits or losses generated when disposing of treasury shares from taxation (tax-exempt) starting next year.

Standards to prevent tax avoidance using overseas subsidiaries (Controlled Foreign Corporations, or CFCs) will also be adjusted in line with global standards.

Previously, if the effective tax rate borne by an overseas subsidiary was lower than 17.5% (70% of the maximum corporate tax rate), it was considered tax avoidance and taxed; moving forward, this threshold will be lowered to below 15%, the same as the "global minimum tax rate."

The aim is to unify the determination criteria between CFCs and the global minimum tax, thereby easing the burden of dual monitoring and tax cooperation costs for multinational corporations.