South Korea/ 5.1 General legislation  

5.1.5 Tax laws

Korean tax laws provide for tax exemption on donations by individuals and also exemption of capital gains tax for works of art. For the culture and the arts, a special category is provided to promote cultural philanthropy, such as donations to the ‘Culture and Arts Promotion Fund’, ‘National Trust Fund’, and in-kind donations to museums. For the ‘Culture and Arts Promotion Fund’ the donated amount is accepted as an expense up to 50% after any possible deduction. For donations to cultural organizations in general, corporations are allowed to deduct 5% from their earnings as expenses and individuals may deduct up to 20% from earnings.

Korean corporations have an account category called “general business expense”. If a corporation spends money on cultural services instead of general business expenses or the like, it will be conferred with an additional 10% tax exemption above the prescribed limit.

The issue of imposing a capital gains tax for art works been only enacted in 2013. Laws to impose capital gains tax for works of art were initiated in 1990 but were postponed and abandoned in 2004. A revised version was passed in 2008 for activation in 2011 but has met with fierce opposition from gallery owners, auction companies, and various artist groups. The revised law included a provision imposing a 20% capital gains tax for the sale of an art work at a certain price (approximately over US $5,500). The logic behind the opposition to the legislation was that the Korean art market is not mature enough to carry the tax burden and that taxation would hinder open transactions and eventually result in the formation of black markets. The final version of leving capital gains tax to the art works has been settled to minimum price of 50 million Korean Won for each piece of work.


Chapter published: 29-11-2013


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