Acquisition tax is imposed on persons who acquire certain assets, and is designed to have those whose tax-bearing capacity is exposed in the process of the transfer of ownership of real estate or vehicles bear tax burden.
The tax base of acquisition tax is the value of the asset at the time of acquisition. This refers to all costs that have been paid before the actual date of acquisition or are payable to the seller or to any third party or parties in order to acquire the relevant asset. As a rule, the acquisition price is based on the amount that is declared by the person who acquires the asset. If the price is not declared or the declared price is below the market price, the standard market price is applied. The actual purchase price is treated as the tax base when an asset is acquired from the central or a municipal government, by import, or when the acquisition price is evidenced by corporate books or court sentence, or when the asset is acquired through open sale.
In the case of construction or repair of a building (excluding new buildings or remodeling), change in the type of vehicle, machinery or equipment, or change of land category, the value increased from such an occurrence shall be the tax base.
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The standard rates for acquisition tax are as follows and the tax rates may be adjusted within 50 percent of the standard rates based on municipal ordinances.
※ Local education tax may be imposed on acquisition tax in certain municipalities.
<Acquisition Tax - Tax Base & Tax Rates (Article 11 & 12, Local Tax Act)>
Category Tax rates
Acquisition of real estate
① Acquisition by inheritance 2.8% (2.3% for farmland)
② Free acquisition other than acquisition by inheritance 3.5% (2.8% for non-profit businesses)
③ Original acquisition 2.80%
④ Acquisition by division of public property 2.30%
⑤ Acquisition by division of common property 2.30%
⑥ Acquisition by reasons other than those provided above 4% (3% for farmland)
⑦ Housings acquired for value (Acquisitions on or after August 28, 2013)
1% (Housings valued at KRW 600 million or less at the time of acquisition) 2% (Housings valued more than KRW 600 million but not more than KRW 900 million at the time of acquisition) 3% (Housings valued more than KRW 900 million)
① Acquisition by inheritance 2.50%
② Free acquisition other than
acquisition by inheritance 3.00%
③ Original acquisition 2.02%
④ Acquisition by import and
shipbuilding order 2.02%
⑤ Acquisition by reasons other than
described above 3.00%
Compact vessels
Compact vessels 2.02%
Motor-powered water leisure equipment 2.00%
Vehicles
Non-business passenger vehicles 7% (4% for compact vehicles)
Business vehicles 4%
Other non-business vehicles 5% (4% for compact vehicles)
Two-wheeled vehicles as defined in the Motor
Vehicle Management Act 2.00%
Other vehicles 2.00%
Machinery Equipment
Machinery equipment that requires registration according to the Construction Machinery Management Act.
3.00%
Machinery equipment that does not require registration according to the Construction Machinery Management Act.
2.00%
Aircraft
Aircraft subject to Article 3 of the Aviation Act 2.00%
Aircraft whose maximum take-off weight is more
than 5,700 kg 2.01%
Aircraft whose maximum take-off weight is less
than 5,700 kg 2.02%
Standing trees 2.00%
Mining and fishing rights 2.00%
Membership of golf clubs, condominiums, riding clubs, sports
facilities 2.00%
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※ However, a higher tax rate equivalent to two to four times the tax rate is applied in the following cases:
-Acquisition of taxable goods for business purpose in order to build a new factory or expand an existing one in an industrial complex in an overconcentration control area of the Seoul metropolitan area
-Acquisition of real estate that is considered a luxury asset (Villa, golf club, luxury recreation facility, luxury housing or boat)
-Acquisition of real estate for the establishment or expansion of a factory in a large city
However, a higher tax rate is applied for the following acquired assets:
<Heavy taxation on acquisition (Article 13 of the Local Tax Act)>
Classification Heavy taxation rate
Type A
Where taxable objects for business use are acquired to newly establish or expand a factory in overconcentration control regions (excluding an industrial complex and a promotional zone subject to the Industrial Cluster Development and Factory Establishment Act, and an industrial area subject to the National Land Planning and Utilization Act)
Standard tax rate + 2 X 2%
Where real estate for business use is acquired for a corporation’s head or main office of a company in an overconcentration control region in the Seoul metropolitan area
Type B Acquisition of real estate, etc. that is considered a luxury asset (e.g. villa, golf club, luxury recreation facility, luxury housing, luxury boat)
Standard tax rate + 4 X 2%
Type C
•Where a corporation is founded (including where acquiring a dormant corporation as prescribed by Presidential Decree) or a branch of sub-office is established
•Where real estate in a large city is acquired as a corporation’s head office, main office, branch or sub-office is relocated to a large city (including the acquisition of real estate after the establishment or relocation)
Standard tax rate X 3 – 2 X 2%
※ When acquiring housing, standard tax rate + 2 X 2%
Where real estate is acquired for the establishment or expansion of a factory in a large city (excluding promotional zones subject to the Industrial Cluster Development and Factory Establishment Act and industrial areas subject to the National Land Planning and Utilization Act)
Where types A and C both apply 3 X Standard tax
rate
Where types B and C both apply Standard tax rate X
3 + 2 X 2%
<Non-taxation of acquisition tax (Article 9 of the Local Tax Act)
Application
Non-taxation
•Acquisition by the central or local government
•Real estate acquired on condition of attribution or donation to the central or local government or a local government association
•Acquisition of any trust property through trust (excluding the acquisition of real estate between a housing association, etc. and its members)
•Acquisition of any real estate purchased by exercising the right of redemption on the expropriation and use of land in areas to be mobilized
•Acquisition of a temporary building, such as a temporary stage for shows and a construction site office, provided that the duration is one year or less
•Acquisition of a housing unit resulting from improvement of a housing unit valued at KRW 900 mil. or less
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