Bill reflects heavy investment burden of livestock facilities and smart equipment, addressing limits of farmland inheritance deduction
30-year management requirement, 10-year post-succession obligation and new review committee proposed to verify eligibility
A bill is being advanced to include pig farming in the family business inheritance deduction, easing the tax burden that arises when farms are passed down. The measure aims to address the limits of the existing farmland inheritance deduction by reflecting the capital-intensive nature of pig farming, which requires large-scale investment in livestock facilities, smart equipment and biosecurity infrastructure.
Democratic Party of Korea lawmaker Moon Geum-ju introduced the bill — a partial amendment to the Inheritance Tax and Gift Tax Act that would explicitly list pig farming as an eligible category for the family business inheritance deduction — on Wednesday.
Current inheritance tax law provides two deduction mechanisms to support stable business succession and continuity in farming: the family business inheritance deduction and the farmland inheritance deduction. Critics have long argued, however, that pig farming — which requires heavy capital investment in livestock facilities, breeding stock, and biosecurity and waste-treatment infrastructure — cannot adequately manage the tax burden of succession through the farmland deduction alone.
Pig farming demands not only livestock rearing but also specialized expertise and equipment for breeding management, disease prevention and odor-reduction facility operation, Moon said. Given that farm operations cannot easily be suspended, selling assets or dividing a farm during the succession process risks weakening the production base, she added.
The proposed amendment would explicitly include pig farming under the Korea Standard Industrial Classification as an eligible category for the family business inheritance deduction, while tightening eligibility requirements to concentrate the tax benefit on farms that have been in continuous long-term operation.
The bill sets a minimum management period of 30 years for the person transferring the business and a 10-year post-succession management obligation for the heir. It also calls for the creation of a family business inheritance deduction review committee to verify applicant eligibility.
Moon has said that a stable generational transition in pig farming is necessary to maintain the domestic pork production base and to help young livestock farmers enter the industry.
"Pig farming is a high-tech, capital-intensive industry that operates 365 days a year without pause and serves as a cornerstone of the nation's food supply, yet farm households have been pushed to the brink of closure during succession because of tax standards that fail to reflect reality," Moon said. "I hope this bill will support the stable succession of farms that have long sustained the livestock industry and contribute to stabilizing food prices for the public."
adastra@heraldcorp.com
