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A growing number of rich Koreans will likely choose to leave the country and settle elsewhere permanently, amid the heavy burden of tax levied on their wealth following a hike on asset prices and the rapidly aging population, according to experts, Monday.
The speculation comes after Korea was ranked seventh in the world in terms of the emigration of wealthy individuals, in a study released by the Hana Institute of Finance, Sunday.
Citing data from global investment migration consultancy Henley & Partners, the Seoul-based institute said 800 high-net-worth Koreans whose net assets are valued at $1 million or more moved to other countries permanently in 2023. The number was up from the net outflow of 400 the previous year.
The institute said Korea would be ranked the second-highest in the world, when considering the rate of millionaire emigrants in proportion to the country's total population.
China had the biggest exodus of millionaires at 13,500 in 2023 but its population is more than 28 times larger than that of Korea's, the report noted.
Speaking on condition of anonymity, a staffer from a private bank's wealth management division said more rich people may leave the country as their assets increase in value amid persistently high inflation and that they may be subject to heavier taxation.
“For instance, a comprehensive real estate holding tax is imposed on a single homeowner whose home is valued at more than 1.2 billion won ($878,900),” the staffer said, referring to a tax that has been described as a punitive measure, by some, for owners of expensive homes.
He then pointed out that the price of apartments, the most popular form of housing in Korea, averages 1.29 billion won in Seoul.
“This means numerous Seoul citizens will be required to pay punitive taxes for living in apartments, and the burden of such taxation is apparently heavier for rich people,” he said.
Kim Je-kyung, a chief consultant at real estate agency Tumi, viewed the burden of inheritance tax can be another reason for rich Koreans' exodus, as more Koreans are getting older and want to pass down wealth to their children before their death.
Kim noted Korea is ranked second in the OECD after only Japan regarding inheritance tax rates. The maximum inheritance tax rate in Korea is 50 percent, compared to Japan's 55 percent and the OECD average of 25 percent.
“More Koreans will be asked to pay inheritance tax as the country turns into a super-aged society, and they certainly may want to keep their fortune by moving to another country with far less tax on inherited wealth,” Kim said.