National Assembly urges government to reconsider hospital tax deduction exclusion
- The South Korean government is facing calls from the National Assembly to reconsider a proposed tax law amendment that would exclude hospitals from the business succession inheritance tax...
- The government is currently pursuing an amendment to the Inheritance and Gift Tax Act that would explicitly list the types of businesses eligible for succession tax deductions.
- Representative Ahn highlighted the case of a prominent obstetrics and gynecology clinic in Seoul’s Gangnam district that has delivered over 65,000 babies during its 40-year history.
The South Korean government is facing calls from the National Assembly to reconsider a proposed tax law amendment that would exclude hospitals from the business succession inheritance tax deduction. During a plenary session of the National Assembly’s Finance and Economy Committee held on September 28, 2026, concerns were raised that the policy contradicts existing government efforts to support essential medical services.
The government is currently pursuing an amendment to the Inheritance and Gift Tax Act that would explicitly list the types of businesses eligible for succession tax deductions. If passed, this measure would automatically exclude hospitals, removing the opportunity for individual medical institutions to undergo the standard evaluation process for business succession eligibility. Representative Ahn Sang-hoon of the People Power Party criticized the plan, arguing that it creates a policy disconnect. While the Ministry of Health and Welfare provides incentives to bolster regional and essential medical care, the proposed tax change could force clinics to close due to unsustainable financial burdens.
Representative Ahn highlighted the case of a prominent obstetrics and gynecology clinic in Seoul’s Gangnam district that has delivered over 65,000 babies during its 40-year history. According to Ahn, if this institution is excluded from the inheritance deduction, its tax liability would surge from 4 billion won to 33 billion won. The Ministry of Health and Welfare is providing support to create more obstetrics and gynecology clinics, yet on the other hand, a tax policy is being pushed that would make it impossible for those handling essential medical services to continue, causing them to shut down,
Ahn stated during the committee meeting.
Government Rationale and Parliamentary Response
Deputy Prime Minister and Minister of Finance and Economy Lee Hyung-il defended the government’s position, explaining that the exclusion is based on the nature of professional licensing. We judged that cases involving professional licenses are not suitable for the concept of business succession,
Lee told the committee.
Representative Ahn countered this classification, emphasizing the unique public-service role of hospitals in South Korea. He argued that because the healthcare system is heavily regulated by the government through the National Health Insurance and price controls, private hospitals function more like a quasi-public system. Hospitals are not like other licensed businesses. They are doing a significant portion of the work the government should be doing, while being subject to price controls and various medical regulations,
Ahn said. He urged the government to reconsider the blanket exclusion and allow for a more nuanced review process.
Hospital Industry Efforts for Regulatory Adjustments
The hospital industry is actively responding to the proposed changes. The industry’s primary goal is to maintain the current system, where individual medical institutions can at least undergo a merit-based review process to determine if they qualify as a family business.
Regarding the path forward, Deputy Prime Minister Lee acknowledged the need for further deliberation. I will ensure that this is sufficiently discussed during the process of the bill review subcommittee,
Lee stated. Representative Ahn concluded his remarks by warning that the government must be held accountable for the potential impact on medical accessibility should the current proposal force hospitals to cease operations during a period of existing medical service shortages.