Supreme Court rules on inheritance tax valuation standards

The Supreme Court ruled on April 30 that appraised values from credible institutions can be recognized as the market price for inheritance tax purposes, even when the appraisal is conducted retroactively.

In a case involving a dispute over land inherited on April 9, 2019, the court held that the average of four appraisals could not be accepted as the market price because special circumstances regarding price fluctuations were not sufficiently excluded. The tax office had based its assessment on valuations dated between June and July 2020, but the court found discrepancies between the individual public land price increase rates and the regional land price fluctuation rates prevented the average from reflecting objective exchange value.

Tax authorities bear the burden of proving that no significant changes occurred between the valuation base date, the price calculation base date, and the date the appraisal report was written. The ruling specified that general price changes due to the passage of time must be considered when judging whether special circumstances exist. Factors such as changes in land use, regulatory environments, and discrepancies with public land prices should be evaluated to ensure the appraised value reflects the objective exchange value at the time of inheritance.

Appraisals commissioned by the court during litigation differ in legal nature from those required by tax laws during the assessment phase. Courts are not bound by statutory requirements regarding the timing or number of appraisals when conducting evidence investigations to determine property value. However, judges must scrutinize requests from tax offices for court-commissioned appraisals to ensure they do not undermine procedural controls or seek new data merely to advantage the authority after failing to follow proper procedures initially.

The high court affirmed the lower court's decision to calculate the rightful tax amount based on a new appraisal commissioned during the trial, which used the date of inheritance as the price calculation base date. The portion of the original tax assessment exceeding this recalculated amount was declared illegal.