[Korean Law Insights] Korean Land Tax and Dividend Bill

[Published on January 20, 2026 edition of the "Korean Law Insights" column in the Korea Daily’s Economic Expert Section]

• Even Koreans residing in the U.S. who own land in Korea may be affected

• Tax liability could apply, while dividends may be excluded

For Koreans residing in the U.S., legislative developments in Korea may feel somewhat distant. However, if one already owns land in Korea or may come to own land through inheritance, gifts, or future investments, the situation becomes more relevant. In particular, if legislation is introduced that treats land ownership itself as a taxable event, such a measure could directly impact non-residents abroad. 

A bill introduced late last year, formally titled the “Land Tax and Land Dividend Act” (hereinafter, the “Land Tax Bill”), is currently under review in the National Assembly and has been drawing attention. The bill proposes imposing a tax on land ownership and distributing the resulting revenues to the public in the form of land dividends.

More specifically, the Land Tax Bill would tax most land nationwide except for farmland and factory-use land. The taxable base would be calculated based on the combined government-assessed land values, and a flat tax rate of 1% would be imposed. If enacted, the bill would abolish the existing Comprehensive Real Estate Holding Tax. Lawmakers behind the proposal argue that this system would recapture unearned gains in real estate and establish a more equal structure of burden and distribution.

However, taxing land ownership itself raises concerns over infringement of constitutionally protected property rights. Applying the same rate of tax regardless of how the land is used or whether it generates any income is likely to face criticism from the standpoint of tax equity.

Land is a representative non-liquid asset. Owning land does not necessarily generate stable annual cash income. In particular, land acquired through inheritance or gift, or land located within development-restricted zones, is functionally limited in its use. When such land becomes subject to continuous tax burdens, landowners may find themselves with few options other than utilization or disposal. In practice, this implies the possibility of inducing disposal due to tax pressure.

An annual tax rate of 1% may impose a considerable burden on certain retirees or older landowners, and such burdens may escalate from an individual financial issue into broader socioeconomic conflict. If circumstances arise in which landowners are effectively forced to sell, this could suppress economic activities related to the long-term utilization of land.

The concept of “land dividends” also raises controversy. It is difficult to argue that sufficient discussion has taken place regarding whether such a scheme aligns with the constitutional economic order of the Republic of Korea. In particular, among Korean residents in the United States who hold U.S. citizenship, those who own land in Korea may become liable for the land tax while being excluded from receiving land dividends due to their status as foreign nationals. This raises issues of tax equity, constitutional principles of equality, and potential infringement of property rights.

Furthermore, once the Land Tax Bill is implemented, it would be difficult to rule out the possibility of future tax rate increases, expansion of taxable land categories, or changes to the distribution structure. Such uncertainty may itself lead landowners to perceive land ownership as a burden.

Because land is an immovable asset, taxation on land requires greater caution. How the Land Tax Bill will ultimately be structured after revisions, and how it will be implemented in practice, remains a matter of consequential interest for Korean residents abroad. As we enter the new year, it may be prudent to closely observe the legislative process, policy adjustments, and potential implementation stages of this bill.

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Jin Hee Lee/K-Law Consulting Korean Attorney

[Reference link in original Korean]

https://www.koreadaily.com/article/20260121004112523