|Seoul’s Yeouido financial district / Yonhap|
By Lee Min-hyung
A feared investment tax will not be imposed until the end of 2024, after the ruling and opposition parties reached a belated consensus to postpone the introduction of the highly controversial taxation system for another two years.
The law stipulates those who gain more than 50 million won in annual revenues through stock trading should pay 20 percent in taxes. The latest decision also delayed the taxation of crypto gains for the next two years. Crypto investors whose annual revenues top 2.5 million won were supposed to pay 20 percent in taxes from the start of 2023, but this will not take effect under the consensus from the National Assembly.
More than 150,000 retail investors had been expected to be subject to the tax, but they were relieved by the postponement of its introduction. But major shareholders who hold more than 1 billion won in stocks should report it and pay the tax. The government pushed for revising the standards for defining major shareholders to those who hold stocks worth more than 10 billion won, but the Assembly decided to maintain the status quo at 1 billion won.
Market analysts expected the Assembly’s decision to help vitalize local stock markets to some extent.
“The postponed levying of the new tax will drive up the benchmark KOSPI,” NH Investment & Securities analyst Kim Young-hwan said.
The government and the ruling People Power Party have called for delaying the introduction of the investment tax, citing concerns over an additional fall of the unstable stock market, as more investors are forecast to engage in a selling spree to evade the taxes. As the market shows little sign of a rebound amid rapid rate hikes, the ruling side underscored the importance of stabilizing the market first without introducing a controversial taxation system.
The main opposition Democratic Party of Korea, however, opposed the idea, saying that the move is nothing more than a tax cut for the rich. Opposition lawmakers agreed to delay the taxation, but rejected the ruling side’s proposal of changing the standards for defining a major shareholder.
Both sides also agreed to cut the securities transaction tax gradually down to 0.15 percent until 2025 from the current 0.23 percent amid investors’ growing complaints over the taxation on both capital gains and securities transactions, which is rarely seen in other major developed countries.