Koo Yooncheol: "Stock Transfer Tax Threshold Maintained at 5 Billion Won... Government to Focus on Normalizing the Capital Market"

Decision Made with Capital Market Revitalization in Mind at Policy Consultation
Withdrawal Following Strong Market Backlash After Tax Reform Proposal
Current Threshold Restored in Response to Investor Concerns

On September 15, Deputy Prime Minister and Minister of Economy and Finance Koo Yooncheol announced, "We have decided to maintain the major shareholder threshold for stock capital gains tax at 5 billion won."

Deputy Prime Minister Koo made this statement during the "Chuseok Livelihood Stabilization Measures Party-Government Consultation" held at the National Assembly on the same day. He said, "Since the announcement of the tax reform plan, we have carefully considered the normalization of the capital gains tax threshold for shareholders and the need to revitalize the capital market." He added, "In light of the public's strong desire to invigorate the capital market, as well as the Democratic Party's view that maintaining the major shareholder threshold is necessary, we have decided to keep the threshold at 5 billion won."

Previously, in July, the government had proposed lowering the major shareholder threshold for the stock capital gains tax from the current 5 billion won per stock to 1 billion won in its tax law revision plan. During the administration of President Yoon Suk-yeol in 2023, the threshold had been raised from 1 billion won to 5 billion won per stock, and the government sought to revert this change to secure tax revenue. However, there was strong backlash, especially from investors, as the stock market experienced significant volatility. In particular, concerns were raised in the stock market that investors holding more than 1 billion won in a single stock might sell large quantities of shares to avoid the capital gains tax, potentially causing stock prices to fall. Even within the ruling party, there was opposition, as the measure was seen as contradictory to the current administration's efforts to revitalize the capital market.

Ultimately, after discussions, the party and government decided to shift their stance and maintain the current threshold. President Lee Jaemyung, during a press conference marking his 100th day in office on September 11, effectively announced the withdrawal of the plan when asked about the issue. President Lee stated, "If the revitalization of the stock market would be significantly hindered by this, there is no need to insist on the change," adding, "Lowering the threshold from 5 billion won to 1 billion won is not something we must do at all costs."

Meanwhile, Deputy Prime Minister Koo emphasized, regarding the restoration of the major shareholder threshold for the stock capital gains tax, "The government will make every effort to revitalize companies and the economy to promote a productive economy and invigorate the capital market."