Securities Transaction Tax Likely to Be Gradually Reduced... Cryptocurrency Capital Gains Taxation Plan to Be Announced Next Month

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[Asia Economy Reporter Jang Sehee] The current securities transaction tax of 0.25% is planned to be gradually reduced. Additionally, capital gains tax is expected to be imposed on gains from all listed stock transactions. A system of loss offsetting, which calculates net profit by integrating losses and gains on financial investment income and taxes only the net profit, as well as a carryforward deduction system that deducts losses incurred this year from next year’s gains before imposing capital gains tax, are also expected to be introduced.

According to the government on the 21st, the Ministry of Economy and Finance plans to announce this month the "Financial Tax System Advancement Plan," which includes the future direction and schedule for reforming the taxation system on financial investment income.

There is a proposal to gradually reduce the current 0.25% securities transaction tax (including the special rural development tax for KOSPI) by 0.05 percentage points annually starting next year. Last year, the government lowered the transaction tax on KOSPI (including the special rural development tax) and KOSDAQ listed stock transactions by 0.05 percentage points to 0.25% for the first time in 23 years. However, the tax reform is not expected to explicitly include the abolition of the securities transaction tax this time. This is because abolishing the securities transaction tax, which generates about 5 trillion KRW annually on average, could cause a significant shortfall in tax revenue.

The Ministry of Economy and Finance intends to comprehensively expand the scope of taxation on financial products. Accordingly, it is pursuing the introduction of full taxation on capital gains from stocks in the medium term. The scope of capital gains tax, currently limited to major shareholders, is being expanded to include individual investors, and detailed criteria for taxation such as basic deductions and tax rates are being prepared. However, due to concerns about side effects such as a decline in stock trading, the expansion is expected to be phased in gradually.

Meanwhile, the taxation method for virtual currencies is leaning toward imposing capital gains tax. Capital gains tax is a 20% tax on profits made from stock transactions, but until now, there was a drawback in calculating these gains because the infrastructure for virtual currency taxation was not properly established. However, with the passage of the amendment to the Act on Reporting and Using Specified Financial Transaction Information in March, the government can now track virtual currency investors’ transaction details, making it possible to levy taxes based on transaction records.

This content was produced with the assistance of AI translation services.