Hong Nam-ki: "Taxation from 2023 Regardless of Small or Major Shareholders" (Update)

Hong Nam-ki, Deputy Prime Minister for Economy and Minister of Strategy and Finance

[Asia Economy Reporter Kwangho Lee] Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, announced on the 25th that "a new financial investment income category, which is taxed separately from comprehensive income and capital gains, will be established and applied starting in 2022."

At the 8th Emergency Economic Central Countermeasures Headquarters (Economic Central Headquarters) meeting held at the Government Seoul Office on the same day, Deputy Prime Minister Hong stated, "Income generated from all financial investment products will be consolidated and taxed at the same rate, and within financial investment income, loss offsetting (combining income and loss amounts) and carryforward deductions of losses within a three-year period will be allowed."

The government presented and discussed the "Direction for Advancing Financial Taxation for Taxation Rationalization" on this day.

Deputy Prime Minister Hong mentioned, "Capital gains from stock transfers will be included in financial investment income for taxation, and from 2023, taxation will apply regardless of whether the shareholder is a small or major shareholder. However, considering the impact on the stock market, capital gains from listed stocks will be exempted (deducted) up to 20 million KRW annually."

He continued, "The reform of financial investment income is to be implemented in a tax-neutral manner by gradually reducing the securities transaction tax in proportion to the increased tax revenue from taxing financial investment income. Accordingly, the securities transaction tax rate (currently 0.25%) will be reduced by a total of 0.1 percentage points over two years, 2022 and 2023, leaving only a 0.15% transaction tax in 2023," he explained.

As a result, it is analyzed that only the top 5% of stock investors (about 300,000 people) will be taxed, while most small investors (about 5.7 million people) will actually see a reduction in their tax burden due to the securities transaction tax cut.

The reform direction announced on this day will go through a public hearing and other opinion-gathering processes, and the final plan will be included in the "2020 Tax Reform Bill" to be finalized by the end of July and legislated during the regular National Assembly session.

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