From 2023, 'Gaemi' Subject to Capital Gains Tax... Tax Exemption for Amounts Under 20 Million Won (Comprehensive)

Taxation on 'Financial Investment Income' from 2022... Transaction Tax Reduced by 0.1%P
Measures for Single-Person Households Including Basic Pension System and Shared Housing Activation
69 Public Institutions Identify and Address 115 Regulatory Issues

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, is attending the 'Emergency Economic Central Countermeasures Headquarters Meeting' held at the Government Seoul Office in Jongno-gu, Seoul on the 25th. Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Kwangho Lee] Starting in 2023, the government will tax capital gains from all listed stocks regardless of whether the shareholder is a small shareholder or a major shareholder. However, gains up to 20 million KRW annually will be exempted (deducted). The government will introduce loss offsetting, which taxes only the net profit by combining income from financial investment products, and allow loss carryforward deductions within a three-year period. Meanwhile, the current securities transaction tax of 0.25% will be reduced by a total of 0.1 percentage points over two years, 2022 and 2023.

On the 25th, Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, chaired the 8th Emergency Economic Central Countermeasures Headquarters (Economic Central Headquarters) meeting held at the Government Seoul Office and announced the direction for advancing financial tax systems to revitalize financial investment and rationalize taxation.

Deputy Prime Minister Hong said, "We will pursue a reform of the financial tax system to support innovation in the financial industry and transform it into productive finance," adding, "We plan to establish a new category called 'financial investment income,' which will be taxed separately from comprehensive income and capital gains, and apply it starting in 2022."

In other words, income generated from all financial investment products will be combined and taxed at the same rate, allowing loss offsetting and loss carryforward deductions within three years within financial investment income.

Capital gains from stock transfers will be included in financial investment income and taxed accordingly, but from 2023, taxation will apply regardless of whether the shareholder is a major or small shareholder. However, considering the impact on the stock market, capital gains from listed stocks will be exempted up to 20 million KRW annually.

This tax reform will be implemented in a revenue-neutral manner, and the securities transaction tax will be reduced by the amount of increased revenue from the financial investment income reform. The securities transaction tax rate will be lowered from the current 0.25% by a total of 0.1 percentage points over 2022 and 2023, adjusting to 0.15% in 2023.

Deputy Prime Minister Hong emphasized, "Only the top 5% of stock investors will be taxed, and most small investors are expected to see a reduction in their tax burden due to the securities transaction tax cut." He added, "The reform plan announced today will undergo public hearings and other opinion-gathering processes, and the final plan will be legislated in the regular National Assembly session by the end of July."

At the Economic Central Headquarters meeting that day, measures for single-person households, including improvements to the Basic Livelihood Security System and activation of shared housing, were also discussed.

Deputy Prime Minister Hong stated, "Since early this year, the government has operated a task force (TF) for single-person household policies to explore a government-wide response direction for single-person household policies," adding, "As a result, measures have been prepared focusing on five major areas: income, housing, safety, social relationships, and consumption."

He particularly noted, "To strengthen the safety net for vulnerable single-person households, a comprehensive plan for the Basic Livelihood Security System will be established by August, and efforts will be made to activate shared housing (share houses), enhance safety for single female households, and prevent solitary deaths among elderly single-person households."

Furthermore, he added, "In terms of consumption, we plan to actively foster the rapidly growing 'Solo Economy' by responding to changes in the consumption environment resulting from the combination of the characteristics of single-person households who value personal preferences and the development of non-face-to-face transactions."

Single-person households have become the most common household type in South Korea since 2015, increasing their share to 30% by 2020. However, there have been criticisms that household-related policies, such as housing and welfare, still follow the framework centered on four-person households from the past, indicating a need for improvement.

The government also prepared measures to improve regulatory difficulties faced by small and medium-sized enterprises (SMEs) based on field feedback from public institutions. For SMEs leasing land from the Korea Expressway Corporation, usage fees will be reduced. The usage fee, previously 5% for non-cultivated land, will be applied at 2?5% depending on the purpose. In procurement contracts, the number of companies eligible for advance payments will be increased. Government advertising fees will eliminate electronic promissory notes and be paid in cash.

Deputy Prime Minister Hong explained, "Public institutions, which are responsible for employing 420,000 people, procuring 54 trillion KRW, and generating 326 trillion KRW in sales, are important business partners for private companies, especially SMEs," adding, "We have identified and addressed 115 regulatory difficulties across 69 public institutions."

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