KOFIA: "Financial Tax System Modernization Plan Should Include Detailed Measures for Capital Market Revitalization and Investor-Friendly Policies"

[Asia Economy Reporter Oh Ju-yeon] The Korea Financial Investment Association emphasized on the 25th that the detailed measures should be prepared in a way that revitalizes the capital market and is investor-friendly, so that the 'Financial Tax System Advancement Plan' announced by the Ministry of Economy and Finance can serve as an opportunity for the domestic capital market to take a step forward.

According to the Financial Tax System Advancement Plan announced that day, from 2023, the capital gains tax on listed stocks, which is currently limited to major shareholders, will be fully expanded to individual investors who are small shareholders. However, since a basic deduction of up to 20 million KRW is applied, a tax rate of 20% will be imposed on profits within the bracket of up to 300 million KRW excluding this amount, and 25% on the portion exceeding 300 million KRW.

In addition, the plan includes 'loss offsetting,' which taxes only the net profit by summing the annual income and loss amounts of all financial investment products held by an individual, and loss carryforward deduction (3 years).

The securities transaction tax will be gradually reduced from the current 0.25% to 0.15%.

Following the announcement of these contents, some have evaluated that the burden of 'double taxation' has not been alleviated. This is because while the financial investment income tax on stock capital gains is fully introduced, the securities transaction tax is maintained by reducing it by only 0.10% instead of abolishing it.

For the Korea Financial Investment Association, which had been expecting the abolition of the securities transaction tax, this reform plan is somewhat disappointing, but they expressed their intention to focus on the detailed measures to be prepared in the future.

Through materials, the Korea Financial Investment Association stated, "The current capital market tax system has caused distrust among investors and hindered the development of the capital market due to the securities transaction tax, which is taxed regardless of profit, the fund taxation system disadvantageous compared to direct investment, and the problem of loss taxation due to the non-allowance of loss offsetting among financial investment products. With this government’s system reform, it is expected that tax neutrality and tax equity will be greatly enhanced as the unreasonable securities transaction tax is further reduced and loss offsetting and loss carryforward deductions among financial investment products are allowed."

They added, "We hope that during the discussions between the National Assembly and the government, detailed measures will be prepared in a way that revitalizes the capital market and is investor-friendly, addressing investors' concerns such as whether to abolish the securities transaction tax, the expansion of the major shareholder taxation scope, and the lack of preferential measures for long-term investment."

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