President Moon: "Stock Market Must Not Shrink"... 'Ant Taxation' Likely to Be Revised (Update)

Government Likely to Supplement Financial Tax Reform Plan... Key Points: 'Easing Stock Capital Gains Holding Period Requirements and Abolishing Securities Transaction Tax'

Cheong Wa Dae spokesperson Kang Min-seok is announcing President Moon Jae-in's directives regarding the government's final financial tax reform plan at the Cheong Wa Dae Chunuchu-gwan Daebriefing Room on the morning of the 17th. 2020.7.17 Photo by Yonhap News

[Asia Economy Reporter Son Sun-hee] On the 17th, President Moon Jae-in stated, "The financial tax reform plan should not be a way to shrink the stock market or dampen the enthusiasm of individual investors." This is interpreted as an instruction to effectively supplement the government's financial tax reform plan announced last month, which sparked investor backlash amid controversy over 'double taxation.'

Kang Min-seok, the Blue House spokesperson, held a briefing at the press center in the morning and said, "President Moon emphasized that individual investors, who have supported the stock market during the difficult times of the novel coronavirus disease (COVID-19), should be encouraged, and that the tax reform plan should aim to revitalize the stock market."

In particular, President Moon said, "All policies must have 'public acceptability' to achieve their goals," Kang conveyed. This appears to be in response to the strong opposition from small investors in the capital market against the previously announced financial tax reform plan.

President Moon emphasized, "This is a time to support the individual investors who have recently been sustaining the stock market," and added, "The domestic stock market needs to become stronger. Please consider the role of individual investors as more important," Kang said. He also noted that such instructions were given multiple times, not just once.

The core issue is the capital gains tax criteria on listed stocks, which will be applied from 2023. When the government announced the tax reform plan on the 25th of last month, it decided to expand the capital gains tax on stock transfers, previously limited to major shareholders, to include small shareholders as well, setting the basic deduction threshold at "20 million won." If income earned from stocks exceeds 20 million won, a tax rate of 20% will be applied to the portion up to 300 million won, and 25% to the portion exceeding 300 million won.

However, since the existing securities transaction tax has not been abolished, controversy over 'double taxation' immediately arose. There were also complaints that the basic deduction amount was excessively low. Especially with the overlap of the July 10 real estate measures announcement, tax resistance movements were detected mainly in civil society, and public opinion rapidly deteriorated.

As President Moon has instructed the supplementation of the tax reform plan, related policy revisions are expected soon. Raising the capital gains tax threshold is likely. The securities transaction tax is also expected to be reconsidered, including the possibility of its abolition.

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