Securities Industry Confirms Commitment to Revitalize Stock Market... Disappointed by Retention of Transaction Tax

"Show Government Will to Channel Market Liquidity into Stock Market"
Though Securities Transaction Tax Cut Timing Advanced, 'Double Taxation' Persists Unless Abolished

[Asia Economy Reporter Oh Ju-yeon] The '2020 Tax Law Amendment' announced on the 22nd was evaluated by the securities industry as showing the government's intention to channel the liquidity released into the market into the stock market. However, the securities transaction tax, which had been controversial due to double taxation, was regretted for maintaining a policy of gradual easing rather than 'abolition.'

According to this financial tax reform plan, capital gains tax, which was only imposed on major shareholders holding stocks worth more than 1 billion KRW per item, will be imposed on individual investors from 2023. However, the basic deduction amount for stock capital gains was raised from the initially announced 20 million KRW to 50 million KRW, thereby easing the criteria. In addition, profits generated from public offering equity funds were also included in the basic deduction target, dispelling controversies over fund products.

The securities industry positively evaluated the easing of the capital gains tax criteria.

Han Dae-hoon, a researcher at SK Securities, said, "The increase in the basic deduction amount is positive news for individual investors," adding, "It reconfirms the intention to channel the abundant liquidity released into the market into the stock market."

A financial investment industry official also said, "There was backlash against the announcement that taxes would be imposed on capital gains exceeding 20 million KRW, but in fact, it is not easy for ordinary individual investors to make profits exceeding 20 million KRW," and added, "Nevertheless, raising the basic deduction amount from 20 million KRW to 50 million KRW means that the range of individuals eligible for the basic deduction has widened, so it is welcome."

The Korea Financial Investment Association also expressed active welcome through a statement on the same day. The association said, "The tax burden on the capital market has been eased," and predicted, "Investor acceptance of the government's tax reform will improve, contributing to the revitalization of the capital market and the establishment of a long-term investment culture."

The advancement of the securities transaction tax reduction by one year from the initial plan and the extension of the loss carryforward deduction period from 3 years to 5 years were also highly evaluated.

However, the decision to gradually reduce the securities transaction tax instead of abolishing it was regarded as regrettable. The government decided to advance the plan to reduce the securities transaction tax levied on stock trading by one year earlier than originally scheduled, reducing it by 0.02 percentage points in 2021 and further reducing it by 0.08 percentage points in 2023.

A securities company official said, "It is regrettable that the transaction-related tax still remains and no abolition roadmap has been presented." Another securities company official also said, "Although the timing of the transaction tax reduction was advanced and contents considering individual investors were added, it is difficult to positively evaluate the transaction tax part as long as the transaction tax is not abolished."

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