[2020 National Audit] Hong Nam-ki: "Will Proceed with Major Shareholder Capital Gains Tax Increase of 300 Million Won as Planned"

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance (center), is responding to a lawmaker's question at the '2020 MOEF National Assembly Audit' held at the Government Sejong Complex on the 7th.

[Asia Economy Reporter Joo Sang-don] Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, announced on the 7th that he intends to proceed as planned with the plan to expand the major shareholder requirement for capital gains tax on stocks from 1 billion KRW to 300 million KRW per stock item starting next year.

On the same day, Hong attended the National Assembly Budget and Accounts Committee hearing held at the Government Complex Sejong and responded to a question from Go Yong-jin, a member of the Democratic Party of Korea, asking, "Will the expansion to 300 million KRW be applied from April next year?" by saying, "That is a matter the government decided in the second half of 2017."

Hong emphasized, "I understand well that individual investors, known as Donghak Ants, played a significant role during the response to the COVID-19 crisis," but added, "However, this issue is not intended for tax increase purposes; rather, tax fairness is important."

Under current law, if the holding amount per stock item is 1 billion KRW or more, the holder is defined as a major shareholder and is subject to capital gains tax of 22-33% (including local tax) on the capital gains. According to the '2017 tax law amendment,' the major shareholder requirements will be gradually expanded, and the capital gains tax criteria will be strengthened. Accordingly, from April 2021, shareholders holding 300 million KRW or more per stock item will have to pay capital gains tax on their gains.

In response, individual investors, so-called "Donghak Ants," are strongly opposing the measure. They argue that expanding the major shareholder scope is unreasonable given the growing economic scale. There are also concerns that if individuals rush to sell stocks to avoid taxes by the end of this year, the stock market could enter a downturn.

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