[2020 National Audit] Hong Nam-ki "Reviewing Adjustment of Major Shareholder Capital Gains Tax 1% Stake Requirement"

At the Ministry of Economy and Finance Tax Policy National Audit, "Review Considering Recent Situations"
Expressed Intent Not to Change the Holding Amount Standard (300 Million KRW)

[Image source=Yonhap News]

[Sejong=Asia Economy Reporter Kim Hyunjung] Deputy Prime Minister and Minister of Strategy and Finance Hong Nam-ki stated that he is reviewing whether to adjust the shareholding ratio criteria among the major shareholder standards subject to capital gains tax on stock transfers.

On the 8th, during the Ministry of Strategy and Finance's tax policy audit by the National Assembly's Planning and Finance Committee, Deputy Prime Minister Hong said, "The shareholding ratio for major shareholders is 1%, and we are currently reviewing whether it is better to maintain this or adjust it, considering recent circumstances."

The current major shareholder criteria for listed companies subject to capital gains tax when selling stocks is a shareholding ratio of 1% or a holding amount of 1 billion KRW per stock. Starting from April next year, this will be expanded to a shareholding ratio of 1% or a holding amount of 300 million KRW or more per stock.

Regarding this, Jeong Seong-ho, a member of the Democratic Party of Korea, pointed out, "The shareholding ratio among the major shareholder requirements for listed stocks has remained at 1% since 2016, but the holding amount is being reduced from 2.5 billion KRW to 300 million KRW," and added, "Wouldn't it be more appropriate to lower the shareholding ratio requirement rather than the amount?"

Deputy Prime Minister Hong responded, "We are switching from household aggregation to individual aggregation and are also internally reviewing the shareholding ratio." However, he did not change his stance that the 300 million KRW requirement is difficult to modify.

According to the announced regulations, shareholders holding more than 300 million KRW in a specific stock as of the end of this year will have to pay 22-33% (excluding the basic deduction, including local tax) of their capital gains as tax starting from April next year.

Initially, the government announced that the stock holding amount would be aggregated not only by the shareholder themselves but also by spouses, parents, grandparents, great-grandparents, children, grandchildren, great-grandchildren in de facto marital relationships, and other special related parties such as corporations under management control. However, due to strong opposition, positive consideration is being given to switching to aggregation on an individual basis.

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