People Power Party Proposes Amendment to Maintain Major Shareholder Threshold at 1 Billion KRW and Abolish Family Aggregation Rule

Assemblyman Choo Kyung-ho Proposes Amendment to Income Tax Act

[Image source=Yonhap News]

[Asia Economy Reporter Kim Hyemin] The People Power Party has proposed an amendment to the Income Tax Act to maintain the major shareholder threshold subject to capital gains tax on stock transfers at the existing 1 billion KRW and to abolish the family aggregation clause.

The amendment, proposed by Representative Choo Kyung-ho on the 20th, aims to legally define the ownership ratio and market capitalization criteria for capital gains tax on stock transfers, which were previously stipulated by enforcement ordinances. To this end, a proviso clause was newly added to Article 94 of the Income Tax Act.

The capital gains tax threshold for stock transfers is set to remain at 1 billion KRW, with the enforcement date scheduled for April 1 of next year. This contradicts the government's plan to strengthen capital gains tax on major shareholders. According to the current enforcement ordinance of the Income Tax Act, the stock holding amount criterion for determining a "major shareholder" subject to capital gains tax is scheduled to be lowered to 300 million KRW next year.

The amendment also abolishes the family aggregation principle applied to the major shareholder requirements. It stipulates that the major shareholder criteria be based on the stock ownership of a "single shareholder or investor," effectively eliminating the family aggregation rule and imposing taxation on an individual basis.

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