Push to Abolish Capital Gains Tax on Stocks Under 10 Billion Won

On the 11th, dealers are working in the dealing room of Hana Bank in Euljiro, Seoul. The KOSPI index opened at 2,586.52, down 10.04 points (0.39%) from the previous trading day. The won-dollar exchange rate opened at 1,277.7 won, up 1.3 won. Photo by Moon Honam munonam@

[Asia Economy Reporter Ji Yeon-jin] The Yoon Seok-yeol administration is pushing to narrow the scope of capital gains tax on stocks to ultra-high-value stockholders holding individual stocks worth 10 billion KRW or more.

According to the government’s national task implementation plan from the Presidential Transition Committee on the 12th, the government has prepared a national task implementation plan in the capital market sector based on this content.

The task of abolishing capital gains tax on domestic listed stocks for individual investors is being directed to proceed excluding ultra-high-value stockholders. The criterion for ultra-high-value stockholders will be set as holding individual stocks worth 10 billion KRW or more.

If the major shareholder taxation system is abolished and the financial investment income tax is implemented from next year, any investor earning income exceeding 50 million KRW (based on domestic listed stocks) must pay taxes regardless of the major shareholder scope.

The securities transaction tax will be maintained at an appropriate level.

Regulations related to short selling will also be strengthened. The collateral ratio applied when individuals borrow stocks for short selling will be reasonably lowered from the current 140% to align with institutions and foreigners (105%). The introduction of a 'short selling circuit breaker' that bans short selling for a certain period if stock price declines are excessive is being considered, and if necessary, the current system for designating overheated short selling stocks will be improved and supplemented.

To prevent 'eat-and-run' stock sales by executives of listed companies, an 'insider unlimited share sale restriction system' will be introduced, requiring insiders such as CEOs to disclose their disposal plans in advance when selling shares. Currently, executives, major shareholders, or related parties of listed companies only need to disclose within five trading days after disposing of shares.

To protect minority shareholders of parent companies related to subsidiary physical division and subsequent listing, which had sparked public outrage among 'ant investors,' the review of shareholder protection measures will be strengthened. If shareholder protection measures are deemed insufficient, financial authorities will consider strong measures to restrict listings.

When management control of a listed company changes due to stock acquisition through mergers and acquisitions, a plan to grant minority shareholders the right to request stock purchase will also be pursued. Minority shareholders refer to those holding less than 1% of shares or less than 300 million KRW in face value.

Additionally, the introduction of a system requiring new major shareholders who take over to publicly tender a certain proportion of minority shareholders’ shares is also under consideration.

Measures to strengthen responses to securities crimes, such as enhancing the effectiveness of sanctions against unfair trading practices, will be reinforced. Plans include expanding the organization and personnel of the Capital Market Investigation Unit and strengthening cooperation with related institutions such as the Korea Exchange.

Meanwhile, the government has set an implementation plan to enact the Digital Asset Basic Act next year and enforce it from 2024 to foster a growth environment for virtual assets such as cryptocurrencies.

Furthermore, the government plans to expand financial institutions providing real-name verification services for virtual asset transactions to strengthen the linkage between digital asset trading accounts and banks, and to revise related systems and regulatory frameworks to prepare conditions for domestic coin issuance (ICO) and circulation.

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