Increase Major Shareholder Threshold for Stock Transfer Tax from 1 Billion to 5 Billion Won

The government will raise the threshold for major shareholders subject to capital gains tax on stock transfers from the current 1 billion KRW to 5 billion KRW or more.

On the 21st, the Ministry of Economy and Finance announced that it will amend the Enforcement Decree of the Income Tax Act to reflect this change. Currently, the stock holding amount subject to capital gains tax for major shareholders is 1 billion KRW per stock item, and the amendment aims to raise this to 5 billion KRW.

According to the current Income Tax Act and its Enforcement Decree, investors holding 1 billion KRW or more per stock item as of the end of the previous fiscal year are considered major shareholders and are required to pay 20% tax on capital gains. Capital gains tax is imposed at a rate of 20% on the taxable base up to 300 million KRW and 25% on the amount exceeding 300 million KRW. As a result, to avoid taxes due to being designated as a major shareholder, large-scale stock sales at the end of the year have a significant impact on the stock market.

The government explained that this measure aims to reduce market volatility caused by year-end stock sales to avoid the tax threshold. The Ministry of Economy and Finance plans to complete the amendment within the year after legislative notice, consultations with related ministries, and the Cabinet meeting scheduled for the 26th. The adjusted criteria will apply to transfers made on or after January 1 of next year.

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