"Three Laws for Exchange Rate Stabilization" Pass Tax Subcommittee... Capital Gains Tax Deductions for Reinvestment in Domestic Stocks

Overseas Stock Sale Deadline Extended to May

The so-called "Three Laws for Exchange Rate Stabilization," which include measures such as providing up to a 100% capital gains tax deduction when proceeds from selling overseas stocks are reinvested into the domestic stock market, passed the Tax Subcommittee of the National Assembly Planning and Finance Committee on March 16.

The Tax Subcommittee of the Planning and Finance Committee held a meeting on this day and approved the Three Laws for Exchange Rate Stabilization, including amendments to the Restriction of Special Taxation Act and the Special Rural Development Tax Act.

Park Sooyoung, a member of the People Power Party and Chairman of the Tax Subcommittee of the National Assembly's Finance and Economy Planning Committee, is explaining the agenda at the Tax Subcommittee meeting held at the National Assembly on the 16th. Photo by Yonhap News

Park Sooyoung, a member of the People Power Party and Chair of the Tax Subcommittee, met with reporters after the meeting and stated, "All three bills related to exchange rates passed without amendment." Park added that these bills are expected to pass the full session of the Planning and Finance Committee on March 17 and be submitted to the plenary session on March 19.

The Three Laws for Exchange Rate Stabilization were proposed by the government and the ruling party to respond to high exchange rates resulting from changes in international circumstances. The aim is to stabilize the exchange rate by encouraging investment funds that have flowed out to foreign stock markets to return to the domestic stock market.

The amendments introduce new capital gains tax exemption requirements, allowing individuals who sell overseas stocks and invest in the domestic stock market through a Return Investment Account (RIA) to receive up to a 100% capital gains tax deduction, depending on the timing of the sale.

However, the period for which tax benefits apply to individuals selling overseas stocks and investing through an RIA will be extended by two months, moving the sales deadline from the end of the first quarter (March) to May. This extension was deemed unavoidable as the original deadline was imminent at the end of this month.

A new tax provision has also been established to reduce the tax burden on capital gains from the sale of overseas stocks if the proceeds are invested in foreign exchange hedging derivatives for the purpose of mitigating exchange rate fluctuation risks.

Additionally, there are plans to temporarily raise the rate of non-taxable income for dividends received by domestic parent companies from overseas subsidiaries from 95% to 100%. This measure is intended to induce the repatriation of income retained by overseas subsidiaries back to Korea.

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