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| South Korea said Thursday it plans to revise a law to levy a capital gains tax on gains from stock investment beginning in 2023, while lowering a stock transaction tax. Korea Times file |
South Korea on Thursday proposed expanding its capital gains taxes to include a larger number of affluent stock investors, in its push reduce inequality by levying more from the wealthy and less from general share trading.
Starting 2023, taxes will be imposed on annual capital gains exceeding 20 million won ($16,627) for retail investors, finance minister Hong Nam-ki said in a policy meeting.
That would affect about 300,000 people or the top 5% of all stock investors in Asia's fourth-largest economy, the finance ministry said in a statement.
It would also mark a significant expansion of current rules as capital gains taxes are only applied to large shareholders with stakes exceeding 1% or 1 billion won ($831,373) of listed stocks.
Currently, no retail investors of listed shares are subject to capital gains taxes unless they are classified as "large shareholders".
About 95% of equity investors derive less than 20 million won in annual capital gains from financial investments. For the majority of these investors, taxes will now be lowered with transaction taxes cut to 0.15% for KOSPI-listed shares by 2023 from current 0.25%.
South Korea's left-leaning Moon Jae-in government has been hiking taxes for wealthy property owners and leading conglomerates to address growing income inequality and rising welfare costs due to its rapidly ageing society.
The new taxes are subject to parliamentary approval.
President Moon's ruling party secured 180 seats in the 300-member, single-chamber parliament following a parliamentary election in April, which should help the government pass the laws in the National Assembly.
Institutional investors won't be affected by the proposed revision in capital gains taxes as they are subject to corporate income tax. (Reuters)
