How will government fine-tune controversial tax reform measures?

An individual savings account advertisement is displayed outside a securities firm branch in Seoul, Monday. Yonhap

By Jun Ji-hye

• Published Aug 17, 2026 2:38 PM KST

ISA rules to get targeted changes, real estate tax framework stays intact

Korea is reviewing potential adjustments to the tax reform package unveiled on Aug. 3 following mounting public controversy and feedback, particularly regarding individual savings accounts (ISAs) that have drawn strong criticism from investors, according to government insiders Monday.

For real estate taxes, however, the government is likely to stick to the core elements of its proposal, including the deduction structure and tax rates. Further adjustments, including the cap on comprehensive real estate tax increases, are expected to be addressed through parliamentary deliberations.

The government plans to gather public input through Thursday before holding discussions at a Cabinet meeting, aiming to submit a final bill to the National Assembly early next month.

The focus of the revisions centers on ISAs, which offer tax exemptions on interest and dividend income and serve as a popular investment vehicle for retail investors looking to build long-term wealth.

Under the initial proposal, the government introduced a new “productive finance ISA” scheme while scrapping the annual contribution rollover and capping maturity periods at 10 years. It also proposed tighter restrictions on existing standard ISAs, including a five-year maturity limit and the elimination of contribution rollovers.

However, the measures sparked criticism for penalizing freelancers and self-employed individuals with irregular incomes, while threatening long-term compound returns.

In response, policymakers are now favorably considering maintaining the current rules, which allow unused contribution allowances to roll over into subsequent years and permit open-ended contract extensions. The revised guidelines are expected to apply uniformly across both traditional and newly established productive finance ISAs.

The government, however, is expected to retain its broader goal of steering household savings into Korea’s capital markets through productive finance ISAs. Under the proposed framework, investors would be allowed to contribute up to 100 million won ($70,600) to a regular ISA and 200 million won to a productive finance ISA, with the latter receiving more generous tax breaks on investment gains. The government is also unlikely to expand the eligible assets for productive finance ISAs to include overseas equity exchange-traded funds, despite calls from retail investors.

As for real estate taxes, the government is expected to push ahead with its proposed overhaul largely unchanged, unlike its flexible approach to the ISA scheme.

The main provisions governing the comprehensive real estate tax, including deduction calculations and applicable tax rates, are expected to remain intact when the bill is submitted to the National Assembly. Specific details, however, could be revised during parliamentary debates.

One of the most contentious issues is a proposal seeking to raise the comprehensive real estate tax burden ceiling from the current 150 percent to 200 percent to ensure higher tax rates translate into actual tax increases.

Some lawmakers from the ruling Democratic Party of Korea, particularly those representing the Seoul metropolitan area, are reportedly pushing to maintain the 150 percent ceiling to shield homeowners from steep tax hikes. The extent to which the tax burden should be eased is consequently expected to become a major sticking point in the upcoming parliamentary deliberations.

Policymakers are also poised to adjust measures aimed at preventing controlling shareholders from deliberately depressing share prices to reduce their inheritance and gift tax liabilities when passing stakes to heirs.

Options under review include lengthening the statutory stock valuation window and capping inheritance tax liabilities so they do not exceed the total value of inherited assets.

The Ministry of Finance and Economy said it will continue to gather feedback from market participants and lawmakers until the public consultation period ends.

“We plan to listen to a wide range of perspectives as broadly as possible,” a ministry official said. “Based on that input, we will carefully consider rational adjustments to ensure the core intent of the tax overhaul is fully realized.”