Seoul: The government has decided to maintain the threshold for capital gains tax on stock holdings at 5 billion won (US$3.6 million), as confirmed by Finance Minister Koo Yun-cheol. In a recent announcement, Koo emphasized that the current criteria for major shareholders will remain unchanged due to the "public's desire" and the ruling Democratic Party's (DP) push for measures to invigorate the capital market.
According to Yonhap News Agency, the Ministry of Economy and Finance had initially proposed in July to lower the threshold to 1 billion won, which raised concerns about potential adverse effects on investor sentiment within financial circles. The decision to uphold the current threshold reflects a balance between tax normalization and the need to stimulate the capital market.
Minister Koo stated during a policy consultation meeting with the DP, "Since announcing the tax reform plan in July, we gave a lot of thought into the criteria for major shareholders subject to capital gains tax on stock transactions." He further assured that the government is committed to supporting the growth of companies and the national economy through the revitalization of the capital market and productive finance.
The announcement follows remarks by President Lee Jae Myung at a press conference last week, where he indicated that there was "no need to insist" on the proposal if it negatively affected investor sentiment. Additionally, the finance ministry outlined plans to create a 150 trillion-won fund aimed at fostering economic growth and establishing a business development company to enhance the value of Korean companies and elevate the country's capital market.
Financial experts have largely welcomed the decision, recognizing the government's role in fostering a favorable environment for the domestic stock market. Lee Kyung-soo, a researcher at Hana Securities, noted a relief rally in the stock market following the announcement. "With the announcement in keeping the criteria for major shareholders unchanged, the stock market has been showing a relief rally," Lee stated.
The benchmark Korea Composite Stock Price Index (KOSPI) has set a record high for the third consecutive day, buoyed by optimism over the finance ministry's decision to withdraw its tax revision proposal. As of 11:20 a.m., the KOSPI was trading 0.32 percent higher at over 3,400 points, supported by strong foreign buying.