Policy to Lower Major Shareholder Threshold
"Only Institutions and Foreigners Will Benefit"
Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki is presiding over the 4th Innovation Growth Strategy Meeting held at the Government Seoul Office in Jongno-gu, Seoul on the 27th. Photo by Kim Hyun-min kimhyun81@
The number of participants in the Blue House petition demanding the dismissal of Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki surpassed 200,000 on the 27th.
The reason for the petitioners' demand for dismissal is that the policy to strengthen the criteria for major shareholders subject to capital gains tax on stock transfers from 1 billion KRW to 300 million KRW is unfair.
The petitioner stated, "The Minister of Economy and Finance is insisting on the absurd major shareholder 300 million KRW rule," and added, "Moreover, based on unequal taxation between institutions and foreigners, retail investors are being hit twice."
The petitioner said, "Thanks to the participation of Donghak ants in stocks, the KOSPI has maintained an upward trend, but if the major shareholder criteria are strengthened, retail investors' sales will only fatten institutional and foreign investors, causing funds to flow into the real estate market and other adverse effects," and requested, "Dismiss Minister Hong and appoint a competent new minister."
According to the current Enforcement Decree of the Income Tax Act, the stock holding amount per item used to determine whether one is a 'major shareholder' subject to capital gains tax on stock transfers will be lowered from 1 billion KRW to 300 million KRW starting next year.
Thus, major shareholders as of the end of this year will have to pay 22-33% capital gains tax (including local tax) if they sell the relevant stocks and make a profit after April next year.
Individual investors are strongly opposing this policy to strengthen the major shareholder criteria.
In response, the government is reviewing a plan to change family aggregation to individual basis but maintains the existing policy to keep the major shareholder criteria at 300 million KRW.
Deputy Prime Minister Hong predicted at the National Assembly's Planning and Finance Committee audit on the 23rd that the market impact of strengthening the major shareholder capital gains tax criteria would not be significant.
However, voices calling for revision of the 'major shareholder criteria lowered to 300 million KRW' policy are also emerging within the ruling party. Yang Hyang-ja, a Supreme Council member of the Democratic Party, said at the Supreme Council meeting held at the National Assembly on the morning of the 5th, "Activating the capital market is our government's policy direction," and added, "We need to carefully examine whether lowering the major shareholder criteria to 300 million KRW contradicts the government's policy direction."
The Blue House provides official responses through the responsible secretaries or relevant ministers and vice ministers for petitions that receive more than 200,000 endorsements.
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