Major Shareholder Requirement Likely to Be Deferred by 2 Years with 1 Billion Won Threshold
[Asia Economy Reporter Jang Sehee] The Democratic Party of Korea and the government have reportedly agreed to reduce property taxes on houses with a publicly announced price of 600 million won or less. The ruling party initially advocated for a threshold of 900 million won but accepted the government's position. Additionally, the ruling party and government have decided to postpone lowering the major shareholder threshold for imposing capital gains tax on stock transfers from the current 1 billion won to 300 million won starting next year.
According to political circles on the 3rd, after final adjustments, the ruling party and government agreed to reduce property taxes for single-homeowners with a publicly announced price of up to 600 million won. The related details will be announced on the 6th. Currently, the property tax rate ranges from 0.1% to 0.4% depending on the taxable standard (60% of the publicly announced price). However, going forward, the tax rate for single-homeowners with properties valued at 600 million won or less is expected to decrease by 0.05 percentage points in each bracket.
The government plans to gradually adjust the publicly announced prices to reflect market prices (likely reaching 90% of market value by 2030), which would increase the tax burden on single-homeowners and owners of mid- to low-priced homes. In response, the ruling party and government reviewed property tax relief measures and reached an agreement on this day. Regarding the threshold for property tax relief, the ruling party insisted on 900 million won, while the Blue House and government maintained their stance at 600 million won.
However, the major shareholder threshold will remain at the current 1 billion won as the ruling party requested. The government has been gradually lowering the major shareholder threshold through tax law revisions since 2017: 1.5 billion won in 2018, 1 billion won this year, and 300 million won next year. The ruling party is concerned that if the threshold is lowered to 300 million won as planned, many investors may sell stocks at the end of the year, potentially destabilizing the market.
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