Major Shareholders Who Transferred Stocks in the First Half Must Pay Capital Gains Tax This Month

'Market capitalization over 1 billion KRW' defines a major shareholder
Reporting required even when holding 1% or more of KOSPI · 2% or more of KOSDAQ

Major shareholders of listed corporations and shareholders of unlisted corporations who transferred stocks in the first half of this year must report and pay capital gains tax by the end of this month.

The National Tax Service (NTS) announced on the 8th that, to facilitate reporting, it will send capital gains tax pre-reporting notices to shareholders of unlisted corporations traded on the Korea Over-the-Counter Market (excluding small shareholders of small and medium-sized enterprises and mid-sized companies) and major shareholders of listed corporations among the pre-reporting subjects.

The subjects for this capital gains tax reporting and payment are shareholders of unlisted corporations and major shareholders of listed corporations who transferred stocks during the first half of this year (January to June). However, small shareholders (all shareholders who are not major shareholders) who transferred stocks of small and medium-sized enterprises and mid-sized companies traded on the Korea Over-the-Counter Market are exempt from the obligation to report and pay capital gains tax.

A major shareholder of a listed corporation is defined as one whose market capitalization as of the end of the business year immediately preceding the business year to which the transfer date belongs is 1 billion KRW or more, or whose shareholding ratio is 1% or more for KOSPI, 2% or more for KOSDAQ, or 4% or more for KONEX.

Starting this year, the scope of related parties to be aggregated when determining major shareholders of listed corporations varies depending on whether the shareholder is the largest shareholder. The largest shareholder refers to the single shareholder with the highest shareholding ratio among the 'single shareholder and related parties' when their shares are combined. If not the largest shareholder, the shareholding ratio is determined based only on the shares held by the individual.

The NTS provides a simplified reporting service that is easier to complete than the general report for taxpayers with a small number of stock items and transactions during the pre-reporting period (semiannual). The input process is streamlined, and the income amount and tax calculation details are presented at a glance to enhance taxpayer convenience.

From the 11th, major shareholders’ stock transaction details will also be provided. Transaction details from the Korea Over-the-Counter Market collected through securities firms and listed stock transaction details will be provided, and if necessary for preparing the report, they can be utilized via the 'Download Transaction Data' feature.

Additional taxes are imposed for underreporting capital gains tax (10%), failure to report by the pre-reporting deadline (20%), and fraudulent non-reporting or underreporting (40%). If payment is not made or underpaid by the payment deadline, an additional late payment surcharge of 0.022% per day on the unpaid tax amount must be paid.