Announcement Today on Major Shareholder Capital Gains Tax Threshold Change from 1 Billion to 5 Billion Won

The government will raise the threshold for major shareholders subject to capital gains tax on stock transfers from the current 1 billion KRW to 5 billion KRW or more.

The Ministry of Economy and Finance will announce the amendment to the Enforcement Decree of the Income Tax Act containing this content on the afternoon of the 21st, after the National Assembly's budget bill is processed. The main point is to raise the stock holding amount subject to capital gains tax for major shareholders from the current 1 billion KRW per stock to 5 billion KRW. Once the government amends the Enforcement Decree of the Income Tax Act, it will be implemented after procedures such as public notice and the Cabinet meeting.

Choe Sang-mok, Deputy Prime Minister and Minister of Economy and Finance nominee, is delivering opening remarks at the confirmation hearing held at the National Assembly on the 19th. Photo by Kim Hyun-min kimhyun81@

According to the current Income Tax Act and its Enforcement Decree, investors holding 1 billion KRW or more per stock are considered major shareholders and must pay 20% tax on capital gains. As a result, to avoid taxes due to being designated as major shareholders, large-scale stock sales occur at the end of the year, which significantly impacts the stock market.

On the 19th, Choi Sang-mok, Deputy Prime Minister and nominee for Minister of Economy and Finance, hinted at the possibility of easing capital gains tax for major shareholders during the National Assembly confirmation hearing. Choi stated, "It is a matter to be decided comprehensively considering domestic and international economic conditions." This was interpreted as placing more weight on the possibility of easing, contrary to the Ministry of Economy and Finance's previously cautious stance.