Stock Transfer Tax Must Be Reported and Paid by the 2nd of Next Month... Major Shareholder Threshold Changed to 5 Billion KRW Starting This Year

The National Tax Service (NTS) announced on the 7th that individuals who transferred stocks in the first half of this year and are subject to capital gains tax must report and pay the stock transfer tax by the 2nd of the following month. The reporting obligation applies to all shareholders except small shareholders who traded listed stocks on the market and small shareholders who traded stocks of small and medium-sized enterprises on the over-the-counter stock market, K-OTC.

From this scheduled report (for transfers after January 1, 2024), the market capitalization threshold for major shareholders will be changed to 5 billion KRW. If the shareholding ratio is 1% or more for KOSPI, 2% or more for KOSDAQ, 4% or more for KONEX, or if the market capitalization is 5 billion KRW or more, the shareholder is considered a major shareholder of a listed company and is required to report.

When determining major shareholders of listed companies, whether the shareholder belongs to the largest shareholder group affects whether related parties are aggregated. The largest shareholder group assesses the major shareholder qualification by combining the shareholding ratio or market capitalization of the individual and other shareholders, but if not part of the largest shareholder group, the qualification is determined solely based on the individual's holdings.

Starting from the 7th, the NTS will send mobile and postal notifications to major shareholders of listed companies and shareholders in the K-OTC market among those subject to scheduled reporting to facilitate reporting. Additionally, to help taxpayers more easily select the complex capital gains tax rates, a 'Tax Rate Selection Assistant' service has been newly introduced on the Hometax reporting screen. It provides assistance materials on four items that determine asset type and tax rate: ▲whether it is a small or medium-sized enterprise ▲whether the stock is listed ▲whether the shareholder is a major shareholder ▲stock holding period. By referring to these and selecting the applicable items, the tax rate is automatically applied.

An NTS official stated, "We have produced a guide video for the first time that covers the entire process from entering to submitting the report so that taxpayers can file by themselves through Hometax." He added, "The video will be distributed through the NTS website’s reporting guidance board, the NTS YouTube channel, and Hometax pop-up windows, so we hope many will use it."