South Korean President Shocks with Abolition of Investment Tax

South Korean President Announces Abolition of Financial Investment Income Tax

In a surprising move, the Chairman of the Korea Exchange, Yoon Seok-yeol, announced the abolition of the financial investment income tax during the stock market opening ceremony. This decision has elicited mixed reactions of excitement and concern among the public.

Controversial Financial Investment Income Tax

The financial investment income tax, which imposes a 20% tax on individuals who earn over 50 million won through stock, bond, and fund investments, has been a subject of controversy and criticism. Originally scheduled to be implemented last year as part of the government’s plan for capital market advancement, its enforcement was postponed to the following year due to opposition from individual investors and the industry.

Blue House Announcement Raises Questions

What is particularly noteworthy is that the announcement to abolish the securities transaction tax came from the Blue House, rather than the government responsible for tax management. While the government has officially confirmed the abolition after the president’s statement, it has not provided a clear stance on the securities transaction tax.

Expectations and Concerns

Individual investors have welcomed the news, anticipating increased liquidity and the inflow of idle funds into the stock market. However, concerns have arisen regarding the lack of consistency in financial tax reforms, with recent criticism surrounding the easing of major shareholder transfer taxes.

Uncertain Future in Parliament

The fate of the tax abolition in parliament remains uncertain as opposition lawmakers have expressed their opposition. Some view the decision to abolish the major shareholder transfer tax as an attempt to win the support of individual investors ahead of the upcoming general elections.

Long-Term Co-Prosperity

The attendance of a sitting president at the stock market opening ceremony is unprecedented, highlighting the significance of the decision. The abolition of the financial investment income tax is seen as a measure for long-term co-prosperity between the country and investors. However, parliamentary approval is still required for implementation, leaving the outcome uncertain.

Mixed Reactions

The surprise announcement by Chairman Yoon Seok-yeol has generated both positive and critical reactions. While individual investors welcome the measure, concerns about the consistency of financial tax reforms persist.

Source: Jtbc