South Korea will lower taxes for trading any type of stock starting May 30.
Main Kospi stock trade tax will go down to 0.10 percent from previous 0.15 percent and to 0.25 percent from 0.30 percent for Kosdaq shares.
The levy to trade shares listed on third-tier Konex will be cut to 0.10 percent from 0.30 percent and to 0.25 percent from 0.30 percent for shares on the over-the-counter financial market (K-OTC).
The government in March announced it will lower the levy collected for every stock trade to draw more retail investment.
The country imposed a fixed rate of tax on all securities transactions regardless of profit or loss on the investments. It has drawn complaints for double levy as shareholders are also required to pay tax on income from stock trade.
The Ministry of Economy and Finance said Tuesday that the proposal on lowering stock trade tax was passed at the Cabinet meeting, with the change taking effect from May 30. As stock settlement is made two business days after a sale or buying order of a share is made, the revised tax rate will become effective from June 3.
The finance ministry expected the latest measure to not only help lower the tax burden on stock investors but also improve investor sentiment, especially in the venture-focused Konex market.
The adjustment on transaction tax for non-listed shares and over-the-counter trades, however, will be included in the government’s regular tax amendment proposal to be made later this year, said the finance ministry.
The government has been studying to fix the current financial market tax policies including raising tax on capital gains from stock investment and adjusting stock trade tax. It plans to run a task force, consisting of tax law specialists from the government, private institutions and academia, from the end of this month to go over the overall taxation system on financial transactions.
By Sohn Il-seon and Cho Jeehyun
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