South Korean government under conservative President Yoon Suk-yeol will postpone imposing tax on gains from stock and cryptocurrency investments by two years while lowering securities transaction tax, according to the economic policy outline announced on Thursday.

Under the outline, the Korean government plans to cut the rate of securities transaction tax, which is calculated based on the value of securities transacted through stock exchange, from current 0.23 percent to 0.20 percent next year. This will replace the previous Moon Jae-in administration’s plan to impose 0.15 percent securities transaction tax plus levying tax on capital gains from stock and cryptocurrency investments from 2023.

The new government will postpone implementing the capital gains tax on stock trading by two years. Instead, it will slightly lower the securities transaction tax to 0.20 percent for now. It will seek revision in the related law for the changes.

During the two-year grace period, the taxation rule on the capital gains from stock trading by major shareholders will stay the same but the baseline value of stock ownership for defining large shareholders will be relaxed to 10 billion won ($7.8 million). Currently, a shareholder holding 4 percent or more stake or shares worth 1 billion won or more in a company is taxed.

The new government plans to introduce capital gains taxes on financial investments in 2025. The new taxation rule is to impose 20 percent tax on investors for gains above 50 million won from stock trading and above 2.5 million from non-stock investment, regardless of stake size. For gains exceeding 300 million won, 25 percent tax is to be imposed.

The Yoon administration is also seeking to extend operating hours of the country’s foreign exchange market with a goal to run it around the clock. It will first extend the operating hours from current 9 a.m.~3:30 p.m. to 9 a.m.~2 a.m. on the next day, when the London FX market closes.

The government plans to allow authorized offshore-located financial institutions to take part in the local FX market as well.

However, it is expected to take at least one year to make the proposed changes.

By Kim Myung-hwan, Park Yoon-ye, Lee Jong-hyuk and Cho Jeehyun

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]