Jin Sung-jun, chair of the Democratic Party of Korea's policy committee, responded to a request from an individual investor group for the strengthening of 'taxation on foreign major shareholders' by saying, 'It is the global standard for foreigners to be taxed in their home countries.' As discussions continue in the political arena regarding the government's tax law amendment to 'lower the major shareholder requirement to 1 billion won', the controversy over tax equity between foreign and domestic investors is showing signs of escalating.
According to the Korea Stock Investors Association (KOSIA) on the 3rd, Chair Jin replied to a text request the previous day that suggested pushing for a policy to tax capital gains on stocks for those holding more than 1 billion won, similar to domestic investors.
Chair Jin added, 'It is the same principle that when our citizens earn revenue in the U.S. market, they are taxed in Korea.'
Earlier, the Ministry of Economy and Finance reviewed a policy to expand the scope of foreign major shareholders by changing the threshold for non-residents and foreign corporations to be liable for capital gains tax on listed shares from 25% to over 5% during the '2017 tax law amendment.' However, this was scrapped as the financial investment industry, including foreign securities companies, opposed the government's policy.
Chair Jin is also actively supporting the government's policy to expand the scope of 'capital gains tax on stocks.' The Ministry of Economy and Finance announced in their tax reform plan released on the 31st of last month that they would lower the threshold for capital gains tax 'major shareholders' from holding over 5 billion won to over 1 billion won.
In response, there is a strong backlash centered around individual investors. A petition titled 'Opposition to the lowering of the major shareholder capital gains tax' has garnered over 80,000 signatures on the National Assembly's public petition board.
Chair Jin stated the previous day, 'While the Yoon Suk-yeol administration aims to revitalize the stock market and significantly reversed this requirement from 1 billion won to 5 billion won, ironically, stock prices have been falling.' He emphasized, 'The party and government have been closely coordinating during the preparation process of the tax reform plan and will continue to do so during the National Assembly's review process.'
However, as criticism from stock investors surged, Kim Byung-ki, the Democratic Party's floor leader, stated, 'We will consider the possibility of raising the 1 billion won major shareholder standard,' leading to confusion within the ruling party regarding the 'major shareholder requirements.'