The security transaction tax rate on the KOSPI market, which was 0%, will rise to 0.05% starting Jan. 1 next year. The security transaction tax rate on the KOSDAQ market will also rise from 0.15% to 0.20%.
The Ministry of Economy and Finance said on the 1st that it will push ahead with two amendments to enforcement decrees of the tax law, among the tasks released through the "2025 tax reform plan," that are scheduled to take effect from January next year. The enforcement decrees will be promulgated after a public notice of legislation through the 15th of this month, followed by meetings of the Vice Ministers and the Cabinet, and will take effect on Jan. 1 next year.
According to the amended enforcement decrees, the security transaction tax rates for the KOSPI and KOSDAQ markets will increase by 0.05 percentage point (p) from current levels. The government had previously lowered the security transaction tax rate on the condition of introducing a financial investment income tax, but because that tax was abolished, the lowered rate is being raised again. The security transaction tax rate for the KONEX market remains at 0.1%.
In addition, the scope of reduced dividends, which had been entirely tax-exempt, has been narrowed by the decree amendment. Reduced dividends are not taxed because they are paid to shareholders from capital surplus rather than profits earned from business operations, but this measure comes as more corporations have abused the practice. Starting next year, for controlling shareholders of listed companies and shareholders of unlisted companies, the portion exceeding the acquisition cost of the shares will be taxed as dividend income.