The government said on the 20th that people who sell overseas stocks and invest in domestic stocks for one year this year can receive a capital gains tax reduction. The aim is to encourage Les Fourmis investing abroad to convert the dollars they hold for overseas investment into won.
On this day, the Ministry of Economy and Finance said it will push to revise the Act on Restriction on Special Cases Concerning Taxation and the Special Tax for Rural Development to create a new income deduction for the Reshoring Investment Account (RIA). If the tax amendment passes the provisional National Assembly next month, major securities firms are expected to launch the RIA. A government official said, "This system will be applied only this year."
Currently, if you sell overseas stocks and make more than 2.5 million won in profit, you must pay a 22% capital gains tax. However, on the 24th, the government said it would reduce capital gains tax by up to 100% if you sell overseas stocks and invest in domestic stocks. As the won-dollar exchange rate keeps rising and Korean retail investors trading U.S. stocks' overseas stock investments have been cited as a factor, the government decided to offer tax benefits to encourage a U-turn to the domestic stock market.
According to the tax amendment bill released by the government on this day, those seeking tax benefits must transfer their overseas stocks to an RIA account through major securities firms. After selling the overseas stocks in this account, they must exchange the proceeds into won and invest for one year in domestic stocks or domestic stock funds. Domestic bonds and bond-type funds are excluded from eligible investments.
The maximum amount eligible for tax benefits is 50 million won per person. The sooner you sell overseas stocks, the greater the reduction in capital gains tax. Sales in the first quarter get 100%, the second quarter 80%, and the second half 50%. You can receive a capital gains tax reduction even if you use only part of the sale amount to buy domestic stocks.
If, after selling overseas stocks, you repurchase overseas stocks in another account, the tax benefit is reduced. This system is also designed so that the sooner the net repurchase, the more the reduction amount decreases.
Meanwhile, a new tax benefit will allow up to 200 million won in dividend income to be taxed separately at 9% and up to 40% to be deducted from income if invested for more than three years in the Public Growth Fund, a public participation vehicle. The Public Growth Fund is a campaign pledge by Lee Jae-myung, under which the public and private sectors will raise 150 trillion won over the next five years to invest in advanced fields such as artificial intelligence and semiconductors and share the returns.