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(2nd LD) Moon urges prudent approach on levying more capital gains taxes on stock investors

All News 13:56 July 17, 2020

(ATTN: ADDS details in last 6 paras)

SEOUL, July 17 (Yonhap) -- President Moon Jae-in on Friday stressed the need to keep encouraging retail stock investors here with a focus on boosting South Korea's equity market, Cheong Wa Dae said.

The statement came in response to a strong backlash against the government's taxation law revision plan to expand capital gains taxes for retail investors.

"It should not be (implemented in) a way to shrink the stock market or discourage retail investors," the president was quoted as saying by Cheong Wa Dae spokesman Kang Min-seok at a press briefing.

Moon said polices should be "acceptable" by the people, adding it's time to "encourage" retail investors who have propped up the local stock market amid the COVID-19 crisis, according to Kang.

"President Moon said there's a need for the domestic stock market to get stronger and instructed (relevant authorities) to think more importantly of the role of retail investors," Kang said.

The finance ministry earlier announced a scheme to impose taxes of up to 25 percent on annual capital gains exceeding 20 million won (US$16,000) for retail investors starting in 2023.

President Moon Jae-in (Yonhap)

Moon's remarks are expected to prompt the finance ministry to amend some provisions of the tax overhaul proposal.

Under the plan, all investors who hold listed stocks will be subject to a tax rate of 20 percent. If they hold stocks worth more than 300 million won, the tax rate will be raised to 25 percent.

However, the proposed tax revision allows a retail investor to be exempted from a capital gains tax when annual profits from stock transactions are below 20 million won.

Currently, South Korea levies a capital gains tax on major shareholders who own stocks worth more than 1 billion won in a single company.

South Korea had some 6 million retail investors as of 2019. The ministry said earlier under the revised tax code, about 5 percent of retail investors, or some 300,000 people, would be taxed.

lcd@yna.co.kr
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