Ministry of Strategy and Finance of Republic o : Government Position on Media Report regarding Proposed Changes to Capital Gains Taxes

Government Position on Media Report regarding

Proposed Changes to Capital Gains Taxes

On January 22, 2018, The Korea Economic Daily reported that the government's proposed changes to capital gains taxes raise concerns about a backlash from the financial investment industry and a drop in foreign investors' share in the Korean stock market as stock sales by foreign shareholders will become subject to withholding tax at a rate of 11 percent.

Position of the Ministry of Strategy and Finance

For non-residents and foreign corporations, the provision to lower the current threshold for capital gains taxes on stock sales from 25 percent to 5 percent is currently open for public comment.[1]

The proposed change will only apply to investors whose countries do not have tax treaties with Korea or non-residents who are subject to levy according to tax treaties. Thus, the effects of the changed measure will be limited, and the foreign investors whose countries have tax agreements with Korea will be exempted.

The government is currently reviewing the securities firms' concern about withholding tax in close consultation with the industry.