South Korea shelves capital gains tax reform after investor revolt

South Korea has abandoned the capital gains tax plan, reducing it from 5 billion won to 1 billion won after facing a backlash from retail ￰0￱ lawmakers also warned that the plan would risk undermining South Korea’s stock ￰1￱ Ministry of Economy and Finance revealed the tax plan as part of a broader reform to boost the South Korean market amid U. S tariff ￰2￱ plan was criticized, citing that more investors will be caught in higher tax brackets, restrict trading, and trigger major ￰3￱ surges following President Lee’s reversal of the capital gains tax President Lee made remarks after his first 100 days in office, noting that revitalizing the market is a central pillar of his administration’s economic ￰4￱ acknowledged that insisting on tightening the capital gains tax would hinder his agenda; therefore, he discontinued the ￰5￱ revealed that the National Assembly would make the final decision, confirming that both ruling parties are on ￰6￱ proposal received more than 140,000 signed petitions from the public, with groups such as the Korean Stockholders Alliance warning of a possible civil ￰7￱ Eui-junh, head of the Korea Stockholders Alliance, said that the Kospi index cannot co-exist with the capital gains tax of 1 billion ￰8￱ Kospi index rose 5.63% throughout the past week and recorded a 0.3% gain today at 3,406.20 ￰9￱ to Goldman Sachs, the weekly inflow was over 4 trillion won, the largest since ￰10￱ YTD stands at 41.93%, which is primarily contributed to by technology sector ￰11￱ Kwon, a Bloomberg Economist, revealed that the reversal exposed weaknesses in Korea’s large shareholder tax ￰12￱ noted that the U-turn on the stock capital gains tax reflects more than wavering policy consistency, revealing flaws in the hefty shareholder gains ￰13￱ added that the retail investors feared a significant ￰14￱ Lee proposed tax hikes to raise funds for campaign pledges and curb the gaps in a budget affected by weak ￰15￱ off the tax on capital gains would cause a revenue reduction to the tune of 200-300 billion won, but some of the country officials noted that it was a more negligible risk to take on compared to the potential market disruption it would have ￰16￱ Korea aligns stock and crypto tax policies The decision has triggered pressure to find alternative sources of revenue to cover the ￰17￱ Lee reaffirmed the nation’s plans to increase the tax on stock transactions from 0.15% to 0.2%.

He also urged the National Pension Service to increase its stake in diversified domestic investments rather than focusing on international ￰18￱ Korean government advanced its corporate reforms with the recent amendment to the Commercial Act, which sought to advance the director’s fiduciary duties and introduce cumulative voting for large listed ￰19￱ Lee confirmed that further reforms would follow, targeting unfair executives and certain controlling shareholders to protect minority investors and hence strengthen the Korean financial ￰20￱ plan to scrap capital gains tax follows a recent shift in tax policies affecting the crypto business in the ￰21￱ reported that on July 9, 2025, the National Tax Service (NTS) clarified that residents receiving virtual assets from overseas as labour income from foreign companies must report and pay the comprehensive income ￰22￱ NTS had cited the provisions under the Income Tax Act from Article 127 on withholding obligations and Article 70 on final tax ￰23￱ Ministry of SMEs and Startups also proposed a legislative amendment to scrap the virtual asset-related industries from the list of restricted sectors under the Special Act on the Development of Venture ￰24￱ country had prevented businesses in crypto trading and brokerage from venture company status, limiting their access to tax breaks, financing, and procurement ￰25￱ $50 free to trade crypto when you sign up to Bybit now