“Opposition to Lowering Major Shareholder Criteria” Surpasses 100,000 Signatures on National Petition

Investors Concerned About Returning to Box Range in Stock Market Due to ‘Tax Increase Package’, The government’s tax reform plan has been primarily blamed for the nearly 4% drop in the KOSPI index on the ‘Black Friday’ of the 1st. Concerns are rising that the domestic stock market, which had managed to break out of its box range, could fall back into stagnation due to the ‘comprehensive tax increase package’ covering capital gains tax, dividend income tax, and securities transaction tax.,
,
, ‘What worries investors the most is the decision to significantly expand the scope of large shareholders subject to capital gains tax. The criteria for a large shareholder will be lowered from ‘holding more than 5 billion KRW per stock’ to ‘more than 1 billion KRW.’ At the end of each year, a flood of sell orders is released to avoid large shareholder designations, causing stock prices to plummet. Lowering these criteria increases the likelihood of more sell-offs.’,
,
, ‘The separated taxation for dividend income also fell short of market expectations. According to the reform plan, the highest tax rate applied when dividend income exceeds 300 million KRW is 38.5% (including local income tax). This is more than 10 percentage points higher than the previously considered bill by Representative Lee So-young of the Democratic Party of Korea (27.5%). Na Jung-hwan, a researcher at NH Investment & Securities, said, “Unlike the stock-friendly policies pursued after the presidential election, the tax increase plans are unfriendly to the market,” adding, “There’s skepticism about the government’s stock price boosting policies.”‘,
,
, ‘Increases in the securities transaction tax and corporate tax rate also add pressure to the market. The securities transaction tax will be raised from the current 0.15% to 0.2%. This tax is imposed on all transactions regardless of profit. There are expectations that the increase in the securities transaction tax will reduce trading volume and add downward pressure on stock prices. The corporate tax rate was also uniformly increased by 1 percentage point across all tax brackets, which could reduce the net income of listed companies and weaken their ability to return profits to shareholders. Additional taxes have also been decided to be collected from financial companies that have been considered high-dividend stocks.’,
,
, ‘There is strong backlash from individual investors against the government’s tax increase plan. As of August 3rd, more than 100,000 people had agreed to the ‘petition against lowering the capital gains tax threshold for large shareholders,’ which was submitted to the National Assembly on July 31st. This far exceeds the 50,000 signatures required for submission as an agenda item to the National Assembly’s standing committee.’,
,
, ‘The petitioner pointed out, “If sell-offs to avoid large shareholder capital gains tax flood the market every year-end, the KOSPI index cannot rise like the U.S.” and argued, “If we impose the same taxes as the U.S. on the domestic stock market, who would invest in it?”‘