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South Korea will lower stock trade tax by 0.05 percentage point this year and reflect tax rates on capital gains counting in all profits and losses made in home and overseas markets at the year-end to rationalize tax code in capital investments.
The Financial Services Commission and the Ministry of Economy and Finance said on Thursday that the government will lower stock trade tax this year to help stimulate retail stock investment. The cut will lower current stock trade tax on shares listed on the main Korea Composite Stock Price Index (Kospi) and secondary Korea Securities Dealers Automated Quotation (Kosdaq) from 0.3 percent to 0.25 percent and on non-listed shares from 0.5 percent to 0.45 percent. The transaction tax on shares listed on the country’s smallest bourse Korea New Exchange (Konex) will be pushed down from 0.3 percent to 0.1 percent.
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Stock trade tax in Korea was introduced in 1963. It was abolished and then re-introduced, with the current tax range implemented since 1996. The tax has drawn complaints over double taxation as shareholders also pay tax on the income from stock trade. No tax is levied on stock trade in the United States and Japan while the rate in China and Hong Kong is only 0.1 percent.
In Korea, there are two separate taxes – stock trade tax that is levied on each stock transaction and income made from stock trade. The government raises the tax category subject to transfer tax by lowering the stockholding threshold to 10 billion won ($8.87 million) from 15 billion won from April next year and further to 300 million won from April, 2021.
Along with the stock trade tax cut, the government decided to allow investors to annually calculate income on capital gains of local or foreign shares upon investment losses. The change will allow investors to add up all losses and profits from various financial investment products and calculate them before being taxed on income.
[ⓒ Maeil Business Newspaper & mk.co.kr, All rights reserved]
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