Strengthening Capital Gains Tax Standards for Major Shareholders Sparks Strong Backlash from Investors

As the government announced a tax reform plan to lower the capital gains tax threshold for major shareholders from 5 billion won to 1 billion won, there has been significant backlash among individual investors.

According to the National Assembly's electronic petition count on the 1st, it was reported that 26,216 people agreed to a petition titled "Opposition to Lowering the Capital Gains Tax for Major Shareholders," registered on the 31st of last month. This opposition opinion formed rapidly, receiving over 10,000 agreements in less than 24 hours after the announcement of the tax reform plan.

The National Assembly's public petition system states that if a petition receives more than 50,000 agreements within a month, it will be referred to the relevant standing committee.

Through this tax reform, the government has strengthened the threshold for capital gains tax applicable to major shareholders from "over 5 billion won per stock" to "over 1 billion won."

This action restores the threshold to its original state after the Yoon Seok-yeol administration raised it to 5 billion won to reduce market volatility caused by year-end sell-offs for tax avoidance.

As a result, concerns are growing that individual investors will repeatedly sell stocks en masse in the KOSDAQ market during November and December and then buy back in early January.

The petition author criticized, "The capital gains tax is a law that can be avoided if stocks are sold at the end of the year; if stock sell-offs occur every year-end, we cannot see a rise like in the U.S."

Additionally, they expressed discontent by stating, "If U.S. stocks and domestic stocks have the same tax, which fool would invest in domestic stocks?" They implored, "Please do not kick away the ladder by setting the threshold at 1 billion won; let’s protect the culture of long-term investment in domestic stocks and the dream of ten-bagger returns."

There is also growing criticism that the threshold for major shareholders is excessively low compared to the average apartment price in Seoul, which is 1.4 billion won.

In response to this government action, the Korea Stock Investors Association has expressed its opposition and staged a protest in front of the National Assembly. Jeong Yi-hyeon, the representative of the association, stated, "Lowering the major shareholder threshold will further solidify the Republic of Real Estate, and the era of KOSPI 5000 advocated by President Lee Jae-myung is likely to remain a mere empty slogan, with a higher possibility of returning to the KOSPI 2000 era."

Image source: Lee Hyung-il, Vice Minister of Economy and Finance, presenting key points at a detailed briefing on the 2025 tax reform plan held at the Government Sejong Building on the 29th. (Provided by the Ministry of Economy and Finance. Reproduction and database prohibition) 2025.7.31/News1, unrelated reference photo / gettyimagesbank