‘Investment income tax plan needs close examination’
Financial Supervisory Service (FSS) Gov. Lee Bok-hyun echoed President Yoon Suk Yeol’s opposition to a plan to implement a financial investment income tax next year.
During a press meeting on Thursday with reporters from English-language news outlets, Lee said that the financial investment income tax, which is slated to be introduced early next year, should be postponed further, considering the current situation of the Korean capital markets.
“The framework of the financial investment income tax bill was adopted a few years ago, yet it needs a close reexamination whether its initial structural design and the current market situation still match,” the FSS chief said.
Lee explained the landscape surrounding the domestic capital markets and investors has evolved significantly since then, thereby requiring the entire taxation system over the capital markets to be overhauled organically.
He said that the “current tax bill as it is” should be discussed again, because the implementing tax scheme without revision would slash down the domestic stock markets’ total size.
He emphasized that the financial authorities have been taking a “comprehensive perspective” in key issues, including a short selling ban and financial investment income tax, in order to ultimately bolster and boost the volume and size of the Korean capital markets.
“It is necessary to deeply ponder the potential impacts of the implementation of the financial investment income tax comprehensively and ruminate how to buoy the Korean stock markets further, in terms of the number of investors, market size and trading volumes,” Lee added.
The financial investment income tax can be delayed further if lawmakers agree to do so during a National Assembly session later this year.
Regarding the ongoing short selling ban, the FSS head said that the financial regulators have been devising measures to improve market systems surrounding short selling practices in the long term. He said the exact details of how to lift the ban, which was originally scheduled to be lifted in July, are still in consideration.
“Financial authorities are delving into how to resume short selling in the country while closely weighing up positions of retail, institutional and foreign investors,” Lee said.