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South Korea may delay widening capital gains tax net for foreign investors

South Korea may delay widening capital gains tax net for foreign investors

SEOUL :  South Korea’s finance minister said on Monday that the government may delay the implementation of a proposed widening of its capital gains tax base for foreign investors, which was due to take effect from July. Kim Dong-yeon said he had received feedback from representatives of the international investment community about the proposal and that he would review the matter.

“(The government) could possibly suspend applying the revised tax and this will be decided depending on the interest of the foreign investors,” Kim told reporters after a meeting. His comments contrast with reassurances from his ministry last week that the revised tax regulation would have limited impact on stock markets as they only applied to investors from nations with which South Korea does not have tax treaties. South Korea had proposed cutting the shareholding ownership threshold at which the capital gains tax on listed securities transactions is triggered to 5 percent from current 25 percent. This would have increased the number of foreign investors affected by the tax. Kim noted on Monday he had been given several opinions regarding the tax change and that he met a representative of investors from Singapore. Singapore is one of the countries that South Korea does not have a tax treaty with. He did not elaborate on the substance of the opinions. “I will fully review this issue in a responsive manner,” said Kim. President Moon Jae-in’s administration has vowed to boost household income and has imposed bigger taxes on wealthy South Koreans and leading conglomerates to fund rising welfare costs and make housing more affordable.