Gu Yun-cheol "Expects FX Stability" as Foreign Stock Tax Cut Bill Passed

The National Assembly's Finance, Economy and Planning Committee passed an amendment to the Special Tax Treatment Control Act at a plenary session on the 17th, which includes a provision to exempt up to 100% of capital gains tax on overseas stocks. The amendment was promoted with the aim of easing foreign exchange market imbalances and stabilizing the won through the repatriation of overseas assets. It is expected to play a positive role in stabilizing volatile exchange rates.

The amendment's core provision allows individual investors to receive up to a 100% deduction on capital gains from overseas stocks if they move their holdings acquired before December 23 of the previous year to a Domestic Return Account (RIA), sell them, and then invest in domestic stocks or other assets for one year. The deduction rate varies by the timing of the sale: 100% for sales made by May 31, 80% by the end of July, and 50% by the end of the year. The deduction limit is 50 million won based on the sale amount.

Additionally, a special tax provision has been newly established, allowing a 5% deduction from capital gains for the purchase of currency-hedged derivatives. The ratio of income not included in taxable income for dividends received by domestic corporations from their foreign subsidiaries has also been raised from 95% to 100% until the end of this year.

Deputy Prime Minister and Minister of Economy and Finance Gu Yun-cheol expressed his expectations for the foreign exchange market stabilization effects after the bill's passage on the 17th.