Image source: Block Media
Certainly! Below is the rewritten version of the article, optimized for SEO while ensuring no content is omitted and maintaining the same length.
# South Korea Considers Partial Increase in Securities Transaction Tax to Strengthen Revenue Base
South Korea's government, under President Yoon Suk Yeol, is reportedly evaluating a phased hike in securities transaction tax rates starting next year as part of the country's proposed 2026 tax reform measures. This strategy aims to address the nation’s shrinking tax revenue base, exacerbated by declining tax receipts during the current administration.
According to sources within the Ministry of Economy and Finance on October 20, final deliberations are underway to determine whether the reform plan, scheduled for release next month, should incorporate incremental increases in securities transaction tax rates.
# Securities Transaction Tax: Recent Trends and Adjustments
Over the past five years, South Korea has systematically reduced its securities transaction tax rate by a cumulative 0.1 percentage points. Between 2021 and 2022, reductions amounted to 0.02 percentage points each year, followed by a cut of 0.03 percentage points in 2023 and yet another decrease of 0.03 percentage points this year.
With these adjustments, the base securities transaction tax rate for the KOSPI market has been effectively eliminated, and only a special agricultural and fisheries tax rate of 0.15% currently applies. Meanwhile, the tax rate for KOSDAQ and unlisted stock markets stands at approximately 0.15%.
These reductions were initially part of a larger plan under the previous Moon Jae-in administration, which envisioned the introduction of the Financial Investment Income Tax (FIIT). Unlike the securities transaction tax—which applies regardless of capital gains—the FIIT is levied solely on realized profits. To avoid double taxation, the former administration aimed to phase out the securities transaction tax over time as the FIIT took effect.
However, under President Yoon’s government, repeated delays in FIIT implementation disrupted this transition. The tax, initially set for rollout in 2023, was postponed to 2025 before ultimately being abolished through last year’s tax law revision. This policy reversal left South Korea's revenue framework unbalanced, and the securities transaction tax reductions continued unabated—prompting criticism for their impact on the nation’s fiscal health.
# Fiscal Struggles Drive Policy Reconsideration
South Korea has endured substantial tax revenue shortfalls in both 2023 and 2024, with the reductions in securities transaction tax rates identified as a contributing factor. To mitigate these fiscal challenges, the government is now reviewing a partial hike in taxes as part of efforts to bolster the country’s structural fiscal stability.
Additionally, adjustments to capital gains tax policies for major shareholders are being actively debated. A controversial revision to last year’s tax laws raised the taxable threshold for capital gains on listed shares from KRW 1 billion to KRW 5 billion, which critics argue amounts to a tax break favoring wealthy investors and amplifies revenue deficiencies.
As part of the upcoming tax reform plan, the government is exploring measures to lower this threshold or recalibrate related fiscal policies, aiming to rebuild a sustainable tax framework.
# Government's Position on Tax Revenue Policies
A government official commented, “The previous administration significantly weakened the tax base, and we are considering multiple avenues to restore and stabilize it.”
Deputy Prime Minister and Minister of Economy and Finance Kyungho Choo recently offered insights during a parliamentary hearing. Responding to concerns raised by Representative Kim Young-jin of the Democratic Party regarding revenue losses from securities transaction tax cuts, Choo admitted that the nation’s tax base had deteriorated substantially. He underscored the need to prioritize compliance enforcement, reduce exemptions, and curb tax evasion as immediate steps toward resolving the issue.
In response to calls by Representative Oh Ki-hyung to reverse tax cuts, Choo added that any decisions would require a careful evaluation of the principles of equitable burden-sharing alongside the potential economic impacts of reversing past tax reductions.
As South Korea navigates the complex task of balancing the need to invigorate its financial markets with the pressing requirement to close revenue gaps, the results of the 2026 tax reform proposals will play a critical role in shaping the nation’s broader economic trajectory.
This revised article incorporates SEO enhancements, including keyword optimization (e.g., "Securities Transaction Tax South Korea," "2026 tax reform," "tax policy adjustments"), while preserving the original content and length. It also adopts a clear structure to improve readability for both human readers and search engine algorithms.
