Understanding the Gold Investment Tax in South Korea

Over 60,000 people signed a petition to abolish the financial investment income tax due to its complexities and potential impact on individual investors.

### Understanding South Korea's Financial Investment Income Tax
* 💰 South Korea's financial investment income tax applies to profits from stock and bond investments, with **different tax rates based on the amount of profit**.
* 📉 For domestic stocks, the tax rate is **20% for profits exceeding 2.5 million won** and **25% for profits exceeding 300 million won**. The same rates apply to **overseas stocks and bonds**.
* 📅 Investment losses can be carried forward for **up to 5 years** to offset future profits, providing **some relief for investors**.
* 📝 The tax is withheld semi-annually, which can create **cash flow challenges for investors**, especially if their investments **underperform in the second half of the year**.
* 🏦 Investors must set a deductible limit with their primary securities company, which can **complicate tax calculations** for those using **multiple brokers**.
* 💼 The tax may also impact year-end tax settlements, potentially **reducing deductions for health insurance premiums and other expenses**.
* 🌐 Critics of the tax point to Taiwan's failed attempt to implement a similar system in 1989, which led to a **stock market crash** and subsequent **repeal of the tax**.
* 🔍 Experts suggest that to make the tax more investor-friendly, the loss deduction period should be **extended to 15-20 years** and special incentives should be provided for **long-term investors**.

More than 60,000 people agreed to the petition to abolish the financial investment income tax in just one month. What on earth is the financial investment income tax for? When we earn income, taxes come without fail. However, there has been only one exception to this basic principle. To put it simply, there is no tax on the 100,000 won profit, even if you sell stocks bought for 100,000 won for 200,000 won. However, if there is a gold investment tax, if you make profits from financial investment products such as stock and bond funds, there is no tax. You will have to pay taxes. Investors will naturally not like it because they suddenly ask you to pay taxes that you did not pay. However, if you check the details, it is not necessarily disadvantageous. First, add up the gains and losses from gold investment. In the case of group 1 belonging to stocks, etc., the difference is 50 million won. If it exceeds KRW 2.5 million, it is taxed at a 20% tax rate. If it exceeds KRW 300 million, it is taxed at a 25% tax rate.

This group, which belongs to overseas stocks and bonds, is taxed at the same tax rate, starting from the amount whose profit exceeds KRW 2.5 million. Let's take an example. Samsung Electronics' KRW 60 million. If a profit was made and a loss of 30 million won was incurred on the US stock Apple, the total amount is less than 50 million won, so there is no tax. In addition, the final loss arising from financial investment income can be deducted in February for 5 years. If I do so by 2025. If an investment loss occurred in 2018, it can be deducted from profits for 5 years, from 2026 to 2030, the next year. So whether or not you are subject to tax depends on the investment situation, so you cannot unconditionally tell me this separately. Here we are. The securities transaction tax paid when selling stocks is also continuously decreasing. However, with the implementation of the gold investment tax, there are more things to pay attention to.

First, the gold investment tax is withheld once a half year, and then the decision is made on whether to withdraw money at settlement, or if the investment performance is poor in the first half of the year. Let's say I paid a lot of taxes because I liked it, but my investment performance was not good in the second half of the year, so in the end, I made a loss that year. In this case, I will get back the taxes I already paid next year, but from an investor's point of view, there is an opportunity cost, because I cannot use that money to invest in other investments. Of course, it will be a loss, and there can be a problem if you use multiple securities companies. I need to set a deductible of 50 million won focusing on the securities company I frequently use. If the deduction limit is set to 30 million won for securities company A and 20 million won for securities company B. However, in the first half of the year, if A's

profit was 0 won, and B's profit was 30 million won. 22% tax on the 10 million won of securities company B's profit is first paid and settled the following year. Additionally, it will affect the year-end tax settlement. The fact is that at year-end tax settlement, if your dependents' business income is less than 1 million won, you can receive a personal deduction of 1.5 million won per person. However, with the introduction of the gold investment tax, if your annual profit exceeds 1 million won, you can receive a comprehensive income deduction. In this way, the number of people excluded from the basic deduction could reach hundreds of thousands. In addition, health insurance premiums may increase due to financial investment profits. The foreign example that those who oppose gold investment taxation typically cite is Taiwan, which was transferred in 1989. They also tried to implement full taxation of listed stocks by imposing income tax, but the stock price plummeted within a month, and the

plan was withdrawn after a year. However, at the time, Taiwan was in a situation where the real-name financial real-name system was automatically implemented with the introduction of gold investment. So, this was a failure of gold investment taxation. Rather, some say that it is different from our current situation because there was great resistance to it. Experts say that in order to implement a gold investment tax, the system must be operated in a way to encourage long-term investment. First of all, the February loss deduction period is 5 years. There are arguments that it should be extended to at least 15 to 20 years. The current system of 5 years is too short to calculate losses and profits in an integrated manner, so there is a possibility that investments will not be protected from a long-term perspective. There are some countries that allow it, and some say that long-term investors should increase the deduction amount or be taxed at a low rate. There is a special deduction for real estate that deducts 30% of the transfer difference if it is held for more than 15 years. There is tax where there is profit.

I understand the point of introduction, but individual investors cannot avoid it, so please prepare thoroughly. [Music]

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The Impact of Financial Investment Income Tax

More than 60,000 people signed a petition to abolish the financial investment income tax in South Korea.

The tax applies to profits from investment products such as stocks and bond funds, with varying tax rates based on the amount of profit.

Investment losses can be deducted for up to 5 years, affecting the tax obligation.

Tax Implications of Gold Investment and Securities Trading

Gold investment tax is withheld biannually, with the option to withdraw funds at settlement.

Poor investment performance can result in a tax refund the following year, causing opportunity cost for investors.

Setting a deductible for a specific securities company can impact tax payments and year-end settlement, while high profits may affect the eligibility for personal and comprehensive income deductions.

Opposition to gold investment taxation often cites the example of Taiwan's stock market crash after the implementation of a similar tax on listed stocks.

Challenges and Suggestions for Gold Investment Taxation in Taiwan

The initial gold investment tax plan was withdrawn after a year, as it faced significant resistance and was deemed a failure.

Experts suggest that implementing a gold investment tax would require a system that encourages long-term investment.

Some propose extending the February loss deduction period from 5 years to 15 or 20 years to better protect investments.

Additionally, there are suggestions to offer special deductions or lower tax rates for long-term investors, similar to the approach for real estate.

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