I.  Overview of the 2025 Tax Policy

Within the framework of the 2025 Tax Reform Proposal, the Government of the Republic of Korea has set out a series of measures aimed at increasing budgetary revenues, strengthening the tax system, and promoting greater tax equity in the finance and investment sector. The primary objective of these measures is to rebalance the tax burden among different categories of investors, while at the same time reinforcing national revenue sources in response to declining fiscal receipts.

II. Increase in Securities Transaction Tax

1. Reinstatement and increase of transaction tax rates

One of the key features of the reform is the reinstatement and upward adjustment of securities transaction tax rates on major trading platforms, as follows:

• KOSPI: The tax rate on stock transactions will be increased from 0% to 0.05%.
• KOSDAQ and K-OTC: The applicable tax rate will be raised from 0.15% to 0.20%.
• KONEX: The transaction tax rate will remain unchanged at 0.10%.

These adjustments will apply to securities transactions conducted after the promulgation of the relevant decree and are expected to take effect from 1 January 2026.

2. Objective of Tax Equity

The authorities explain that the reinstatement and increase of the securities transaction tax are intended to enhance fairness within the securities taxation system, ensuring that market participants contribute an equitable share to the state budget and preventing situations of “disproportionate benefits” among different groups of investors.

III. Market Reactions

The proposed policies have triggered strong reactions from investors and financial institutions, for several reasons:

• Some commentators argue that increases in transaction taxes and the expansion of taxation on investment income may adversely affect the functioning of the securities market, leading to reduced liquidity and heightened investor concerns.
• The market has, in fact, recorded declines in stock indices following the announcement of the tax plan, reflecting the sensitivity of the market to new fiscal policy measures.
• Nevertheless, these measures have also garnered support from policymakers who emphasize the need to increase budgetary revenues and to move toward a fairer system of taxation on assets and investment income.

IV. Significance of the securities tax reform

1. Increase in budgetary revenues

The increase in transaction taxes and related adjustments are expected to generate additional revenue from financial and securities activities, which represent a significant potential source of public revenue amid heightened fiscal pressures.

2. Enhancement of tax equity

These measures aim to rebalance the tax burden between individual and institutional investors, as well as between short-term and long-term investment gains, while curbing the exploitation of tax loopholes for the avoidance of investment income taxation.

3. Regulation of market activity

Higher transaction taxes may affect market efficiency by requiring investors to exercise greater caution in trading decisions, thereby restraining purely speculative activities and encouraging the allocation of capital toward long-term investment.

V. Conclusion

Korea’s 2025 securities tax reform—particularly the increase in securities transaction taxes and the adjustment of investment income taxation rules—underscores the objective of establishing a fair, sustainable tax system capable of ensuring fiscal soundness. Despite eliciting mixed reactions from the financial markets, these measures reflect an effort to strike a balance between the development of the capital markets and the equitable distribution of tax burdens in society.

VI. About NYLA – Korean Legal Office

■ NYLA – Your Trusted Legal Partner in Korea

At NYLA, we understand that the success of foreign businesses in Korea requires not only a solid business strategy but also reliable legal support. With a team of experienced Korean attorneys and legal professionals, NYLA provides tailored legal services for companies, investors, and individuals operating or planning to establish a presence in Korea.

We support our clients throughout the entire business journey with comprehensive services, including:

• Legal consultation on company establishment, taxation, and immigration;
• Advice on commercial real estate, franchising, and product distribution;
• Support in human resources, marketing, and business strategy.

In addition to legal advisory, NYLA also represents clients in civil litigation cases related to business, labor, marriage, family, and inheritance to ensure their rights and interests are fully protected.

■ Contact NYLA

If you’re a foreign business or individual looking for a reliable legal partner in Korea, NYLA is here to help. We are committed to delivering effective, practical, and personalized legal solutions for every client.

With a proven track record of assisting hundreds of international clients, our team is equipped to help you navigate complex legal challenges—whether it’s commercial disputes, contract issues, or foreign investment guidance.

Don’t let legal matters hold you back. Let NYLA be your trusted guide in the Korean market.

■ Get in touch with NYLA for expert legal support

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