(LEAD) Gov't to provide temporary tax benefits to investors investing back home

▲ In this file photo, Choi Ji-young (C), a senior official of the Ministry of Economy and Finance, speaks to reporters at the government complex in the central city of Sejong on Dec. 24, 2025. (Yonhap)

(LEAD) domestic investment-tax benefits

(LEAD) Gov't to provide temporary tax benefits to investors investing back home

(ATTN: ADDS more info in paras 6-7, 11-12)

SEOUL, Jan. 20 (Yonhap) -- The government will introduce a temporary tax incentive for retail investors who sell overseas stocks this year and reinvest the proceeds in domestic assets, the finance ministry said Tuesday.

Under the new scheme, investors who sell overseas equities and convert the proceeds into the Korean won for investment in domestic assets for at least one year will be eligible for an income deduction on capital gains from overseas stock sales, according to the Ministry of Economy and Finance.

Capital gains on overseas stock sales are currently taxed at 20 percent.

The tax exemption will be capped at 50 million won (US$33,900) per person, the ministry said, adding that the deductible amount will vary depending on the timing of the sale.

The deduction will be set at 100 percent for sales made in the first quarter of 2026, followed by 80 percent for sales in the second quarter and 50 percent for sales in the second half of the year.

The ministry also announced measures to prevent retail investors from exploiting the incentive by reinvesting funds back into overseas stocks solely to benefit from the tax break.

While funds deposited into designated domestic accounts may be invested freely in domestic stocks and domestic equity funds, the tax deduction will be adjusted if an investor makes net purchases of overseas stocks through a separate account.

In addition, the government will introduce a special tax benefit for retail investors who invest in currency-hedged products.

Under the measure, 5 percent of the investment amount will be deductible from overseas stock capital gains, with a per-person deduction cap of 5 million won.

The move is part of a previously announced package of tax incentives and foreign-exchange measures aimed at addressing continued net capital outflows by domestic investors, which authorities say have largely contributed to the depreciation of the Korean won against the U.S. dollar.

The ministry emphasized the measures will be operated on a temporary basis this year to help stabilize the foreign exchange market.

"The revision will be introduced and discussed during an extraordinary session of the National Assembly in February," a ministry official said.

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