S. Korea's tax income from stock trade to be doubled from last year and hit record-high

While tax income has fallen far short of expectations due to virus-induced recession, levies from stock trade would likely reach record-high in South Korea due to retail stock frenzy.

According to the Korea Exchange and National Tax Service on Tuesday, turnover at the main Kospi and secondary Kosdaq market from December 2019 to September 18 amounted to 4,030 trillion won ($3.4 trillion), with the daily tally averaging at 20.15 trillion won.

At this rate, about 4,977 trillion won in stock trade could be subject to 2020 fiscal tax bill, soaring 119.7 percent from last year.

The tax rate on average has gone down to 0.10 percent from 0.15 percent for the main Kospi and to 0.25 percent from 0.30 percent from May 30 last year. That would mean 0.18 percent would be taxed for this year’s stock trade, compared with 0.22 percent average from 2014 to 2018.

Based on the estimation, this year’s tax revenue from stock transactions would reach 8.8 trillion won, more than doubled from last year’s 4.47 trillion won and overwhelm 2018 record-high of 6.24 trillion won.

Individual and day traders have been swarming into the stock markets amid easy and cheap liquidity from record-low interest rates and scarce investment options. Retail investors were behind 288.4 trillion won, or 75 percent of total trade turnover as of Sept. 18.

The stock transaction tax rate goes down by 0.02 percentage point in 2021 and 0.08 percentage point in 2023.

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