Will Taxing Unrealized Gains Crash the South Korean Stock Market? South Korean National Assembly Discusses Including Stock and Real Estate Unrealized Gains in Comprehensive Taxation
BlockBeats News, June 23rd, according to Yonhap News Agency, this morning, various party members of the South Korean National Assembly, including the Democratic Party, the Progressive Party, and the Social Democratic Party, jointly participated in a tax reform forum. The core proposition of the forum is to promote the transition to "comprehensive income taxation" — regardless of whether the asset is sold, taxation is based on substantial net asset appreciation, and unrealized gains of investment assets such as stocks and real estate, including the book value appreciation, are also subject to taxation.
According to Bitget market data, the South Korean stock index plummeted by 9.99% today, triggering a circuit breaker on the KOSPI, with Samsung Electronics and SK Hynix leading the decline.
The core theme of this South Korean tax forum is to transform the current system of taxing based on income into a comprehensive taxation framework based on economic capacity — that is, regardless of the form of assets and whether they are realized, taxation is based on the substantial increase in net assets. Lee Sang-min, a senior researcher at the Korea Institute of Public Finance, pointed out that if taxation only occurs at the point of asset realization, taxpayers will have a tax avoidance incentive to hold onto their assets or delay realization, creating a "lock-in effect" that hinders capital from flowing to more efficient areas. The forum also proposed a more gradual implementation path: unrealized gains are generally recognized as income, but the tax obligation can be deferred until the realization point or postponed for payment with added interest; for real estate and unlisted stocks that are difficult to assess the market value, the current realization point taxation may be maintained, or a pilot program may be implemented only for high net worth asset holders.
