Leading S.Korean trade body, 31 brokerages urge delay in financial investment tax

South Korea's Korea Financial Investment Association and 31 domestic securities companies on Sunday released a joint statement urging a delay in the adoption of a tax on financial investment gains.

"We request that the National Assembly and political circles make a quick decision to suspend the introduction of the financial investment tax" they said.

"If the financial investment tax is implemented after 20 days, forecasts for and tax acceptability by taxpaying individual investors could plummet," it added. "Brokerages are also not properly prepared for related operations such as computer systems."

The statement warned of a host of implementation problems and confusion if the tax is adopted, as well as fears over the concentration of year-end sales due to taxation of major shareholders.

The tax was set to receive parliamentary approval in 2020 and take effect next month after a two-year grace period. In July this year, however, the Ministry of Strategy and Finance under its tax reform plan delayed the levy for two years citing reasons such as financial market conditions.

The Democratic Party of Korea initially opposed the delay but growing resistance from investors caused it to keep the major shareholder standard at 1 billion won last month. The party also retreated from its earlier position, saying it could accept the government's two-year postponement plan if the tax on stock transactions is cut from 0.23% to 0.15%.

The government, however, has rejected the party's demand and insisted on sticking to its original plan.

Write to Hyun-Ju Jang at blacksea@hankyung.com