Korea raised the tax on selling shares in 2026 — without a vote in parliament

Since 1 January 2026, selling a KOSPI-listed share costs 0.20% of the proceeds. It cost 0.15% for the whole of 2025. The increase arrived in a Presidential Decree signed on 31 December, applies to every seller — Korean, foreign, retail, institutional — and required no vote in the National Assembly.

That last part is not a procedural footnote. It is the design.

Article 8 of the Securities Transaction Tax Act fixes the rate at 0.35% and then, in its second paragraph, hands the government a lever: where it is judged urgently necessary to develop the capital market, the rate may be lowered or set at zero for exchange-traded shares, board by board, by Presidential Decree. Every rate a Korean investor has actually paid in years has been a number in that decree rather than in the statute. So the rate can move again, quickly, and the only place to read it is a document most investors have never opened.

What the decree now says

Article 5 of the enforcement decree, as amended on the last day of 2025, sets three rates. Add the rural development surtax that rides on KOSPI sales and the picture looks like this.

The two main boards land in the same place, as they have for years. Whenever Seoul cut the KOSPI transaction tax it cut KOSDAQ by the same number of basis points, and the surtax that applies only to KOSPI kept the totals level. What changed in January was the level itself, not the balance between the boards.

The tax was being dismantled. Then the thing it was traded for died.

The path down was deliberate and staged: 0.23% in 2021 and 2022, 0.20% in 2023, 0.18% in 2024, 0.15% in 2025. Read as a series it looks like a government quietly making its market cheaper to trade.

It was not that. It was the consideration in a bargain.

Korea legislated a financial investment income tax in 2020 — a tax on realised gains, of the kind most developed markets run — and the transaction tax was supposed to shrink as the gains tax phased in. Start date 2023, then deferred to 2025. Retail investors organised against it, both major parties eventually campaigned against it, and on 10 December 2024 the National Assembly voted it out of existence before it ever collected a won.

That left the concession without the trade. Through 2025 Korea taxed neither KOSPI turnover, in any meaningful sense, nor gains on listed shares held by ordinary investors. A cut made as the price of a gains tax that no longer exists is a straightforward thing to reverse, and in December the government reversed roughly a third of it.

What 0.20% actually costs

Not much, once. Sell ₩10 million of stock and ₩20,000 goes to the state — less than the spread on a thinly traded small cap, comparable to what a full-service broker charges in commission.

The number bites at frequency, not at size. It is charged on every sale, so a strategy that turns its book over ten times a year pays 2% of the portfolio annually before commissions, and pays it whether or not the year made money. That is the feature investors most often miss. The tax base under Article 7 is the transfer value, not the gain. Sell at a loss and you still pay.

For a long-term holder this is close to noise, which is roughly the point of a transaction tax: it prices frequency. Anyone weighing the routes into Korean equities from abroad should note that it also prices venue. The tax attaches to the transfer of a Korean share certificate. Sell an American depositary receipt or an offshore ETF and no Korean transaction tax arises, because no Korean share certificate changed hands — a difference of 20 basis points a round trip that compounds for anyone rebalancing often, and one of the few places where the wrapper genuinely matters.

The larger line on a foreign investor’s statement

Transaction tax is rarely the biggest number a non-resident pays on Korean shares. Dividends are.

Without treaty relief, a dividend to a non-resident is withheld at 20% national tax plus a local surtax of 10% of that — 22% all in. Treaty rates cut it, unevenly. A UK or Japanese portfolio holder gets 15% and no surtax. A US resident gets the 15% treaty rate but Korea’s local surtax still rides on top, for 16.5%. On a 3% yield, the gap between 16.5% and 22% is worth more each year than the transaction tax on a full round trip.

And the paperwork changed this year in a way that matters. Treaty relief has never been automatic in Korea — it requires an application and a certificate of residence lodged with the payer before the dividend is paid. From 1 January 2026 the withholding agent must also file that application with the district tax office by the end of February of the following year. In practice the burden lands on the custodian, and the failure mode is familiar: no current residence certificate on file, 22% withheld, and a refund claim that takes far longer than the dividend did.

The transaction tax is the part everyone can see and the part that costs least. It is also the part that can change on 31 December with no debate, which is why the enforcement decree is worth a bookmark. Korea spent five years cutting this tax to buy a reform, lost the reform, and took most of the cut back in a single line of secondary legislation. Nothing in the statute stops the same lever moving the other way the next time the KOSPI has a bad year and Seoul wants to look supportive.

Figures current as of 20 August 2026. Rates verified against the Securities Transaction Tax Act and its enforcement decree at the National Law Information Center, and cross-checked against PwC Worldwide Tax Summaries. Tax treatment depends on your residence and your holding; this is journalism, not tax advice.