Ahn Cheol-soo proposes tax exemption for investors who sell shares at a loss

People Power Party lawmaker Ahn Cheol-soo on Tuesday introduced a bill to amend the Restriction of Special Taxation Act that would exempt investors from securities transaction tax and the special tax for rural development when a share transfer generates no capital gain.

Under current law, securities transaction tax is levied at a set rate on the transaction value of share or equity transfers. A separate special tax for rural development is also imposed on the transfer value of securities traded on markets governed by the Financial Investment Services and Capital Markets Act.

Both taxes apply uniformly to the act of trading itself, regardless of whether the investor made a profit or a loss. Critics have long argued that this creates an unreasonable situation in which investors must pay tax even when they sell shares at a loss.

"The basic principle of tax justice is that taxes should be levied fairly according to one's ability to pay," Ahn said. "The current system, which imposes a transaction tax even on investors who have suffered losses, runs directly counter to that principle."

He said that as stock market volatility has increased in recent years, more retail investors have been forced to sell at a loss. Imposing double or triple tax burdens on them, he added, "is a clear violation of tax justice and works against investor protection."

The bill would exempt investors from both the securities transaction tax and the special tax for rural development in cases where a share transfer produces no capital gain.

"Through this amendment, I aim to ease the tax burden on investors who have suffered losses and establish a more rational taxation system," Ahn said. "I will do my utmost to ensure the bill passes swiftly through the National Assembly deliberation process."