South Korea's Ministry of Finance and Economy announced on the 7th that its upcoming tax reform plan, scheduled for release at the end of this month, will protect single residential homes for actual residence while rationally reorganizing systems that encourage real estate speculation. Kim Hu-jin, Planning and Coordination Office Director at the Ministry, stated during a briefing to the National Assembly's Finance and Economy Committee that the tax reform will focus on both a growth tax system supporting economic advancement and a livelihood tax system for inclusive growth. The Ministry outlined priority tasks including price stability, forex and real estate market risk management, and potential growth rate improvement as part of the government's second-half economic strategy.
Ministry Announces Tax Reform Plan Protecting Single Homes
Kim Hu-jin stated that the tax reform plan will introduce a domestic production tax credit and establish a productive financial Individual Savings Account (ISA). The Ministry will pursue strengthened tax support for youth entrepreneurship, reform of the Earned Income Tax Credit (EITC), and expanded regional preferential treatment for tax support to small and medium enterprise workers. Kim explained that all tax expenditures will be reviewed from the ground up.
Government Outlines Second-Half Economic Growth Strategy
The Ministry's second-half economic growth strategy centers on risk management and strategic initiatives following the Middle East war, achieving a rebound in potential growth rate through three mega-projects, and addressing polarization and structural issues for inclusive growth. Kim emphasized that the Ministry will concentrate all capabilities on successful implementation of the three mega-projects to improve potential growth rate. The government will actively support core technology development for a hyper-innovative economy, establish a fund to strengthen strategic export momentum, and promote creation of a global artificial intelligence hub.
The Ministry will prepare a K-GX strategy for green transformation and pursue a sovereign wealth fund with initial capital of over 20 trillion won within the year. Kim added that Korea-US strategic investment will prioritize national interests through the recently launched Korea-US Strategic Investment Corporation, pursuing US investment and shipbuilding cooperation investment projects.
Ministry Strengthens Forex and Real Estate Risk Management
Kim Hu-jin emphasized that the Ministry will ease the burden of living costs for energy and food to stabilize the people's economy, and establish market order by strengthening sanctions against hoarding and cornering. The Ministry will strengthen forex market and real estate market risk management through a 24-hour forex market monitoring system, housing supply, and tax rationalization. Kim added that the government will strengthen supply chain resilience through domestic production support and import diversification.
Regarding polarization response and regional-led growth, Kim stated that the Ministry will discover and select differentiated growth engines for five poles and three special zones, and pursue legislation during the second half to transition to a region-led, centrally-supported system.
Korea Advances Won Internationalization with 24-Hour Forex Market
Kim stated that Korea began 24-hour forex market opening from early this month for won internationalization, and plans to introduce an offshore won settlement system by early next year. The Ministry will pursue diversification of government bond demand, including allowing direct investment in individual investment government bonds through retirement pension accounts.
FAQ
What did South Korea's Ministry of Finance announce on the 7th regarding tax reform?
The Ministry announced that its tax reform plan, scheduled for release at the end of this month, will protect single residential homes for actual residence while rationally reorganizing systems that encourage real estate speculation. The plan will focus on both a growth tax system supporting economic advancement and a livelihood tax system for inclusive growth.
How is South Korea strengthening forex market risk management?
The Ministry of Finance and Economy began operating a 24-hour forex market from early this month and plans to introduce an offshore won settlement system by early next year. The Ministry emphasized strengthening risk management through a 24-hour forex market monitoring system as part of won internationalization efforts.
