Lee Hyung-il says capital gains tax needs stable markets first, urges caution on inheritance tax reform

Competing arguments on inheritance tax burden, equity require social consensus, nominee says; detailed virtual asset tax criteria to be released this year ahead of January rollout

Lee Hyung-il, nominee for deputy prime minister and minister of economy and finance, holds a press briefing for reporters at Government Complex Sejong. [Ministry of Economy and Finance]

Lee Hyung-il, nominee for deputy prime minister and minister of economy and finance, said any introduction of a capital gains tax — including a financial investment income tax — should be considered only after financial markets have sufficiently stabilized. He also struck a cautious note on reforming inheritance and gift taxes, saying social consensus would first be needed.

The positions emerged Sunday in written responses Lee submitted to the National Assembly ahead of his confirmation hearing, as released by the Ministry of Economy and Finance. On financial investment taxation, Lee said he would overhaul the regime to keep pace with changes in financial markets and the financial industry, and build a fair and efficient tax system.

On the timing of introducing a capital gains tax, including a financial investment income tax, Lee said it was a matter to be discussed after market conditions had sufficiently stabilized. He signaled that he would monitor market conditions rather than push for immediate implementation, given the potential impact on financial markets.

On inheritance and gift tax reform, Lee said competing arguments were squarely at odds. He said some argue South Korea's inheritance tax rate is high by international standards and the burden should be reduced, while others contend that a tax cut would be inappropriate given deepening asset inequality and concerns over tax equity.

Lee said the issue required broad consultation and social consensus, and that any discussion should comprehensively weigh fiscal conditions and the range of beneficiaries.

On corporate tax policy, Lee outlined a dual approach of supporting growth while broadening the revenue base. He said tax incentives backing future growth engines, advanced industries and regionally led development would be maintained, but that low-impact tax exemptions and deductions would be streamlined to reflect changes in the economic and industrial environment.

On virtual asset taxation set to take effect in January, Lee said the National Tax Service would publish detailed tax criteria through an official notice before the end of this year. He said the specific standards were being drawn up to ensure taxpayers would not face difficulties when filing.

Asked about criticism that classifying virtual asset income as miscellaneous income was inappropriate, Lee said the current classification was appropriate. He explained that categorizing it as miscellaneous income was necessary to apply broad income taxation while reducing compliance costs and extending taxpayer-friendly provisions such as basic deductions and a flat tax rate.

Lee added that since shares were already subject to capital gains taxes for major shareholders, overseas equities and unlisted stocks — as well as securities transaction taxes — taxing virtual assets would also help improve tax equity across asset classes.

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