The 2026 Tax Reform Proposal would raise inheritance and gift tax valuations for flagged listed companies, while also easing tax pressure on SK and expanding ISA and BDC incentives.
South Korea plans to curb so-called share price suppression by raising inheritance and gift tax valuations on shares of listed companies found to have held their stock prices artificially low. Under an amendment included in the Ministry of Economy and Finance's 2026 Tax Reform Proposal, relevant shares would be taxed on a base at least 30% higher than the current method once a company is confirmed as a suppressor. The current rule values KOSPI- and KOSDAQ-listed shares at the average closing price over the two months before and after inheritance or gifting, a framework critics say has enabled controlling shareholders to delay dividend increases or share buyback cancellations before management succession. Companies can be flagged if their six-year price-to-book ratio ranks in the bottom 25% of their KOSPI sector or the bottom 10% on KOSDAQ, or if recent capital transactions such as dual listings or exchangeable bond issuances are followed by a sharp decline in valuation. Final designation rests with the National Tax Service's Valuation Review Committee. The government estimates as many as 200 companies, or about 7.5% of KOSPI and KOSDAQ-listed firms, could be flagged. The proposal also relieves SK from tax tied to mandatory treasury-share cancellation, launches a Productive Finance ISA for domestic stocks and funds with full tax exemption on interest and dividends, and introduces tax incentives for BDCs that back venture and small businesses.