Seoul: The finance ministry has unveiled a new package of tax benefits designed to stimulate the domestic capital market and address structural supply-demand imbalances in the foreign exchange (FX) market. This announcement comes as domestic investors increasingly channel their resources into overseas assets, amid the ongoing depreciation of the Korean won against the U.S. dollar.

According to Yonhap News Agency, the Ministry of Economy and Finance outlined that individual investors who sell overseas stocks and convert the proceeds into Korean won for long-term investments in domestic stocks will receive temporary tax relief on capital gains from these overseas stock sales, effective for one year. This initiative is part of broader efforts to encourage domestic investment.

Additionally, the government plans to assist major brokerage firms in quickly introducing forward-selling products for individual investors. This move aims to equip retail investors with better tools to manage FX risks, which they currently lack.

In a further step to enhance the competitive edge of domestic companies, the government will increase the dividend income exclusion ratio from 95 percent to 100 percent. This measure is intended to reduce the double taxation burden on dividends received by domestic parent companies from their overseas subsidiaries.

The ministry highlighted that despite the strong performance of the domestic stock market, with the Korea Composite Stock Price Index (KOSPI) rising approximately 70 percent this year due to government-led market reforms and optimism about the AI boom, there has been a notable increase in individual investors' overseas stock investments, which contrasts with a decline in domestic equity investments.

Moreover, the ministry acknowledged the growing demand for strategies to repatriate overseas assets held by exporters and other companies to foster domestic employment and investment opportunities.