Tax cuts lure overseas investors back home

Jan 21, 2026, 07:49 am

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An electronic board shows the exchange rate at Hana Bank headquarters in central Seoul on Jan. 20. / Yonhap

The government plans to introduce tax incentives as early as February to encourage retail investors who have poured money into overseas stocks to return to the domestic market, offering capital gains tax relief if funds are reinvested at home for at least a year.

According to the Ministry of Economy and Finance on Jan. 20, the policy centers on a new “Return to Domestic Market Account” (RIA), designed to channel proceeds from overseas stock sales back into Korea amid concerns over exchange rate volatility.

Under proposed amendments to tax laws, investors who sell foreign stocks through an RIA, convert the proceeds into won and invest domestically for one year will be eligible for income deductions on capital gains from overseas stocks. The deduction rate will vary by timing: 100 percent for sales in the first quarter of 2026, 80 percent in the second quarter and 50 percent in the second half of the year, with a per-person sales cap of 50 million won.

Funds placed in RIA accounts may be freely invested in domestic listed stocks and equity funds. However, deductions will be adjusted if investors simultaneously make net purchases of overseas stocks through regular accounts.

The government also plans to expand tax support to mitigate currency risk. Individual investors in currency-hedged products will be allowed to deduct 5 percent of their investment amount from overseas stock capital gains, up to 5 million won per person. In addition, the exemption ratio for dividends received by domestic parent companies from overseas subsidiaries will be raised from 95 percent to 100 percent.

Both the RIA scheme and currency-hedging tax benefits will be applied on a temporary basis this year, reflecting their primary goal of stabilizing the foreign exchange market.

Separately, new tax incentives will be introduced for long-term participation in a planned “National Growth Fund,” slated for launch in June or July. Investors who commit funds for at least three years will be eligible for a 9 percent separate tax rate on dividend income, with income tax deductions of up to 40 percent depending on the investment amount. The same benefits will apply to corporate growth-focused investment vehicles, within a contribution limit of 200 million won.

A ministry official said the proposed amendments will be submitted as a private member’s bill and could take effect immediately if passed during the February extraordinary session of the National Assembly.

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