Sell 10 million won worth of Korean stock and 20,000 won disappears as securities transaction tax. Since 1 January 2026, the effective rate on both the KOSPI and KOSDAQ markets has been 0.20%. Until then it was 0.15% on both, so the same sale now costs 1.33 times as much in tax.
The increase itself is only 0.05 percentage points — invisible to anyone who sells once. What matters is that this tax lands on the full sale proceeds, not on the profit. Hold the same principal and the annual bill swings by orders of magnitude depending on how often you turn the portfolio over.
You pay it whether you gain or lose
The securities transaction tax is not an income tax. It is a circulation tax on the act of trading, and three consequences follow.
- Only sellers pay. Buying carries no transaction tax (brokerage commissions are a separate matter).
- Losses are not exempt. Buy at 10 million won, sell at 7 million, and you still owe 0.20% of 7 million — 14,000 won.
- No filing required. The KB Capital financial guide notes that dividend tax and transaction tax are both withheld at source, so most investors never file for them. The money is already gone when the proceeds land in your account.
It is easy to confuse this with capital gains tax. On listed Korean shares, capital gains tax mainly applies to major shareholders — those holding 1% of a company or 5 billion won in value. For ordinary investors, domestic stock trading generates two taxes only: the transaction tax and the dividend tax. The dividend side is worked through separately in the piece on 15.4% dividend withholding and separate taxation.
Why KOSPI shows 0.05% but charges 0.20%
The rate table lists the KOSPI securities transaction tax at 0.05%. The actual deduction is 0.20%, because KOSPI sales also carry a separate 0.15% special rural development tax (nongteukse). KOSDAQ works the other way: no rural tax, and the transaction tax alone is 0.20%. Different labels, identical burden.
News1 reported that the Ministry of Economy and Finance raised the KOSPI rate to 0.05% and the KOSDAQ and K-OTC rates to 0.20% through follow-up enforcement decree amendments to the 2025 tax reform package. Money Today added that KONEX applies at 0.1%. The government frames this as restoring a flexible rate that had been cut on the assumption that a financial investment income tax would arrive.
| Market | 2025 effective (%) | 2026 effective (%) | 2026 composition |
|---|---|---|---|
| KOSPI | 0.15 | 0.20 | Transaction 0.05 + rural 0.15 |
| KOSDAQ | 0.15 | 0.20 | Transaction 0.20 (no rural tax) |
| K-OTC | 0.15 | 0.20 | Transaction 0.20 |
| KONEX | 0.10 | 0.10 | Transaction 0.10 |
The split matters in one practical place: brokerage statements. A KOSPI sale prints two lines, transaction tax and rural tax. A KOSDAQ sale prints one. Add both lines to see what you actually paid.
What comes out at each sale size
The formula is plain: sale proceeds × 0.20%. Purchase price and profit never enter it. The table below applies the 2025 and 2026 rates to the same amounts, common to both markets.
| Sale proceeds (KRW) | 2025 tax (KRW) | 2026 tax (KRW) | Increase (KRW) |
|---|---|---|---|
| 5,000,000 | 7,500 | 10,000 | +2,500 |
| 10,000,000 | 15,000 | 20,000 | +5,000 |
| 30,000,000 | 45,000 | 60,000 | +15,000 |
| 50,000,000 | 75,000 | 100,000 | +25,000 |
| 100,000,000 | 150,000 | 200,000 | +50,000 |
Sell 100 million won and you pay 50,000 won more than last year. On that scale the rise looks trivial. The reason the government still expects, as The Public reported, more than 12 trillion won in additional revenue over five years is that market-wide turnover multiplies the base. The same arithmetic runs inside a single account.
Add turnover and the numbers change shape
Assume 10 million won of principal, no trading gain or loss, and vary only how many times the whole position is sold in a year. With zero net profit, each sale is 10 million won.
| Full turnovers per year | Annual sale proceeds (KRW) | 2025 tax (KRW) | 2026 tax (KRW) | 2026 cost vs principal (%) |
|---|---|---|---|---|
| 1 (annual) | 10,000,000 | 15,000 | 20,000 | 0.20 |
| 4 (quarterly) | 40,000,000 | 60,000 | 80,000 | 0.80 |
| 12 (monthly) | 120,000,000 | 180,000 | 240,000 | 2.40 |
| 52 (weekly) | 520,000,000 | 780,000 | 1,040,000 | 10.40 |
| 250 (every trading day) | 2,500,000,000 | 3,750,000 | 5,000,000 | 50.00 |
Replacing the whole portfolio once a week costs 10.4% of principal per year in transaction tax alone. Under the 2025 rate it was 7.8%, so high-turnover accounts absorb the largest absolute share of this increase. At the extreme of daily replacement, tax alone consumes half the principal — before brokerage fees and bid-ask spread enter the picture.
The transaction tax is not a cost you subtract from returns; it is a cost already subtracted before any return exists.
What the table argues is not that the rate is high but that turnover sets the cost structure. An account targeting a 5% annual return that rebuilds itself monthly hands back nearly half that target in transaction tax first. Slow the same strategy to quarterly and the drag falls to 0.8%.
Conditions under which this math breaks
Three assumptions hold the table up. Break any one and the result moves.
- Zero net profit. A growing account sells larger amounts, so the tax exceeds the table; a shrinking one pays less.
- Full-position sales. Real portfolios usually rotate partially. Substitute your actual executed sale value for the annual total and multiply by 0.20%.
- The rate holds. This adjustment restored a flexible rate by enforcement decree. Given the amendment path described by the Korean Association of Certified Public Tax Accountants newspaper, it is a decree-level matter and can move again with policy.
Overseas equities sit outside this calculation entirely: no Korean transaction tax, but a different capital gains regime. That framework is covered in the guide to the 2.5 million won basic deduction on US stock gains.
What to watch
- Your total annual sale proceeds. Pull the yearly executed sale value from your trading platform and multiply by 0.20%. Check whether your return calculation includes that figure.
- The two lines on KOSPI statements. Transaction tax and rural tax print separately. Reading only the first line makes the rate look like 0.05%.
- Excess return against turnover. Whether the extra return from trading more exceeds the extra tax — if it does not, turnover itself is the cost.
- Enforcement decree news. Flexible rates move by decree, not statute. Watch whether the transaction tax reappears in ministry tax announcements.
- KONEX and K-OTC positions. Rates differ by market, so accounts mixing unlisted or SME market trades need market-by-market math.
Sources
- Securities transaction tax rises from January: KOSPI 0.05%, KOSDAQ 0.20% (News1)
- Securities transaction tax to rise from January (Money Today)
- Transaction tax raised to 0.05% for KOSPI, 0.20% for KOSDAQ (KACTA Newspaper)
- A full guide to Korean stock taxes: capital gains, dividends, transaction tax (KB Capital)
- Transaction tax increase to raise 12 trillion won over five years (The Public)