South Korea’s RIA Tax Scheme Deadline Extended to May
Seoul, South Korea – The deadline for receiving a 100% income deduction through South Korea’s Domestic Market Return Account (RIA) system, designed to incentivize investment in domestic markets, has been extended from March to May. The delay is attributed to legislative hurdles in the National Assembly that impacted the initial rollout of the program.
RIA Program Details
The RIA system aims to encourage investors to repatriate funds from overseas stock markets and invest domestically, helping to stabilize the Korean won and bolster the local economy. Investors who transfer existing overseas stock holdings to an RIA account and sell them through the account are eligible for capital gains tax deductions.
The maximum amount eligible for tax benefits is 50 million won per person. Funds generated from the sale of overseas stocks can be converted to Korean won and reinvested in domestic listed stocks or domestic stock funds.
Revised Deduction Schedule
Originally, the government planned a tiered deduction system: 100% for sales in the first quarter of 2026, 80% in the second quarter, and 50% in the second half of the year. Due to the legislative delays, the National Assembly adjusted the schedule to:
- 100% deduction for sales by May
- 80% deduction for sales by July
- 50% deduction for sales by the complete of 2026
Essential Considerations for Investors
Investors participating in the RIA program must maintain the funds in the account for at least one year to qualify for the tax benefits. Withdrawals or account closures before the one-year mark will forfeit the deduction. Purchasing overseas stocks through separate, non-RIA accounts may reduce the overall tax benefit received.
The deadline for applying for special tax treatment through RIA accounts remains at the end of 2026.
Market Context and Concerns
While the securities industry has completed preparations for the RIA launch, some analysts express concern that the delay may have diminished the program’s effectiveness. The initial proposal for the RIA system was made on January 23rd, but the KOSPI has experienced increased volatility due to the Middle East crisis, potentially reducing the incentive for overseas investors to return to the domestic market. Korea Herald
There are concerns that investors may now perceive overseas investment as a safer option, necessitating efforts to restore confidence in the RIA system. Korea Herald
Legislative Progress
The Tax Subcommittee of the National Assembly’s Finance and Economic Planning Committee recently approved amendments to the Restriction of Special Taxation Act and the Special Tax Act for Rural Areas, paving the way for the introduction of the RIA. The bills are expected to be submitted to the plenary session on March 19th. Seoul Economic Daily
The RIA policy account products are expected to launch as early as the end of March, pending final legislative approval and government procedures. Seoul Economic Daily