South Korea Advances Tax Plan to Stabilize Won and Encourage Overseas Profit Repatriation

South Korea’s Finance Committee advanced a set of measures intended to stabilize the won and dampen currency volatility, as the government and ruling party push to shore up the exchange rate ahead of plenary consideration.

On March 16, the Tax Subcommittee of the National Assembly’s Budget and Economic Planning Committee approved amendments to the Tax Expenditure Limitation Act and the Rural Areas Special Tax Act. Park Soo-Young, a member of the ruling party and chair of the tax subcommittee, said the three exchange-rate-related bills passed without modification.

The centerpiece is the Return to Investment Account, or RIA. Under the plan, funds obtained from selling overseas stocks that are reinvested in the domestic stock market through the RIA can receive capital gains tax relief, potentially up to 100% depending on when the sale occurs.

Commentators note the bill also extends the window for eligible overseas stock sales—from the original end-March deadline to end-May, reflecting adjustments from stakeholder feedback. A separate tax provision aims to reduce the tax burden when investors use currency-hedging derivatives.

The package also includes incentives for corporate investors. The portion of undistributed profits that domestic parents can exclude from corporate tax when receiving dividends from overseas subsidiaries would temporarily rise from 95% to 100%.

Officials say the aim is to encourage remittance of profits from overseas operations back to Korea, thereby increasing domestic liquidity and forex market supply.

Government and ruling-party spokespeople describe the measures as a practical response to a high won in a shifting international landscape, seeking to channel overseas capital back into Korea’s markets and stabilize the USD/KRW rate.

The amended bills are expected to move from the committee to the full National Assembly for a plenary vote, with a committee meeting on March 17 followed by a plenary session anticipated on March 19.

Context for international readers: Korea’s economy is heavily export-driven and technologically advanced, with major conglomerates such as Samsung Electronics and SK Hynix playing pivotal roles in global supply chains. Repatriation of overseas profits and shifts in capital flows can influence the won’s value, Korea’s stock market, and the broader environment for U.S.- Korea trade and investment, including tech and semiconductor sectors. The outcome could affect cross-border investment decisions, currency dynamics, and timing of capital returning to or leaving Korea.