KB News Desk
People Power Party Rep. Ahn Cheol-soo, a four-term lawmaker and former software entrepreneur, has joined with nine other PPP lawmakers to propose a two-year extension of a tax deferral scheme for venture business shareholders who reinvest capital gains back into venture businesses.
Under the proposed revision to the Act on Restriction on Special Cases Concerning Taxation, the tax benefit would be extended to Dec. 31, 2028. At present the tax benefit is set to expire at the end of this year.
Under the current law, qualifying shareholders of venture businesses, including companies that lost their venture status within the previous seven years, are allowed to defer capital gains tax if they sell a required portion of their shares to an unrelated party and reinvest at least 50 percent of the proceeds.
The scheme is stipulated under Article 46-8 of the act, titled “Special Taxation for Reinvestment in Venture Businesses after Sale of Stocks.” The tax is deferred until the shares or equity interests acquired through the reinvestment are sold.
The provision was first added to the law in 2014 as part of government efforts to ensure that proceeds from successful venture investments are reinvested in the venture ecosystem.
Ahn’s bill argues that extending the expiry date is crucial for sustaining the stability and continuity of the venture investment ecosystem.
The proposal would continue an incentive that has already been extended once before. Article 46-8’s deadline had previously been Dec. 31, 2023, before a revision extended it to the current deadline.
