[Sejong=E-Daily Reporter Kim Mi-Young ] The government has decided to withdraw its plan to lower the basic exemption amount for the Comprehensive Real Estate Tax for non-resident single-homeowners to 900 million won starting next year and to maintain the current level of 1.2 billion won. The cap on the property tax burden (comprehensive real estate tax + property tax) has also been rolled back to the current 150%, reversing the initial plan to raise it to 200%. Although the government had sought to increase the tax burden on non-resident single-homeowners and others under the banner of “tax normalization,” it appears to have taken a step back as public approval ratings fell amid widespread public backlash.

President Lee Jae-myung presided over a Cabinet meeting on the 1st and approved this year’s tax reform bill, which includes these measures. The tax reform bill, which revises 11 tax laws including the Comprehensive Real Estate Tax Act, is scheduled to be submitted to the National Assembly by the 3rd and deliberated during the regular session.

Compared to the government’s original proposal announced in late July, the most notable change concerns the Comprehensive Real Estate Tax.

The government had initially planned to differentiate the basic exemption amount for owners of one home per household based on residency status—raising it from 1.2 billion won to 1.4 billion won for residents while lowering it from 1.2 billion won to 900 million won for non-residents—but in the revised bill approved today, it decided to maintain the basic exemption amount for non-residents at the current level of 1.2 billion won. While owners of a single residence who actually live there will receive a larger basic deduction, those who do not live there will retain their existing deduction, meaning the “differential effect” remains.

The deduction criteria for couples jointly owning a single home were also partially adjusted. While the government’s original proposal called for lowering the basic deduction for non-resident couples jointly owning a single home from 900 million won per spouse to 400 million won, the amended bill decided to maintain the current standard of 600 million won.

The tax burden cap also marked a retreat from the initial reform direction. While the government had originally planned to raise the tax burden cap for property and land holding taxes from the current 150% to 200%, the final proposal reverted to 150%. This means that even if the combined total of the Comprehensive Real Estate Tax and Property Tax exceeds 1.5 times the previous year’s amount due to rising home prices, taxes will be levied only up to 1.5 times the previous year’s amount.

The reform plan for Individual Comprehensive Asset Management Accounts (ISA), which had faced strong opposition primarily from young people and investors, was also significantly revised from the original plan.

First, regarding the general ISA, it was decided to maintain the current system to “support citizens’ asset accumulation.” The government withdrew its plan to set an annual contribution limit of 20 million won for up to five years and to prohibit the carryover of unused annual contribution limits. It also decided not to set a sunset clause, which had originally been scheduled to expire in 2029.

The scope of support for the newly introduced “Productive Finance ISA” has been expanded. In line with the revisions to the General ISA, the program now allows the carryover of unused annual contribution limits and removes the maximum contract term (which was 10 years in the government’s original proposal). The sunset clause has also been removed.

In addition, to support asset accumulation among young people, the government decided to allow simultaneous enrollment in both the “Youth Productive Finance ISA” and the “Youth Future Savings Account.”

Meanwhile, the tax reform bill passed today did not include the amendment to the “Stock Price Suppression Prevention Act.” An official from the Ministry of Economy and Finance stated, “After gathering sufficient input through discussions between the ruling party and the government, we plan to devise reasonable improvement measures during the regular National Assembly review process.”