The government's proposed overhaul of the ISA (Individual Savings Account) has met fierce backlash, particularly from younger demographics, prompting authorities to go back to the drawing board.

Reform Plan Halted Before Implementation

The revision, which would have limited new ISA investments to domestic assets while shortening the contract period for existing ISAs, sparked outrage among investors—especially the youth. Critics argued it effectively forced domestic investment while reducing existing benefits.

After receiving reports on the public backlash, President Lee Jae-myung reportedly instructed his aides to revisit the reform plan from scratch. He is said to have issued a strong rebuke, noting that the reduction of benefits for existing subscribers had not been carefully examined. The so-called 'anti-stock-price-suppression bill,' which had been discussed alongside the overhaul, also faces reconsideration, with critics saying it failed to reflect the original intent of the reform.

What kind of revisions the government will produce following this review remains a key variable for investors to watch.

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■ Key ISA Account Information

• Eligibility: Domestic residents aged 19 and older (earned income earners aged 15 and older); one account per person across all financial institutions
• Contribution Limit: Up to 20 million won annually, with a maximum of 100 million won over five years (unused limits can be carried forward)
• Mandatory Holding Period: Minimum 3 years (early termination within 3 years nullifies tax-exemption and separate taxation benefits; a general tax rate of 15.4% applies instead)
• Management Types: Brokerage (investor selects individual assets), Trust (investor selects a product and delegates management to a financial institution), Discretionary (entire asset management delegated to a financial institution)
• Tax Benefits: Greater benefits for lower-income earners. Only the net profit—calculated after offsetting gains and losses across all products within the account—is taxed, and income within the tax-exemption limit is tax-free

In a regular account, a 15.4% dividend income tax is immediately levied on stock dividends, bank interest, and returns from domestically listed overseas ETFs. Even if losses occur, there is no way to reclaim taxes already paid. In contrast, the core advantage of the ISA is that it only taxes the net profit, which is determined by aggregating all gains and losses within the account.

[This article is intended for informational purposes only and does not recommend the purchase of or investment in any specific financial product. Detailed requirements for ISA enrollment and tax benefits may vary depending on an individual's income level and circumstances. Please consult a financial institution or tax professional for the latest standards before enrolling. AI assistance was used in part.]