South Korea’s government is considering softening two of the most controversial changes it proposed for Individual Savings Accounts, or ISAs, after criticism that the new rules would make the tax-advantaged accounts less flexible for people with irregular incomes.
The original tax-reform proposal would have stopped holders of ordinary ISAs from rolling unused contribution allowances into the following year and capped the account term at five years. A newly proposed “productive finance” ISA would have had a maximum term of 10 years. Those restrictions drew criticism because people do not necessarily have the same amount available to save every year.
Why carryover matters
The issue is particularly relevant for younger workers, freelancers and self-employed people whose incomes can fluctuate. Carryover lets someone who cannot use the full allowance in one year preserve that tax-advantaged saving capacity for a later period. Removing it would have made the annual limit more rigid even though the account is intended to encourage long-term household investment.
The reconsideration follows public pushback and instructions from President Lee Jae-myung to supplement parts of the tax package. The government is collecting opinions through Aug. 20 and plans to submit the tax-law revision bill to the National Assembly in early September, so the details are not yet final.
What happens next
The ISA changes are only one part of the broader tax package. The government is also reviewing some real-estate tax provisions while broadly maintaining its direction of increasing certain property-tax burdens.