[EXPLAINER] Why Lee ordered rethink of ISA and 'stock price suppression' rules

President Lee Jae Myung has ordered a comprehensive review of the government's proposed changes to individual savings accounts (ISAs) and measures aimed at preventing the manipulation of share prices. This directive was issued on Friday, just four days after the government released its tax reform plan on August 3rd.

ISAs present tax advantages for retail investors, allowing up to 2 million won ($1,416) of investment income to be exempt from taxation. Any earnings above this limit are taxed at a reduced rate of 9.9 percent. The government's plan involves introducing a new "productive finance ISA" that would offer tax-free investment income with no ceiling, and enable contributions of up to 20 million won annually, capped at 200 million won over a decade.

However, the proposed modifications would diminish the current benefits of ISAs. The government intends to reduce the maturity periods for existing accounts and eliminate the provision for tax-exempt withdrawals.