Concerns Over Reduced Long-Term Investment Benefits...Ahn Cheolsoo: "ISA Reform Plan Must Be Scrapped"

"Productive Finance ISA Focuses on Domestic Stocks and Funds"

ISA Contract Period Limited to 5 Years, Rollover of Contribution Limits Abolished

Government Establishes Tax-Exempt Account for All Domestic Investment Gains

Ahn Cheolsoo, a member of the People Power Party, has called for a reassessment of the government's recently announced plan to revise the tax rules for Individual Savings Accounts (ISAs), claiming that it could weaken the existing system’s role in supporting long-term investment and asset building.

On August 4, Assemblyman Ahn wrote on his social media account, "The government has hidden a toxic provision that infringes on retail investors’ accounts," and asserted, "The ISA tax reform plan must be scrapped altogether." He compared this overhaul to a "nerf," a gaming term describing a downgrade of certain functions, and evaluated the proposal as a reduction of benefits for ISA, which he called "the nation’s account."

Ahn Cheol-soo, a member of the People Power Party, is being interviewed by The Asia Business Daily at the National Assembly on the 28th of last month. Photo by Kim Hyunmin

An ISA is an asset management account that allows investors to receive various tax benefits across a single account by investing in a mix of financial products, such as deposits, funds, exchange-traded funds (ETFs), and domestically listed stocks. Under the current system, after the mandatory three-year participation period, contracts may be extended, and any unused portion of the annual contribution limit of 20 million won (KRW 20,000,000) can be carried over to the following year. As investors can increase their principal through long-term investments, ISAs have been used by individuals as a mid- to long-term asset-building tool.

The tax reform plan unveiled by the government on August 3 introduced the concept of a "Productive Finance ISA" aimed at directing long-term investment funds into domestic capital markets. A Productive Finance ISA is an account focused on domestic productive sectors, such as domestically listed stocks, domestic equity funds and ETFs, Business Development Companies (BDCs), and the National Growth Fund. All interest and dividend income earned in these accounts are completely tax-exempt.

The annual contribution limit is 20 million won (KRW 20,000,000), and the total contribution limit is 200 million won (KRW 200,000,000). The initial contract period of three years can be extended for up to ten years. The government’s policy is to strengthen tax support for domestic stocks and funds to attract more household funds into the capital markets. In contrast, the general ISA will see its contract period adjusted from the current maximum of three years to up to five years, and the rollover of unused annual contributions will be eliminated.

Ahn Cheolsoo, a member of the People Power Party, is being interviewed by The Asia Business Daily at the National Assembly. July 28, 2026. Photo by Kim Hyunmin

Assemblyman Ahn argued that such changes could restrict long-term investment using general ISAs. He particularly pointed out that if the revisions are applied to existing account holders, they could disrupt the plans of investors who have managed their accounts over an extended period. He said, "ISA is an account that allows enjoying the benefits of compounding through long-term investments not only in KOSPI but also in overseas indices such as the U.S. NASDAQ and Standard & Poor’s (S&P) 500. If the contract period and rollover of unused contributions are limited, ISAs lose much of their strength as ultra-long-term investment tools."

He also highlighted that the investment targets for the Productive Finance ISA are largely centered on domestic assets. Assemblyman Ahn noted that even if ETFs tracking overseas indices such as the NASDAQ 100 or S&P 500 are listed on the domestic exchange, they could be excluded from the investment scope of the Productive Finance ISA. "The government is restricting individuals’ options for global diversification and steering investors towards domestic stocks," he claimed.

Meanwhile, the government maintains that it has established a new account tailored to domestic investments, separate from general ISAs, and expanded both the tax-exempt range and the total contribution limit. The government’s position is that this will supply long-term capital to domestic businesses while reducing the tax burden for individual investors.

In response, Assemblyman Ahn cited Japan’s “New NISA,” implemented in 2024, as a comparison. Through statutory reforms, Japan made the NISA permanent, shifted to an indefinite tax-exempt holding period, and raised the annual and total non-taxable investment limits. He contrasted this with Korea’s proposal, observing that while Japan’s reform expanded the system to allow investment in various domestic and overseas assets, Korea’s version imposes limitations on both eligible investment targets and account operation periods.

Recently, Assemblyman Ahn has continued to comment on financial and capital market policies, citing inflation and stock prices as key economic indicators that reflect public sentiment. In March, regarding political developments within the party, he stressed the importance of tracking trends in the real economy and financial markets, saying, "Public opinion must be sought at gas stations and in the stock market."

This content was produced with the assistance of AI translation services.