South Korea's Tax Reform Needs Net Asset Floor to Block Stock Price Suppression, VIP Asset Management Says

According to VIP Asset Management on August 5, South Korea's draft tax reform on stock price suppression contains structural loopholes that require further safeguards. The government's proposal applies the higher of current valuation plus 30% or average stock prices from the past 6 to 78 months, but VIP argues this fails to address long-term undervalued companies where historical averages remain artificially low.

VIP recommended adopting a minimum net asset value floor—similar to unlisted stock evaluation methods—set at 80% of net asset value when market price falls below that threshold. The firm's CEO Kim Min-guk noted this approach would eliminate incentives for major shareholders to suppress stock prices ahead of inheritance or gift transfers, while procedural simplifications for subsidiaries below 5% of net assets could reduce administrative burden.