South Korea's ruling party has proposed taxing unrealized gains on stocks and real estate — meaning investors could be taxed on profits they haven't even realized yet.

The Market Reaction: The benchmark KOSPI plunged 9.99% on Tuesday, triggering a circuit breaker that halted trading for 20 minutes. Samsung Electronics and SK Hynix both fell over 12% [citation:1][citation:2][citation:3].

According to Yonhap News Agency, on the morning of June 23, 2026, multiple opposition party lawmakers held a tax reform forum in Seoul [citation:5][citation:6][citation:7].

The core proposal: Replace Korea's current tax system with an "Income Tax Comprehensive-ism" framework — where taxation is based on increase in net assets, regardless of whether assets are sold or not [citation:5][citation:6].

Key arguments from forum participants:

• Tax on realization creates a "lock-in effect" — investors hold assets longer to avoid taxes, reducing capital mobility [citation:1][citation:5]
• Tax on unrealized gains would reflect a taxpayer's "economic capacity" more accurately [citation:5][citation:6]

Proposed implementation approach:

• Tax liability deferred until the asset is actually sold (with interest) [citation:5][citation:7]
• Start with high-net-worth individuals and listed financial assets only [citation:5][citation:6]
• Exempt real estate and unlisted stocks from immediate taxation [citation:6]

KOSPI Decline: 910.71 points → -9.99% to 8,203.84 [citation:1][citation:3]

Causes of the crash:

• AI & Tech Sell-off: US tech stocks declined overnight; SpaceX shares fell 16% on corporate bond news; concerns over AI infrastructure costs [citation:2][citation:4]
• Overheated Market: KOSPI had been at record highs; SK Hynix had gained nearly 350% over the past year [citation:15]
• Leveraged Retail Investors: Margin debt hit a record 38.5 trillion won in June; leverage amplified the sell-off [citation:2]
• FII Selling: Foreign investors sold over 4 trillion won of KOSPI shares [citation:3]
• Rumors ("Korea Small Essay"): A social media post claiming Korea's ruling party had officially decided to tax unrealized gains triggered panic among retail investors [citation:5][citation:6]

Circuit Breaker Triggered: At 2:33 PM, the KOSPI slid by over 8%, triggering a Level 1 circuit breaker that halted trading for 20 minutes — the 4th occurrence this year and the 10th in history [citation:3][citation:13][citation:14].

The claim that the Netherlands "passed a similar tax in February 2026 and backtracked days later" is partially accurate — but the timeline is more nuanced.

• What was passed: The "Actual Return in Box 3 Act" passed the Dutch House of Representatives on February 12, 2026 [citation:12]
• The tax: A 36% tax on annual unrealized gains on stocks, bonds, and cryptocurrencies [citation:9][citation:10]
• Why it was passed: The Dutch Supreme Court struck down the previous "deemed return" system in 2021, creating a €2.4 billion revenue gap [citation:9][citation:10]
• The backlash: The bill faced strong criticism from investors, business groups (VNO-NCW), and over 61,000 petition signatures [citation:9][citation:12]
• The reversal: Finance Minister Eelco Heinen admitted "something simply hasn't gone right" and promised major amendments to the bill [citation:11][citation:12]
• Current status: The Dutch Senate has sent 36 pages of questions on the bill; the government is developing amendments to address loss carry-back and startup exemptions [citation:9][citation:12]

Key Concerns Raised:

• Liquidity Risk: Investors may be forced to sell assets to pay taxes on paper gains, creating market pressure [citation:4][citation:11]
• Capital Flight: Wealthy individuals may relocate to lower-tax jurisdictions [citation:11]
• Investment Disincentive: Entrepreneurs and early-stage investors face liquidity crises [citation:4][citation:12]
• Loss Asymmetry: If gains are taxed when assets rise, but losses cannot be claimed back when they fall, taxpayers bear disproportionate burden [citation:9][citation:10]
• Netherlands precedent: 61,000+ signatures, business lobbies, and public outrage forced a government reversal [citation:9][citation:11][citation:12]

In South Korea:

• The proposal was not official government policy — it was a forum discussion [citation:5][citation:6]
• The KOSPI selloff has cooled investor sentiment and forced a reassessment
• Regulatory authorities are monitoring leveraged positions [citation:15]

In the Netherlands:

• The bill is currently under Senate review [citation:9][citation:12]
• Amendments on loss carry-back and startup exemptions are being drafted [citation:9]
• A shift to a traditional realized capital gains tax is possible by 2030 [citation:12]