Confusion is mounting among investors as the government announced it would completely re-examine its plan to scale back tax benefits for Individual Savings Accounts (ISAs) following a strong public backlash.

Some investors who trusted the government's announcement and terminated their existing ISAs are voicing complaints, saying they have even lost their tax-exemption benefits.

Recently, major securities firms and banks have been flooded with inquiries regarding the termination and re-subscription of ISA accounts.

Earlier, the tax code revision proposal announced by the government on the 3rd included measures to partially reduce ISA tax benefits.

Currently, after the mandatory 3-year subscription period passes, account holders can continuously extend the maturity while receiving tax exemptions and tax deferrals. However, the revision proposal capped the maximum maturity of ISAs at 5 years by allowing only a maximum 2-year extension on top of the initial 3-year maturity.

The rule was set to apply to accounts newly subscribed or extended starting next year, while excluding existing subscribers who had already set their maturity periods for the long term.

The proposal also decided to abolish the carryover of annual contribution limits.

Currently, if an account holder fails to fill the annual limit of 20 million won, the remaining limit can be rolled over to the following year for additional contributions. Under the change, unused limits would disappear in the respective year.

As investor backlash over the reduced benefits intensified, President Lee Jae-myung ordered a complete re-examination of the revision proposal, altering the situation once again.

The problem is that some investors had already terminated their ISAs in the meantime.

To avoid the 5-year maturity cap starting next year, they terminated their existing accounts in advance to open new ones within this year and set a long-term maturity.

ISAs require meeting a minimum 3-year mandatory subscription period to receive tax benefits. If an account is terminated early before fulfilling the 3 years, investors can lose the tax exemption benefits they were otherwise entitled to.

ISAs allow investors to aggregate gains and losses from investment products, offering tax exemptions of up to 2 million won for the general type and up to 4 million won for the low-income type, with a 9.9% separate taxation applied to amounts exceeding those thresholds.

In particular, foreign index ETFs listed domestically can be subject to a 15.4% tax on trading profits in ordinary accounts, making ISAs highly popular for their significant tax-saving effects.

With the ISA revision proposal undergoing a complete re-examination, investor confusion is expected to persist until the final direction of the tax code revision is finalized.

Reported by Kim Minjeong | Video by Seo Byeong-wook | Design by Sumin Lee | Produced by SBS Digital News