[Anchor]

The revision plan for Individual Comprehensive Asset Management Accounts (ISA), which faced strong backlash from young people and investors, has been completely overhauled. Both the ban on rolling over contribution limits and the restrictions on contract periods have been scrapped.

Reporter Chae Heesun has the details.

[Reporter]

An ISA is a tax-advantaged asset management account based on net profits at maturity. The general type offers tax exemptions of up to 2 million won, with a 9.9% tax rate applied to any excess amount.

A major advantage of the account was that it allowed investors to set long maturities and adjust the timing of tax settlements.

However, in its previous revision proposal, the government decided to cap the contract period for general ISAs at a maximum of five years, and up to ten years for the newly introduced productive finance ISA.

It also barred users from rolling over unused annual contribution limits to the following year and set a sunset clause requiring subscription by the end of 2029 to receive tax benefits.

Criticism followed that these measures disadvantaged self-employed individuals and freelancers with unstable incomes and contradicted the original purpose of the ISA, which is to encourage long-term asset management.

[Kim Hyun-dong / Professor, Department of Business Administration, Pai Chai University: ISAs were originally introduced to support the formation of public assets, and since tax benefits are provided through tax exemptions and low tax rates, it is necessary to encourage the participation of vulnerable asset classes. However, these measures actually limit the effectiveness of the system...]

Ultimately, the government decided to allow users of both general ISAs and productive finance ISAs to carry over their remaining annual contribution limits to the next year.

While both accounts will maintain a minimum contract period of three years, the maximum contract period limits have been eliminated, allowing subscribers to maintain their accounts as long as they wish.

The sunset clause, which had been set for the end of 2029, has also been abolished.

In addition, the government decided to allow duplicate subscriptions between the youth-focused productive finance ISA and the Youth Future Savings account, which were previously blocked in the original proposal.

With major revision details essentially reverting to the way they were and only new products being added, critics are pointing out whether sufficient preliminary review was conducted, while raising criticisms that policy reliability has declined.

Reported by Lee Jae-young | Video by Yoon Tae-ho | Graphics by Hwang Se-yeon