South Korea to cut corporate, dividend income tax to boost shareholder returns

SOUTH Korea will provide tax cuts for companies that raise shareholder returns and also cut taxes on dividend income for shareholders in the firms, the finance minister said on Tuesday (Mar 19).

Finance Minister Choi Sang-mok said specific details of the tax cuts would be determined and announced after hearing different opinions at a meeting with market experts.

South Korea last month unveiled a corporate reform plan, dubbed the “Corporate Value-up Programme”, aimed at lifting the value of Seoul-listed companies by encouraging firms to boost shareholder returns, such as dividends.

The minister’s comments come after criticism from investors that the plan did not go far enough to changes corporate behaviour, since it lacked penalties and tax incentives.

The government will finalise by early May guidelines for listed firms to refer to, Choi said. These were originally slated to be announced within the first half of the year.