South Korea To Expand Dividend Tax Breaks

by Mary Swire, Tax-News.com, Hong Kong

24 October 2003

The South Korean government is planning to expand tax benefits available for dividend earnings in a bid to drive extra liquidity onto the stock exchange and discourage speculative activities in the nation’s overheated property market, the Korea Herald reported this week.

"To induce floating funds to the equity market, the government will expand the scope of tax benefits for dividend earnings, which are currently applied to minority shareholders' earnings worth not more than 50 million won ($42,260)," Finance and Economy Minister Kim Jin-pyo told parliament on Wednesday. Additionally, officials indicated that the exemption threshold for dividend taxes may be raised to 100 million won.

With parliament expressing concern over the rapid economic growth of neighboring China, Kim also declared an intention to reduce corporate tax to a rate lower than both China and Japan.

"Those two countries are now considering lowering their corporate taxes. Although it would be difficult for us to lower them immediately next year, the government will not fail to do so within an adequate amount of time," said Kim.

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