Korean gov’t mulls incentives to companies expanding dividends

[Courtesy of MOEF]

The South Korean government is considering reducing penalty tax rates for companies that increase dividend payouts in a move to improve corporate value.

The penalty tax, introduced in 2015 as part of the corporate income tax system, imposes a 20 percent tax on retained earnings of large companies that are not used for investments or wage raises.

The government has come up with comprehensive support to boost corporate value, including a reduction in the penalty tax rates for companies with increased stock dividends.

The move intends to lower corporate taxes on companies that share their profits with shareholders via dividend offering or stock retirement.