[Tax Enforcement Decree] 9% Low-Rate Separate Taxation on Dividend Income from New Deal Infrastructure Fund Investments

[Asia Economy Reporter Jang Sehee] To ensure the successful promotion of the Korean New Deal, the government has decided to apply a low separate taxation rate of 9% on dividend income generated up to an investment amount limit of 200 million KRW for investors who invest in New Deal Infrastructure Funds until the end of 2022.

On the 6th, the Ministry of Economy and Finance announced a revised enforcement decree following the 2020 tax law amendment containing this content.

Compared to the original tax law amendment which provided separate taxation on dividend income at a withholding tax rate of 14% up to a limit of 100 million KRW for public infrastructure fund investors, the benefits have been significantly increased.

The types of collective investment schemes are defined as real estate investment companies, investment and financing collective investment schemes, real estate collective investment schemes, and special asset collective investment schemes. Assets related to specific social infrastructure (New Deal infrastructure) must be industry-related among stocks, equity, or bonds.

Subsequently, the industrial relevance of social overhead capital (SOC) will be reviewed and certified according to standards set by the Ministry of Economy and Finance. The government announced that it will establish a 'New Deal Infrastructure Deliberation Committee' to specifically regulate these matters.

Examples of New Deal infrastructure projects eligible for investment include digital SOC safety management systems, data centers, smart shared logistics centers, and shared non-face-to-face office facilities. Additionally, the government will prepare measures to encourage the expansion of public participation in the infrastructure fund market through a public offering method.

Meanwhile, this revised enforcement decree is scheduled to be promulgated and enforced next month after legislative notice until the 21st of this month, followed by procedures such as the vice-ministerial meeting and the Cabinet meeting.