[Asia Economy Reporter Park Jihwan] Samsung Securities announced on the 10th that it will be the first in the industry to launch a 'Dedicated Account for Investment Collective Investment Schemes' that allows for separate taxation benefits on income generated from investments in social overhead capital (SOC) projects.
The government has temporarily allowed separate taxation (15.4%) benefits on dividend income generated from 'Dedicated Accounts for Investment Collective Investment Schemes' until 2022 to promote SOC investment.
If financial income from interest and dividends exceeds 20 million KRW per year, the individual becomes subject to comprehensive financial income taxation, where the highest tax rate of 49.5% applies to the total income combining interest/dividend income, earned income, and business income. However, dividend income generated from this account can be taxed separately.
The publicly offered collective investment scheme available for investment through this account is represented by 'Macquarie Infra,' which is established for SOC investment purposes. Macquarie Korea Infrastructure, which invests in Incheon International Airport Expressway and Umyeonsan Tunnel, has had a dividend yield of around 6% over the past 10 years.
For example, Samsung Securities explained that if an investor subject to comprehensive taxation invests 100 million KRW through this account and receives 6 million KRW in dividends, the tax payable could be reduced from 66,000 KRW to a maximum of 2,046,000 KRW annually depending on the tax bracket.
Lee Seungjun, Tax Specialist at Samsung Securities, said, "The dedicated account for publicly offered collective investment schemes allows investment in assets providing a dividend yield in the 6% range while also enabling separate taxation benefits," adding, "It is worth actively utilizing for those subject to comprehensive financial income taxation who want to increase their effective yield."
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