Meeting on Capital Market Advancement on the 19th
Choi Sang-mok, Deputy Prime Minister for Economic Affairs and Minister of Economy and Finance, is attending an industry meeting on capital market advancement held at the Government Seoul Office in Jongno-gu, Seoul, on the afternoon of the 19th, explaining the policies prepared by the government. [Image source=Yonhap News]
The government will ease corporate taxes for companies implementing shareholder return policies such as treasury stock cancellation. It also plans to reduce income tax burdens for shareholders of companies that increase dividends.
Choi Sang-mok, Deputy Prime Minister for Economy and Minister of Strategy and Finance, announced this on the 19th at the ‘Capital Market Advancement Meeting’ held at the Government Seoul Office in Jongno-gu, Seoul.
Deputy Prime Minister Choi explained, “To encourage more companies to participate in expanding shareholder returns such as dividends and treasury stock cancellations, we will ease the corporate tax burden on a certain portion of the increase in shareholder returns. Additionally, to ensure that shareholders receive more tangible benefits from dividend increases, we will reduce the high dividend income tax burden on shareholders of companies that expand dividends.”
This tax incentive is a follow-up measure to the ‘Corporate Value-Up Support Plan’ announced last February. The Value-Up Support Plan is a government initiative aimed at resolving the undervaluation of the Korean stock market and advancing the capital market to the next level. Under this plan, the government launched a Value-Up Advisory Group composed of experts and revised the Stewardship Code to encourage institutional investors such as pension funds to actively incorporate corporate value enhancement efforts into their investment decisions.
Deputy Prime Minister Choi stated, “Global investment banks and investors regard the Value-Up Support Plan as a meaningful effort to resolve the undervaluation of the Korean stock market, and institutional investors including the National Pension Service have also welcomed and expressed willingness to participate.” However, he acknowledged, “It is important for the government to pursue this steadily over the medium to long term rather than as a one-time event, and there have been requests for additional support measures such as concretizing tax incentives.”
He added, “We will listen to various opinions and conduct simulations before deciding on specific support targets and reduction methods. Going forward, we will continue to communicate sufficiently with the market and upgrade our capital market with both speed and sustainability.”
He also said, “The Value-Up Guidelines currently being prepared will be expedited as much as possible, with additional seminars in April and a prompt finalization by early May.”
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