Hankyung Association "Inducing Positive Cycle of Corporate Capital through Tax Support"

Proposal for Tax Law Amendments Submitted to the Ministry of Economy and Finance
Korea Economic Association Suggests Expansion of Investment Tax Credits and Dividend Incentives

The Korea Economic Association (HanKyungHyup) has proposed tax law amendments to the government, including the removal of limits on increased tax credits, to restore weakened economic vitality and encourage companies to increase investments.

HanKyungHyup announced on the 19th that it submitted the "2025 Tax Law Amendment Opinions," containing a total of 89 tasks across 10 laws, to the Ministry of Economy and Finance after gathering opinions from member companies and major domestic corporations. Among the main proposals was the "Seven Tax Policy Tasks to Induce the Social Virtuous Cycle of Corporate Capital." Given the recent intensification of uncertainty and the resulting economic slowdown, tax reforms are necessary to support job creation through investment and corporate activities.

Employees of tenant companies are moving at the Korea Economic Association in Yeouido, Seoul. Photo by Kang Jin-hyung

First, to increase corporate facility investments that have a job creation effect, they requested the removal of the limit on the increased amount of investment tax credits. Currently, the credit amount for increased investment compared to the previous three years cannot exceed twice the credit amount for the current investment. This limits the credit rate even if investments increase.

HanKyungHyup particularly urged that large corporations, which lead domestic facility investments, be included in the temporary investment tax credit target. Although the amendment to the Restriction of Special Taxation Act, which raised the integrated investment tax credit rate for small and medium-sized enterprises (SMEs) and mid-sized companies until this year, passed the National Assembly at the end of last month, large corporations were excluded from the target.

HanKyungHyup stated, "Investment by large corporations should be considered for its contribution to society through expanding work opportunities for cooperating SMEs and mid-sized companies, as well as through chain investments and job creation."

Regarding dividends, they proposed including "minority shareholder dividends" in the income return methods (investment, wage increase, win-win cooperation expenses) for the investment and win-win cooperation promotion tax. Dividends to minority shareholders transfer corporate income to the general public, contributing to increased household income, and this is expected to help enhance corporate incentives for dividends.

In the donation sector, they requested raising the tax exemption limit when companies donate stocks to public interest corporations. Currently, if the donated stocks exceed 10% of the total issued stocks of the company (5% when donated to large business groups and related public interest corporations), inheritance and gift taxes are imposed on the excess. They argued that the exemption limit should be raised to 20%, the level of the United States, to encourage stock donations.

Lee Sang-ho, Head of the Economic and Industrial Division at HanKyungHyup, said, "To overcome the ongoing domestic demand slump and improve the frozen economic sentiment, tax law amendments that can support the national economic contribution of corporate capital are necessary."