On June 25, 2024, South Korean President Yoon Seok-yeol delivered a speech at a ceremony in Daegu to commemorate the 74th anniversary of the outbreak of the 1950-1953 Korean War.
Ahn Young-joon | AFP | Getty Images
South Korean President Yoon Seok-yeol announced tax cuts for companies that increase capital returns to shareholders under the country’s “Corporate Value Enhancement Plan.”
Talked about before In the government’s biennial economic policy announcement, Yin said the tax incentives would reward companies that “actively expand dividends and promote separate taxation of shareholders’ dividend income tax at a low rate,” according to Google Translation.
“We will establish and promote value-added programs to enhance corporate value and provide asset formation opportunities to the people,” he added.
Yin was referring to the country’s financial regulator’s Enterprise Value Enhancement Plan, which aims to boost the undervalued local market.
Due to various factors such as opaque corporate governance and low dividend payout ratios, the overall value of the Korean market is always undervalued, leading to a phenomenon known as the “Korean discount.”
According to the Financial Services Commission, valuation enhancement schemes aim to prioritize shareholder returns through incentives such as tax concessions and “encourage listed companies to voluntarily develop and disclose valuation enhancement schemes”.
Yoon also announced other measures, including a 25 trillion won ($17.98 billion) support package for small businesses, which he said “are still in a difficult situation.”
“With continued high interest rates, their interest burden increases, while salary and rental costs are also rising,” he said. Translated by Reuters.
The Bank of Korea has maintained its benchmark interest rate at 3.5% since January 2023, a 15-year high.
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