The Korea Real Estate Investment Trusts Association delivered a petition to the Ministry of Economy and Finance and the Strategy and Finance Committee on the 23rd, asking for Real Estate Investment Trusts (REITs) to be included in the subject of separate taxation for dividend income.
Currently, the government and the National Assembly are discussing a tax reform proposal to impose taxes separately on dividends received from stock investments.
The issue is that REITs are likely to be excluded from tax benefits. Currently, under the separate taxation exception, if an investment of less than 50 million won in REITs is made for more than three years, it is taxed at a low rate of 9.9% on dividend income. However, since the investment amount is limited and long-term investment is a prerequisite, it is assessed as being less favorable compared to the separate taxation of dividend income being discussed by the government and the National Assembly.
The Korea Real Estate Investment Trusts Association emphasized that it could be discriminatory to exclude REITs, which are legally obligated to distribute more than 90% of profits as dividends, from the subject of separate taxation for dividend income, despite having a higher dividend structure than listed companies. It also expressed concern that due to the unfavorable tax system, there is a high possibility that new funds will flow less into REITs and existing investors may withdraw.
The Korea Real Estate Investment Trusts Association said, "Considering the policy intention of separate taxation for dividend income that supports high-dividend products, it does not make sense to exclude REITs, which are legally required to offer high-dividends," and added, "In order to enhance tax fairness among financial investment products and ensure the rational investment choices of the public, REITs must be included in the subject of separate taxation for dividend income."