In the future, when implementing 'reduction dividends' that distribute capital surpluses, individual major shareholders, not corporations, will also have to pay taxes. The dividend income tax will be imposed on the amount exceeding the purchase price of the stock. Additionally, the corporate tax special rate for cooperative corporations such as NongHyup, fisheries cooperatives, and Saemaul Geumgo will be adjusted. The tax rate applied to the taxable standard exceeding 2 billion won will rise from 12% to 15%.
The government also decided to enhance the global minimum tax system to prevent tax evasion by multinational corporations and secure taxation rights. By introducing the 'Domestic Minimum Tax (DMTT)', there is a plan to collect the difference domestically when foreign corporations operating in Korea are taxed at a rate below the global minimum tax rate of 15%.
On the 31st, the Ministry of Economy and Finance finalized and announced the '2025 tax reform plan' containing the details of this 'tax system rationalization' at the Tax System Development Committee.
In this reform plan, the government decided to expand the taxable scope of reduction dividends. Reduction dividends utilize the Commercial Act provision allowing 'capital surpluses exceeding 1.5 times the capital to be transferred to retained earnings.' Unlike ordinary dividends, the tax rate applied to individual shareholders was 0% because it was recognized as shareholders taking back the money they originally invested.
However, as cases arose where the dividend amount exceeded the 'acquisition price' when purchasing stocks, the government judged that the necessity for taxation had increased. Through this announcement, dividends exceeding the acquisition price will be taxed for 'major shareholders of listed corporations' and 'shareholders of unlisted corporations' subject to capital gains tax.
The corporate tax special exemptions for cooperative corporations will also be rationalized. Currently, eight organizations including NongHyup, fisheries cooperatives, agricultural cooperatives, credit unions, Saemaul Geumgo, small and medium-sized enterprise cooperatives, tobacco cooperatives, and consumer cooperatives have been taxed at a lower rate on certain items such as donations or corporate operational expenses from their net profits in financial statements. While a tax rate of 9% has been imposed for the portion under 2 billion won and 12% for the portion exceeding 2 billion won, the rate for the portion exceeding 20% will be adjusted upward to 15% in the future.
In addition, the government decided to introduce 'DMTT' for multinational corporations operating domestically. This is a measure to prevent losing taxation rights to other countries.
To prevent multinational corporations from evading taxes, major countries have set a common corporate tax minimum, establishing the global minimum tax at 15%. As a result, even if a corporation establishes a subsidiary in Korea, where the effective corporate tax rate is 13%, in order to save on taxes, it had still been paying 2% (15%p-13%p) to country B, where the parent company is located. A government official noted, 'Through DMTT, our tax authorities will be able to collect this 2%.'
The government announced that it will also reorganize the temporary tax support that has been applied to small and medium-sized enterprises. It plans not to extend the temporary additional deduction of 2 percentage points for investments in general and new growth source technology facilities by small and medium-sized enterprises, the VAT refund exemption for beauty medical services for foreign tourists, and income deductions for youth-type long-term collective investment securities savings that are due to sunset by the end of this year. Additionally, in order to avoid anti-dumping tariffs, it was decided to include 'deferred export' where products are reprocessed in a third country before being imported into the country as a taxable subject.