Gu Yoon-cheol, Deputy Prime Minister for Economic Affairs and Minister of the Ministry of Economy and Finance, said on the 17th that "we have decided on a 35% separate taxation rate for dividends income, but we will discuss it again with the National Assembly."
At a National Assembly interpellation session that day, Deputy Prime Minister Gu said this when Lee Eon-ju, a lawmaker of the Democratic Party of Korea, asked, "What do you think is an appropriate separate taxation rate for dividends income?"
Deputy Prime Minister Gu said, "We are considering both the need to encourage dividends and the need for tax fairness." He continued, "When we introduced the dividends income boosting tax system in 2015, the top rate was 25%," and added, "At the time, amid controversy that there were too many tax cut benefits for the wealthy, we withdrew it after one year."
Earlier, the Ministry of Economy and Finance announced in Jul. that it had proposed a tax law revision to separate dividends income received from high-dividends corporations from comprehensive income (14%–45% rate) and apply a top rate of 35%.
Lee said, "The Republic of Korea is seeing its tax base shrink due to rapid population decline and aging," adding, "We need to secure new tax sources by inducing production and increasing value added."
In response, Deputy Prime Minister Gu said, "If we build growth potential, we gain global competitiveness, and tax revenue increases through a virtuous cycle," adding, "Over the mid to long term, we will focus on increasing tax revenue by expanding growth potential and securing fiscal sustainability."
Regarding the mandatory cancellation of treasury shares included in the third amendment to the Commercial Act, Deputy Prime Minister Gu said, "I understand there are two views: that it is difficult to defend management rights when corporations cancel treasury shares, and that it is necessary to protect the rights and interests of ordinary shareholders in the market and to improve corporate governance," adding, "We will listen carefully to both views and make a comprehensive judgment after observing the market's response."