The South Korean government is intensifying discussions on specific tax incentives to increase the market value of local companies, with plans to hold public hearings over the next two months.
“We have discussed tax incentives for the Value-up Program on multiple occasions. But now is the time for us to discuss more concrete plans,” stated Finance Minister and Deputy Prime Minister Choi Sang-mok during a press briefing on Monday.
The Corporate Value-up Program by the government aims to motivate listed firms to enhance their value, ultimately improving their market value and addressing the issue of the “Korea discount,” where Korean companies are perceived as undervalued due to various factors.
However, a recent vague guideline lacking enforceability and specific incentives to boost participation has faced criticism.
Choi mentioned that the public hearings will cover various incentives proposed in the market, such as separate taxation of dividend income, corporate tax credits for increased dividends, and the elimination of inheritance tax surcharges for major shareholders.
The Finance Minister emphasized the importance of finding a balance between maximizing benefits and maintaining fairness in the incentives.
The open hearings are expected to take place two to three times over the next two months, with the initial session focused on refining options and subsequent discussions aimed at finalizing incentive details.
Choi also indicated that discussions on inheritance tax will be included in the hearings, pointing out that South Korea currently has one of the world’s highest inheritance tax rates, with additional surcharges for major stakeholders in large firms.
The government plans to unveil measures to support the growth of small and medium-sized enterprises by extending the period for receiving benefits from three to five years, with further assistance post-extension.
These measures will be disclosed in early June as part of the government’s “dynamic economy road map,” outlining its economic policy vision.
Choi also expressed a positive outlook on inflation, stating that prices are showing a downward trend after a peak in March, with expectations of stabilization in the second half of the year around the low to mid-2 percent range.
