"Value-Up Tax Incentive Fails...Limited Negative Impact Due to Low Expectations"

A revision to the 2025 budget was approved at the plenary session held at the National Assembly on the 10th. Photo by Kim Hyun-min

On the 11th, LS Securities viewed that although the value-up tax incentives for the financial sector were scrapped, the negative impact would be limited as expectations for proactive incentives were not high.

Previously, the National Assembly approved the tax law amendment bill. The proposed tax incentives for value-up in the stock market, such as separate taxation on dividend income and corporate tax credits for companies expanding shareholder returns, were not tabled due to opposition from the opposition party. The plan to expand tax support for Individual Savings Accounts (ISA) was also removed from the amended Restriction of Special Taxation Act and thus not reflected.

Researcher Jeon Bae-seung stated, "The value-up related tax incentives were decided at a significantly scaled-back level, considering the opposition from the opposition party, applying dividend income tax rate reductions and corporate tax credits only to the increased dividends," adding, "Nevertheless, the proposal failed due to exposure to the wealthy tax cut issue when applying separate taxation on dividend income exceeding 20 million KRW in financial income."

He added, "From the perspective of value-up companies and investors, the actual incentives were not substantial, so the negative impact from the failure of the tax law amendment is also expected to be limited," emphasizing, "Regardless of the law amendment, the government and financial authorities are maintaining a consistent policy direction by creating additional value-up funds, and with the value-up index rebalancing, further corporate value enhancement plans by financial companies are scheduled to be announced early next year."

He continued, "However, it is necessary to monitor the increased policy uncertainty due to recent political instability," noting, "The direction of value-up will be maintained, but sustaining momentum is the key."

This content was produced with the assistance of AI translation services.