Ruling and Opposition Parties Agree on 25% Separate Taxation for Dividends, but Differ on Application Conditions

Opposition from Innovation Party for the Motherland and Reform Party

On the 10th, both the ruling and opposition parties reached a consensus on easing the maximum tax rate for separate taxation of dividend income to 25%. The People Power Party further proposed eliminating all conditions for applying separate taxation.

Park Sooyoung, the opposition secretary of the National Assembly Strategy and Finance Committee, said at the "2025 Tax Law Amendment Bill Forum" held at the National Assembly Members' Office Building that day, "The ruling party has also agreed on setting the maximum tax rate for separate taxation of dividend income at 25%, so there is a possibility of reaching an agreement."

Previously, the Democratic Party of Korea, the government, and the Presidential Office held a high-level party-government meeting the previous day and agreed to lower the maximum tax rate for separate taxation of dividend income by 10 percentage points from the government's original proposal of 35%.

On the 10th, at the 2025 Tax Law Amendment Bill Forum held at the National Assembly, Professor Ki-Taek Park of the Department of Taxation at the University of Seoul (second from the right) is speaking. 2025.11.10 Photo by Hyunmin Kim

However, there were differences of opinion on the specifics. The People Power Party insisted that separate taxation of dividend income should be introduced without any requirements, such as being a high-dividend company. Assemblyman Park said, "The government is attaching various conditions, setting the tax rate at 35% and also considering dividend increases, but our party's position is that separate taxation of dividend income should be implemented unconditionally, without any special requirements regarding dividend increases. If complicated conditions are attached, very few people will qualify, which will not help revitalize the capital market," he emphasized.

Chun Haram, floor leader of the Reform New Party, also argued, "Depending on a company's growth stage, some companies are better for investment, while others are better for dividends. It is inappropriate for officials in Yeouido or Sejong to arbitrarily set the criteria for benefits. If companies have to pay out a certain amount in dividends to receive benefits, they may be forced to make excessive dividend payments that do not fit their circumstances, potentially distorting dividend cycles and corporate management."

There were also objections to the very idea of separate taxation of dividend income. Cha Kyugeun, an assemblyman from the National Innovation Party, questioned, "Is it reasonable to introduce such a system when the effect of increasing dividends is uncertain, and it would reduce tax revenue by more than 2 trillion won over the next five years?" Assemblyman Cha expressed concern, saying, "In the end, dividends may not increase, and only tax revenue will decrease, potentially restricting the fiscal management of the Lee Jaemyung administration and hindering reform efforts."

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