 |
South Korean Finance Minister and Deputy Prime Minister Choi Sang-mok speaks during a meeting with the local journalists at the government complex in Sejong on Monday. (Yonhap) |
The South Korean government is ramping up discussions on specific tax incentives aimed at enhancing the market value of local companies, with plans to conduct public hearings over the next two months.
"We talked about tax incentives for the Value-up Program on several occasions. But now is the time for us to discuss more specific plans," Finance Minister and Deputy Prime Minister Choi Sang-mok told reporters on Monday.
"Throughout June and July, we will host public hearings to deliberate specific tax incentives," Choi said.
The government's Corporate Value-up Program aims to incentivize listed firms to bolster their value, thereby improving their market value and addressing the so-called "Korea discount" issue. "Korea discount" refers to Korean companies being seen as comparatively undervalued due to various factors.
However, the recent release of a vague guideline lacking binding force and specific incentives to boost participation has drawn criticism.
Choi mentioned that the hearings will cover various incentives discussed in the market, including separate taxation of dividend income, corporate tax credits for increased dividends and the abolition of inheritance tax surcharges for major shareholders.
"From the perspective of the effectiveness of incentives, the more benefits, the better. However, an excess could compromise fairness. We'll strive to strike a balance," he emphasized.
The top finance policymaker revealed that the open hearings will occur two to three times over the next two months. In the initial session, options will be refined, with subsequent discussions aimed at finalizing incentive details.
Choi also noted that discussions on inheritance tax will be included in the hearings. South Korea has the world's second-highest inheritance tax rate at 50 percent, with a 20 percent "management premium" surcharge for major stakeholders at large firms, elevating the rate to the world's highest, at 60 percent.
"In regard to the inheritance tax law, there are various proposals, from eliminating the surcharge for major shareholders to expanding family business inheritance deductions and enhancing benefits for Value-up companies," he explained. "We will narrow down options through public hearings and incorporate them into the tax law amendment."
Monday's briefing marked Choi's inaugural monthly press conference, a move aimed at enhancing communication with the media and the public.
During the session, he addressed various queries, including clarifying the government's position on the short selling ban.
"To reintroduce short selling, we need regulatory enhancements to combat illegal practices, including the implementation of a monitoring system," he emphasized. "With the ban set to continue until June, we aim to clarify our resumption plans by the end of the month for market stability."
Earlier that day, Financial Supervisory Service Governor Lee Bok-hyun suggested that the short selling monitoring system's development could conclude in the first quarter of next year, suggesting a potential lift of the ban around that time.
Choi also disclosed the government's plans to support the growth of small and medium-sized enterprises by extending the period for receiving benefits from three years to five years. Additional measures to assist them post-extension will also be introduced.
These measures will be unveiled in early June as part of the government's "dynamic economy road map," outlining its economic policy vision.
Regarding inflation, Choi reiterated the government's positive outlook.
"Fortunately, prices are showing an overall downward trend after March's peak," according to Choi. "If there are no additional disruptions, we anticipate them stabilizing in the second half of the year as originally forecast, around the low to mid-2 percent range."
