Assembly's Finance Committee Approves Financial Tax Breaks

The Ministry of Finance and Economy said Tuesday that tax breaks to corporate and individual stock investors will go into effect as early as May.

A bill to amend the tax law to exempt corporate capital gains tax for pension and other state funds investing in stocks was approved by the National Assembly's Finance and Economy Committee Tuesday.

The amendment, if confirmed by the full Assembly, will also lift the securities transactions tax through 2003.

Smaller investors who hold a stock for one year or longer will also be able to exclude dividends from their taxable income. That tax break will be available if the stocks are valued 50 million won ($38,000) or less.

If the stocks are valued at 300 million won or less, stockholders will have the option of paying the lesser of the comprehensive financial income tax or 10 percent of financial income received in dividends.

The comprehensive financial income tax is levied on interest and dividend income exceeding 40 million won annually.

The bill also expands the tax exemption on dividends paid on stocks held as part of an employee share ownership plan. Employees who hold stocks for one year or more will be entitled to dividend income exclusion. Under the proposed legislation, the exemption would be expanded to include shares valued at up to 50 million won. The current limit is 18 million won.

The exemption will be effective through 2003.

by Song Sang-hoon