Gov't to roll out tax incentive plan for value-up in June: FSS

Economy

Published: 03 Jun. 2024, 17:03 Updated: 03 Jun. 2024, 18:19

Gov't to roll out tax incentive plan for value-up in June: FSS

Financial Supervisory Service (FSS) Gov. Lee Bok-hyun, left, and American Chamber of Commerce in Korea Chairman James Kim speak during a dialogue session held in central Seoul on Monday. [FSS]

The government will likely flesh out its plan for corporate tax incentives to encourage companies to participate in the value-up program this month, Financial Supervisory Service (FSS) Gov. Lee Bok-hyun said.

“Discussions are currently ongoing regarding measures to improve corporate governance structures, enhance shareholder values and such,” said Lee while speaking about the program designed to resolve the chronic undervaluation of stocks that is often referred to as the "Korea discount."

“For example, the Ministry of Economy and Finance is currently preparing to provide an overall policy direction related to corporate tax and dividend gains tax incentives for companies participating in the corporate value-up program probably in June, I have been informed.”

The comment came during a conference hosted by the American Chamber of Commerce in Korea (Amcham) in central Seoul on Monday, with executives from U.S. companies operating in Korea in attendance.

“Given Korea’s world-class digital infrastructure, innovation and strong economic fundamentals, we believe now is the opportune time for Korea to position itself as a regional headquarters of Asia,” said Amcham CEO and Chairman James Kim in his opening remarks.

As Korea falls behind Singapore, Hong Kong and Shanghai in terms of the number of companies operating regional headquarters in the country, Kim stressed that “to unlock the true potential, it’s imperative to create a regulatory environment consistent with global standards.”

In his keynote speech, Lee stressed that “the United States holds the utmost importance for Korea among its three largest trading partners,” promising that “the government and financial authorities will do their best to make fundamental improvements in the country’s economy and financial market.”

Lee cited the value-up program as one of the government’s latest efforts to attract investors to the domestic capital market, along with its plan to revise the Commercial Act to require corporate board directors to perform their duties faithfully not only for the company but also shareholders, which would mandate the board of directors to incorporate minor shareholders’ interests in their decision-making.

The value-up program kicked off last Monday with the launch of a new website. The voluntary scheme aims to incentivize companies to announce plans to enhance shareholder returns.

During a dialogue session with Kim, the governor mentioned that the government is working to deregulate stringent rules on network separation mandating a physical separation of internal and external networks for security purposes, which has hindered the adoption of new digital services in the financial sector.

The progress on the initiative will be announced in the latter half of the year, according to Lee.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]