Tax law revised for dividends from capital surplus reductions; only major shareholders taxed
The government has introduced partial taxation for dividends paid by reducing capital surplus. Major shareholders have been designated as the taxpayers, while small shareholders are excluded.
The government has introduced partial taxation on dividends from capital surplus reductions. The measure covers a method in which capital surplus is reduced and converted into retained earnings, and the resulting funds are then distributed to shareholders as dividends. KB Securities described this as “a structure in which capital surplus is converted into retained earnings and distributed as dividends.”
Until now, dividends from capital surplus reductions have been treated as tax-exempt, unlike ordinary dividends. There have been cases in which dividends exceeding the acquisition cost were also recognized as tax-exempt, prompting debate over fairness. The government revised its taxation plan in response to these concerns.
The revised proposal limits those subject to taxation to major shareholders. Ordinary small shareholders are excluded. When a company announces a dividend from a capital surplus reduction in a disclosure, shareholders should check that disclosure.
The tax law revision is intended to partly change the tax treatment of dividends. Companies may find it harder to obtain tax-saving benefits in the same way as before. Whether someone qualifies as a major shareholder is determined under tax law criteria, including the ownership percentage.
Investors should check the wording of company disclosures and how the source of the dividend is identified. They should distinguish whether the dividend comes from a reduction in capital reserves or from ordinary retained earnings. Major shareholders should consult a tax professional to confirm the specific criteria.
Sources: 파이낸셜뉴스 증권
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