Franklin Templeton: “Reform of Financial Investment Income Tax and Other Stock Market Taxes Needed to Accelerate Korea‘s Value-Up.”


On July 9 Global Asset Management firm Franklin Templeton Positively evaluated South Korean government’s “Corporate Value-Up Program,” But cautioned it may take some time to see tangible results due to the ongoing political debates around tax reforms such as financial investment income tax.


In Reports released on the same date. Franklin Templeton stated, “The Value-Up Program has the potential to succeed, but it will take some time for small investors to benefit from it.” The The firm emphasized that the current tax regime, which includes the financial investment income tax and dividend income tax, may be significant obstacles in enhancing shareholder value. Korea.


Under The current law imposes a tax of 15.4% on dividends below 20 million won (roughly $14,600), but a tax rate of 49.5% is applied to dividends above 20 million won. This A high rate of dividend tax is criticized as not incentivizing major shareholders to increase dividends or engage in shareholder return. Instead, Franklin Templeton noted, “Major shareholders can exploit corporate value through means that may harm the interests of small shareholders.”


The The report also identified as a major problem the structure which allows founding families maintain control over conglomerate group despite having low stakes in them. This Structures can benefit controlling shareholders who prioritise market share over overall profits. Franklin Templeton The analysis of the “Value-Up” The policy is a result of the authorities’ recognition that Korea Discounts could continue if corporate governance standards and rights of small investors are not met.


Franklin Templeton The opposition’s majority in parliament is a further reason to provide incentives through tax reform. National Assembly It is more difficult to expect institutional changes after the last general elections. AdditionallyThe firm has diagnosed the problem Korea’s Value-Up ProgramIt is a different kind of Japan’s Corporate governance code based upon the principle of “comply or explain”.


Meanwhile, Franklin Templeton Positively evaluated Korea Exchange’s Launch the plan “Korea Value-Up Index” You can also read about how to get in touch with us. September List exchange-traded (ETF) funds that are related in the fourthquarter as an incentive to companies. HoweverThe firm pointed out that the criteria of the index were not disclosed yet and that there was no way to know what the index would include. Value-Up Program The fact that there is no mandatory enforcement indicates the need for further monitoring.

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