The federal government has determined to restrict dividend revenue separate taxation advantages to money dividends to strengthen the precise earnings shareholders obtain.
In line with the “2025 Tax System Reform Observe-up Enforcement Decree Modification” introduced by the Ministry of Financial system and Finance on Jan. 16, the system that excludes dividend revenue of high-dividend corporations from complete revenue tax base and applies 14-30% separate taxation has been specified within the enforcement decree.
This can be a follow-up measure to the 2025 tax system reform plan that handed the Nationwide Meeting on the finish of final 12 months.
Separate taxation advantages apply solely to money dividends. Inventory dividends are excluded, however dividend equivalents arising from securities lending transactions are acknowledged. Funding administration corporations and securitization corporations similar to REITs are excluded from the relevant scope.
Even corporations with internet losses for the present interval can obtain separate taxation advantages in the event that they improve money dividends by greater than 10% in comparison with the earlier 12 months and keep a debt ratio of 200% or much less.
The dividend payout ratio, which is a key indicator for figuring out high-dividend corporations, is calculated primarily based on consolidated monetary statements, and if there are not any consolidated monetary statements, separate monetary statements are utilized. That is to judge the substantial dividend stage of the whole firm.
This enforcement decree modification additionally consists of measures to strengthen the funding and win-win cooperation promotion tax system that induces massive companies to truly spend funds gathered internally by rising dividends, investments, and wages.
All interim, quarterly, particular, and year-end dividends paid by corporations within the related enterprise 12 months are acknowledged as reflux efficiency, however are restricted to money dividends and exclude dividends from discount of capital reserves and earned reserves.
The reflux ratio will improve from 70% to 80% for investment-inclusive varieties similar to manufacturing industries, and from 15% to 30% for investment-exclusive varieties similar to monetary corporations.
Moreover, the ten% revenue deduction restrict for KOSDAQ enterprise fund investments might be adjusted from the prevailing cumulative 30 million received to an annual 20 million received.
