Parliamentary committee passes bill on separate taxation of dividend income
Published: 01 Dec. 2025, 09:04
Updated: 01 Dec. 2025, 14:22
![Lim Lee-ja, the chair of the parliamentary strategy and finance committee, knocks a gavel during a plenary session at the National Assembly in Seoul on Nov. 30. [YONHAP]](https://koreaseafood.online/data/photo/2025/12/01/bae9d829-18e2-4658-b374-cc98b062b19c.jpg)
Lim Lee-ja, the chair of the parliamentary strategy and finance committee, knocks a gavel during a plenary session at the National Assembly in Seoul on Nov. 30. [YONHAP]
A parliamentary committee on Sunday passed a tax reform bill to create a new bracket for dividend income subject to separate taxation and impose up to 30 percent tax for amounts exceeding 5 billion won ($3.4 million).
The Strategy and Finance Committee passed the bill, which aimed to lower tax on dividend income in an effort to boost the local stock market.
The bill lowers the government's original proposal of a maximum 35 percent tax rate to 30 percent, with the highest bracket expected to apply to only around 100 high-income individuals.
Currently, financial income is taxed at 15.4 percent for amounts up to 20 million won per year, while income above that threshold is subject to comprehensive taxation, with rates reaching up to 49.5 percent.
Under the bill, a separate tax rate of 14 percent would apply to dividend income of up to 20 million won, 20 percent for amounts over 20 million won and up to 300 million won and 25 percent for amounts over 300 million won and up to 5 billion won. Amounts exceeding 5 billion won would be taxed at 30 percent.
The new tax scheme will apply to companies with a dividend payout ratio of 40 percent or higher, or a dividend payout ratio of 25 percent and an on-year increase of 10 percent or higher.
If approved in a plenary vote at the National Assembly, the bill will take effect for dividends paid next year.
Yonhap
with the Korea JoongAng Daily
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