South Korea Eyes Dividend Tax Reform to Attract Investment

South Korea is considering a major reform of its dividend tax regime to encourage higher shareholder payouts and attract long-term capital, as part of President Lee Jae Myung’s broader efforts to invigorate capital markets.

The proposal would offer reduced and separate tax rates for dividends from listed firms with payout ratios exceeding 35%. This would cut the effective tax rate for major shareholders from nearly 50% to around 25%. Currently, Korea’s average payout ratio stands at 26%, significantly below global norms, due to punitive tax burdens.

Analysts believe the proposed changes could increase dividend yields, stabilise markets, and benefit investors across the board. Companies with consistent dividend histories, such as SK Discovery and Orion Holdings, stand to gain significantly if the reform progresses.