With the revised Act on Restriction on Special Cases Concerning Taxation (“the Act” hereinafter) taking effect from January 1, 2026, a separate taxation rule has been adopted on income generated from stock dividends.
Under the revised Act, high dividend companies will need to disclose the information demonstrating that they have satisfied all the requirements prescribed under the revised Act to qualify for special cases in a manner specified by a presidential decree. In this regard, a revision bill to the Enforcement Decree of the Act was approved by the government at the cabinet meeting held on February 24, 2026, stipulating that high dividend companies should follow the rules concerning the disclosure of corporate value-up plans.
Method of Disclosure and Provision of Assistance
At the end of each fiscal year-end closing, high dividend companies will need to file disclosures of corporate value-up plans with the Korea Exchange (KRX) with contents detailing that they have satisfied all the requirements to qualify for special cases concerning taxation under the Act until one day after the day that dividends are declared at the annual general meeting of shareholders (AGM).
Since the disclosure of corporate value-up plan is prepared by companies on their own based on the individual characteristics of each listed company, specific disclosure contents other than the required fields on dividends, as well as the decision regarding which criteria to incorporate and in what length will be left up to companies in principle.
In particular, considering that this is the first year wherein high dividend companies will be filing disclosures of corporate value-up plans for indicating their qualifications for special cases concerning taxation, an abridged form of disclosure will be permitted containing only key disclosure contents, such as qualifications for special cases concerning taxation, return on equity (ROE), dividend payout ratio target, and capital expenditure (CapEx) target.
To provide assistance to high dividend companies, the KRX will make updates to the disclosure form used for corporate value-up plans and offer examples of abridged disclosure filing in the guidelines for corporate value-up plan.
In addition, the KRX will make utmost efforts to ensure that all high dividend companies are well aware of the disclosure filing and that there is no qualified company left out from participating by holding online information sessions (March 4 and March 9), sending emails, and displaying an information pop-up window on the KRX’s KIND website. In the meantime, given that corporate AGMs are mostly taking place at the end of March, the KRX will offer one-on-one consultations upon request for high dividend companies to facilitate their preparation for disclosing corporate value-up plans.
Anticipated Effects
Under the current administration, the government has been seeking to bring about fundamental changes in the Korean stock market by boosting market confidence, enhancing shareholder protection, encouraging innovation, and promoting a virtuous cycle of capital flows, thereby helping to overcome the so-called “Korea discount” and aim further to achieve a “Korea premium.” In order to make shareholder primacy a commonsensical practice in the capital market, it is especially needed for listed companies to not only make efforts to boost corporate value on their own but also actively engage and communicate their efforts with shareholders.
In this regard, with the revised Enforcement Decree of the Act in place, the availability of tax benefits in conjunction with the disclosure of corporate value-up plans will help to significantly increase participation by listed companies in the disclosure of corporate value-up plans. As this will help companies to have more active communication with their shareholders and market participants, it will foster a market environment and a corporate culture where shareholder value is respected more deeply.
Moreover, high dividend companies making greater efforts at shareholder return will receive proper evaluation in the market through their disclosure of corporate value-up plans, and this will facilitate the cycle of financing and reinvestment, thereby helping to establish a virtuous cycle in the capital market where growth is shared across the board for enterprises, investors, and the market.
* Please refer to the attached PDF for details.