At a Federation of Korean Industries forum on 24 July 2014, Korean Finance Ministry, Choi Kyung-hwan, announced the governments intent to introduce a retained earnings tax in Korea in order to promote investment and economic development. The tax will be applied at a rate of 3% on excess retained earnings at the end of a financial year if they are not used within 3 years.
In addition, the government also plans to introduce certain incentives for companies, including:
While industry groups' reactions to the announcements were mixed, the market reaction was decidedly positive, with the KOSPI index rising sharply, hitting a 3-year high.
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