Abstract

This study examines the theoretical background of the Dividend－Exclusion System, and proposes an improvement plan that can solve the problem of double taxation and improve equity. Under the current corporate tax law, the income non－inclusion rate for income dividends is not a system that alleviates the problem of 100% double taxation, but the non－income rate differentially applied according to the equity ratio section of the investee. This is not the level of mitigation of the problem of complete double taxation. In addition, different levels of mitigating the double taxation problem by applying differential non－income rates to holding companies and general corporations according to the form of economic entity do not meet the purpose of the system. Based on the results of analyzing these problems, this study suggested two ways to improve the current general corporation’s 3rd stage or the 4th stage of the holding company’s equity ratio section as follows. First, it is a method of converting each to a multi－stage share ratio section. Second, it is a method of converting into a continuous form between the equity ratio and non－inclusion ratio. These improvements increase slightly the amount of non－inclusive income of the holding company, while the size of the non－income amount of general corporations increase significantly, increasing the overall amount of non－inclusive income from dividends. As a result of this, the mitigation effect of the double taxation problem is improved and also each has the effect of improving the equity.

Keywords

• Income Dividend Payable
• Dividend－Exclusion
• Double Taxation
• Equity
• Equity Ratio

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