ATJ Asian Tax Journal

Asian Tax Journal

Print ISSN 1738-3323 Online ISSN 2733-9270

A Study on the Problems and Improvement of the Tax Improvement Plan for Corporate Value－Up

  • Sung Ook Park Department of Accounting and Taxation, College of Business Administration, Kyung Hee University
  • Young Woo Kim Department of Accounting and Taxation, College of Business Administration, Kyung Hee University
  • Seo Hyun Kim Department of Accounting and Taxation, Graduate School, Kyung Hee University

Asian Tax Journal Vol. 25 No. 4 (2024), pp. 131-158

Abstract

Korean companies are significantly undervalued compared to the value of listed companies in major overseas countries. The most commonly used indicator when determining whether a company is undervalued is PBR. As of 2023, the average of Korean companies is 1.0, which is significantly lower compared to the average of 3.2 in developed countries and 1.7 in emerging countries. To solve this problem, the government intends to establish and implement corporate value－up guidelines. This study examines the literature on tax systems that have a negative impact on the corporate valueup, identifies problems, and proposes improvement measures as follows. First, the tax base for inheritance tax should be expanded and the tax rate should be lowered to reduce the burden of excessive inheritance tax by reflecting changes in Korea’s economic environment, such as inflation. Second, corporate tax benefits should be given to companies that pay dividends so that companies can voluntarily return profits to shareholders. Also, it is necessary to abolish the Tax Incentives for Investment and Mutual Cooperation, which imposes additional corporate tax on non－recirculation income. Third, it is reasonable to select between comprehensive income taxation and separate taxation only for dividend income so that investors can actively invest in companies and share profits, and to provide tax benefits such as tax exemption to minority shareholders who hold stocks in listed corporations for more than a year. Fourth, it is necessary to abolish the financial investment income tax in order to create a virtuous cycle structure in which a company receives smooth investment, shares the growth of the company with investors, and reinvests in the company again. As such, this study is significant in that it reviewed various tax systems and suggested improvement plans for corporate value－up.

Keywords

  • Corporate Value－Up
  • Inheritance tax
  • Corporate tax
  • Pay dividends
  • Financial investment income tax

Related Articles

ATJ
E-SubmissionSitemapContact Us RSS

Asian Tax Journal

Address : 3F, KICPA Bldg., 12 Chungjeongro 7-gil, Seodaemun-gu, Seoul 03736, Republic of Korea

Editor-in-Chief : Prof. Wanyong Kim Editorial Office : Dept. of Finance, Accounting & Taxation, Hanyang Cyber University, 220 Wangsimni-ro, Seongdong-gu, Seoul, Republic of Korea Tel : +82-2-2290-0418 / +82-10-8664-1117 E-mail : taxresearch2@hanmail.net