• Yoon said these tax benefits will be given to companies that "actively expand dividends and push for [a] low-rate separate taxation on shareholders' dividend income tax," according to a Google translation.
• He also announced a 25 trillion won ($17.98 billion) support package for small businesses affected by the Covid-19 pandemic.

South Korean President Yoon Suk Yeol has announced tax cuts for companies that increase capital returns to shareholders under the country's "corporate value up program."

Speaking ahead of the government's biannual economic policy announcement, Yoon said that these tax benefits will reward companies that "actively expand dividends and push for [a] low-rate separate taxation on shareholders' dividend income tax," according to a Google translation.

"We will establish and spread the value-up program that increases corporate value and provides opportunities for asset formation to the people," he added.

Yoon was referring to the "corporate value up program" from the country's financial regulatory body, which aims to boost its undervalued local markets.

South Korea's market as a whole is perpetually undervalued due to various factors including opaque corporate governance practices and low dividend payouts, leading to a phenomenon known as the "Korea discount."

The value up program aims to prioritize shareholder returns through incentives including tax benefits, and "encourage listed companies to voluntarily set up and disclose valuation enhancement plans," according to the Financial Services Commission.

Yoon also announced other measures including a 25 trillion won ($17.98 billion) support package for small businesses, which he said "are still in difficult conditions."

He said "amid persistently high interest rates, their interest burden has increased, while wage and rent costs are also rising," according to a Reuters translation.

South Korea's central bank has held its benchmark interest rate at 3.5% since January 2023, a 15-year high.