Korea Zinc Tender Offer Gains, Dividend Income Tax Instead of Transfer Tax

Profits arising from Korea Zinc's participation in the tender offer of treasury stocks are expected to be taxed as dividend income tax, not transfer tax.

Korea Zinc said in its tender offer statement that under the tax law, shares purchased by Korea Zinc are not subject to transfer as a procedure for returning stock certificates to the company, which could result in taxes on agenda dividends.

Tender buying is one of the over-the-counter transactions, and the gains generated from this are subject to a 22% capital gains tax rate, including local taxes.

However, Korea Zinc's tender offer is considered a dividend in which the company buys its own shares and burns them all.

As a result, 15.4% of dividend income tax is withheld from the tender purchase and comprehensive financial income taxation with financial income exceeding 20 million won per year is applied to the maximum tax rate of 49.5%.

However, this is a tax rate that applies to individual investors, and there is no difference because domestic institutions pay corporate taxes.