Only dividends from high-dividend companies get Korea’s lower separate tax from 2026, so whether a company will qualify matters. Article 104-27(1) of the Restriction of Special Taxation Act sets three conditions: (1) listed, not on KONEX; (2) prior-year dividends not below the 2024 business year; (3) a prior-year payout ratio of 40%+, or 25%+ with dividends up 10%+ on the year before. The Decree defines the payout ratio as cash dividends ÷ net profit, deemed 25% when profit is zero or below. The checker tests all three.
1. Three conditions: listed (not KONEX) · dividends not below 2024 · payout test.
2. A 40%+ payout ratio qualifies; at 25%+ dividends must also grow 10%+.
3. Profit zero or below: payout deemed 25% — 0 if debt exceeds twice equity.
Checker
Updates as you type. Enter amounts in the same unit. If net profit is zero or below, the payout ratio is deemed 25%, or 0 for companies with debt over twice equity (Decree Art. 104-24(5)). We read condition (2) as comparing cash dividend totals; the company’s own disclosure is what counts.
The three conditions — Art. 104-27(1)
| Type | What the source says | Worth noting (ours) |
|---|---|---|
| Item 1 | A listed company at year end (not KONEX); investment companies and similar (Corporate Tax Act Art. 51-2(1)) excluded | Decree para. 2 |
| Item 2 | Prior-year dividends not lower than the business year including 31 December 2024 | Base year fixed at 2024 |
| Item 3(a) | Prior-year payout ratio 40/100 or more | — |
| Item 3(b) | Prior-year payout 25/100 or more and dividends up 10/100 or more on the year before | Either (a) or (b) |
How the payout ratio is measured — Decree Art. 104-24
“Dividend amount” is the total paid in cash as profit dividends in the business year. The payout ratio divides it by that year’s net profit: for consolidated accounts, profit attributable to owners of the parent, otherwise the audited net profit. If profit is zero or below, the ratio is deemed 25/100, but 0 for companies with debt over twice total equity.
Four results — our example
| Case (our example, 100m won) | Result | Worth noting (our sum) |
|---|---|---|
| Dividends 400, profit 1,000, 2024 dividends 300 | Qualifies (a) | Payout 40% |
| Dividends 300, year before 270, profit 1,000, 2024 250 | Qualifies (b) | Payout 30%; 300 ≥ 270 × 1.1 = 297 |
| Dividends 290, rest as above | Doesn’t | 290 < 297; payout 29% |
| Dividends 100, a loss, not over-leveraged | Doesn’t | Deemed 25% but no 10% growth |
We read condition (2) as comparing cash dividend totals. Whether a company qualifies is ultimately shown by its disclosure, due by the day after the AGM dividend resolution (para. 4; Decree para. 7, voluntary disclosure method). The separate tax is in high-dividend separate tax calculator.
Checklist
- ☐ Market (not KONEX) and type (not an investment company)
- ☐ 2024 business year dividends
- ☐ Cash dividends for the last two years
- ☐ Consolidated: parent-owners’ profit
- ☐ The company’s disclosure
Questions that remain
Are quarterly dividends included?
The Decree says “total paid in cash in the business year”; how quarterly dividends fit isn’t spelled out, so we don’t say.
Do buyback cancellations count?
The Decree mentions only profit dividends paid in cash.
Sources
- Korean law database (law.go.kr) — Restriction of Special Taxation Act Art. 104-27(1), (4) — source (effective 18 September 2026, Act No. 21467; checked 20 October 2026). Three conditions, the 2024 base, 40% and 25%+10%, disclosure deadline.
- Korean law database — Enforcement Decree Art. 104-24 — source (effective 18 September 2026, Decree No. 36587; checked 20 October 2026). Excluded entities, dividend amount, payout ratio (parent owners), 25% or 0 rule, disclosure method.
- Not read. Case law; ministry ordinance.
- What we added. The “worth noting” column and the Korean everyday gloss.
Where to check further
- DART company filings — the high-dividend disclosure.
Written on 20 October 2026. The content is from the source; the glosses are ours.
