South Korea announced measures on 5 February 2014 to ease the tax burden on stock options for the venture capital and start-up sector. Early this year, the Government finalized a range of tax incentives, which were first announced in May 2013, to encourage and help start-up and venture capital businesses.
The South Korean Government has now decided to develop supplemental measures, if needed, to attract more angel investors and encourage more mergers and acquisition activity between small- and medium-sized enterprises.
The Government is to ease the tax burden on stock options to help start-ups attract talent to the industry. It will allow stock holders to pay either the earned income tax (maximum 38 percent) when they exercise stock options, or the transfer income tax (10 percent or 20 percent) when their stocks are sold. For start-ups offering new stock options to their employees as part of the employees’ compensation, the Government will allow companies to account for stock options as an expense when exercised.
