Samsung Told by Tax Man to Use Apple-Topping Cash: Korea Markets
Samsung Electronics Co. is sitting on a cash pile 58% bigger than Apple Inc. (AAPL)’s war chest. The tax man has a message for South Korea’s biggest company: “Use it or lose it.”
The government of President Park Geun Hye this month published initial plans for a 10% tax on what it says are excessive fund hoards that should either be spent on wages and investment or distributed to shareholders.
“We’re trying to give a signal here,” Moon Chang Yong, the head of the tax bureau at Korea’s Finance Ministry, said by phone on Aug. 19. “It’s time to help stoke domestic demand.
The tax on surplus reserves is supported by stock investors eager for dividends as the government deploys 11.7 trillion won ($11.4 billion) in stimulus to boost economic growth that slowed to the weakest in a year last quarter.
The 763 companies in the Kospi index, the benchmark gauge for South Korean equities, held the equivalent of $808 billion of cash and short-term securities on their balance sheets, according to data compiled by Bloomberg. That’s more than the gross domestic product of the Netherlands.
The measure is part of Finance Minister Choi Kyung Hwan’s plan to force the country’s chaebol conglomerates to boost household incomes that less-than doubled between 2000 and 2012, even as corporate earnings saw a three-fold increase.
Source: bloomberg
