SEOUL, May 19 (Yonhap) -- South Korea's finance ministry said Friday it has revised a double-taxation prevention pact with Portugal in line with efforts to promote economic exchanges.
The revision is aimed at accurately reflecting the evolving economic ties between the two countries since the ratification of the pact in 1997, according to the Ministry of Economy and Finance.
Under the agreement, the two countries have agreed to reduce the limited tax rate on dividends between businesses from 10 percent to 5 percent. This lower rate applies to dividends from shares of 25 percent or more, provided they have been held for a minimum of two years.
"The revision is expected to lend hands in expanding economic exchanges, including trades and investment," the ministry said in a statement.
The updated pact also reflects international guidelines, including those from the Organization for Economic Cooperation and Development, it added.
A double-tax avoidance pact allows countries to avoid taxing the same income twice and helps ease the tax burden on companies doing business in the other country.
The updated agreement is set to take effect after a formal signing and parliamentary ratification in both countries.
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