Deputy Prime Minister and Finance Minister Choi Kyung-hwan said the government's plan to tax local companies' cash reserves is not a punitive measure.
 
Choi made the comments at a forum Saturday hosted by the Federation of Korean Industries, saying firms would face no additional taxation if they use their reserves appropriately.  
 
Choi stressed the plan was aimed at inducing companies to use their new profits for more employment and investments. He said companies will have to spend 60 to 70 percent of their net profits to avoid taxation. 
 
The comments came in response to concerns over the taxation plan the government introduced earlier this week along with its 41-trillion won stimulus package.
 
The finance minister also explained that companies' net profits gained before the new tax measure will not be subject to taxation. 
 
The minister said the rate of the new tax on cash reserves will be set considering previous corporate tax cuts, ranging between 25 to 22 percent over the last five years.