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S.Korea seeks to revive foreign bond tax -Yonhap
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S.Korea seeks to revive foreign bond tax -Yonhap
Reuters - Sunday, November 7
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SEOUL, Nov 7 - South Korea will seek to reintroduce withholding taxes on foreign bond holdings during the current session at parliament, with tax rates likely to be set flexibly, Yonhap news reported on Sunday.
The government is also discussing further limits to currency forward trades at foreign bank branches to around 200 percent of their capital from next January, compared with the current 250 percent, the news agency cited unidentified government offices.
Those measures will likely be announced in sequence following the Nov. 11-12 G20 summit in Seoul.
"The original tax rate is 14 percent," an unnamed government official was quoted as saying.
"But given some countries are applied by 10 to 12 percent in accordance with tax treaties, we are examining technical contents such as if setting a range of flexible tax rates can be effective while following the rule of no taxation without representation."
National Assembly has been in regular session since Sept. 1, which will end on Dec. 9, the parliament's website shows.
South Korea removed the withholding tax on capital gains earned by foreign buyers of government bonds and monetary stabilisation bonds in May 2009, in an effort to attract long-term offshore funds.
Now emerging countries, including Brazil and Thailand, are stepping up efforts to resist capital inflows that are boosting their currencies and undercutting the competitiveness of exporters.
On Thursday, South Korea's finance ministry said in a statement the government would "aggressively" consider taking measures to curb inflows, shortly after the U.S. Federal Reserve unleashed a fresh asset buying plan worth $600 billion.
Yonhap also reported the government was running a task force team to examine a bank levy.
Finance Ministry spokesman Yoon Yeo-kwon said by telephone the government was still examining various measures but had yet to determine what to introduce.
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