State Funds To Get Tax Breaks for Stock Buys

Finance

Published: 05 Jan. 2003, 15:55

State Funds To Get Tax Breaks for Stock Buys

The Ministry of Finance and Economy announced Tuesday that it will offer tax benefits on stock trading by pension and other state-run funds as part of its efforts to boost the nation's sagging stock market.

The ministry said that the funds' investments will be exempt from a 0.3-percent stock transaction tax and one levied on 50 percent of capital gains. It said that it will submit the bill to the National Assembly this month.

The decision, coming as a follow-up to measures announced last week, was made at a meeting of the nation's economic ministers, who also agreed that the National Pension Corp. and postal savings will invest a combined 800 billion won ($600 million) into funds managed by local investment trust companies to help boost the downcast stock market. That will increase the size of the trust funds to 3 trillion won.

Separately, the country's four major pension funds will invest a total of 3 trillion into equities this year, the ministry said. It plans to raise another 3 trillion won by creating investment pools, for which other small pension and government funds will chip in.

Defending the move, the ministry said the local stock market needs the support because it is vulnerable to external shocks such as uncertainties about the U.S. economy and the weakening Japanese yen.

by Kim Hyun-chul