Foreigners to be exempt from tax on Korean government bonds

Economy

Published: 17 Jul. 2022, 17:58

Foreigners to be exempt from tax on Korean government bonds

Choo Kyung-ho, deputy prime minister and minister of economy and finance, left, talks with Kristalina Georgieva, managing director of the International Monetary Fund, at the G20 Finance Ministers and Central Bank Governors Meeting at Bali on Saturday. [NEWS1]

Foreign investments in Korean government bonds will be exempt from taxation, according to Finance Minister Choo Kyung-ho.

The plan was announced at a press conference Saturday in Nusa Dua, Indonesia. Choo was in Bali to attend the G20 Finance Ministers and Central Bank Governors Meeting.

More details about the exemption will be provided on July 21.

Korea is trying to join the World Government Bond Index (WGBI), and the governments of most countries with bonds in the index exempt non-resident investors from taxation on debt instruments they issue.

Choo also announced at the press conference that the cap on duty-free purchases eligible for tax exemption will increase from the current $600 to $800.

"It has been some time since the cap was set to $600, and we plan to raise it to $800 to help the tourism industry," said Choo.

The limit was raised from $400 in September 2014.

Japan has a tax exemption cap of 200,000 Japanese Yen ($1,440) and China has a cap of 5,000 Chinese yuan ($740).

Companies have been requesting an increase for a long time, with CEOs of duty-free companies asking for a higher cap during a conference with Yoon Tae-sik, commissioner of Korea Customs Service, in June. Various restrictions were eased for duty-free companies as the business was hit hard by the pandemic. Since March, the duty-free purchase cap for Koreans was raised from $3,000 to $5,000.

BY LEE TAE-HEE [lee.taehee2@joongang.co.kr]