To Expand Demand for Government Bonds
The Ministry of Economy and Finance announced on July 21 that foreigners’ interest income and capital gains derived from investment in government and monetary stabilization bonds would become tax-free and the introduction of financial investment income tax and cryptocurrency taxation would be postponed for two years.
“The tax exemption for non-residents and foreign corporations is expected to lead to a higher demand for government bonds, more investment in the bond market and a higher level of foreign exchange market stability,” said Deputy Prime Minister Choo Kyung-ho.
“In addition, taxation on overseas subsidiaries’ divided income will be exempted next year so that such companies do not have to pay double taxes, that is, a local corporate tax and a domestic tax regarding the dividend paid to the parent company,” the government said, continuing, “South Korean enterprises’ overseas reserves amount to more than 100 trillion won and the non-taxation will help attract the money into South Korea.”
Previously, the government was planning to apply an income tax rate of 20 percent to cryptocurrency-related capital gains exceeding 2.5 million won a year. The plan was scheduled to take effect in October 2021 but was postponed to January 2022 and January 2023. This time, it was postponed to 2025 for current market conditions and better investor protection measures.