South Korea: Revised tax treatment for Korean Treasury bonds (KTB) and Monetary Stabilisation Bonds (MSB)
Clearstream Banking1 informs customers that the Ministry of Economy and Finance (MOEF) of South Korea has announced that the amendment to the Enforcement Decree of the Income Tax Act and Enforcement Decree of the Corporate Tax Act was promulgated on 27 October 2022. According to the amendment, non-residents and foreign investors investing in Korean Treasury bonds (KTB) and Monetary Stabilisation Bonds (MSB) for the period from 17 October 2022 to 31 December 2022 can benefit from tax exemption on the interest payments and capital gains derived from KTB and MSB.
Background
Non-residents and foreign investors can benefit from tax exemption on interest payments from KTB and MSB during the period from 17 October 2022 to 31 December 2022 in accordance with the promulgation of the revised Enforcement Decree of Income Tax Act and Corporate Tax with effective date 27 October 2022, if the necessary documents have been submitted to Clearstream Banking. The tax exemption application is only temporary for the period mentioned above as per the government’s reflationary measures.
Standard refund of withholding tax on interest payments from South Korea bonds is not available through Clearstream Banking.
Clearstream Banking does not assist with tax exemption on capital gains derived from KTB and MSB. Customers should consult their tax advisor for further information.
Impact on customers
Customers who are non-residents and foreign investors can benefit from tax exemption on interest payments from KTB and MSB during the period from 17 October 2022 to 31 December 2022. No tax documents need to be submitted and the exemption is determined based on the following documents that have to be submitted to Clearstream Banking at the time of the Investment Registration Card (IRC) request:
- Certificate of Residence (COR); or
- Certificate of Incorporation.
Note: The procedure and documentation requirements for obtaining an IRC are provided in Settlement Services - South Korea.
Further information
For further information, please contact the Clearstream Banking Tax Help Desk or Clearstream Banking Client Services or your Relationship Officer.
------------------------------------------
1. Clearstream Banking refers collectively to Clearstream Banking S.A., registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Trade and Companies Register under number B-9248, and Clearstream Banking AG (for Clearstream Banking AG customers using Creation Accounts), registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500.