Gov't mulls lifting taxes on foreigners' bond interest

SEOUL, Feb. 26 (Yonhap) -- The government is pushing to exempt foreign investors
from taxes on their interest income from local bonds to stimulate a capital
influx and stabilize the currency market, officials said Thursday.
"Tax benefits for foreign investments in the bond market is one of many measures
that we are weighing," a senior finance ministry official said on condition of
anonymity "A decision will be made on the issue sooner or later."
According to recent data, foreign investors held around 38 trillion won (US$25
billion) worth of local bonds. Currently, they have to pay 14 percent of gains
earned from their bond investment here.
The measure will come as jitters are deepening that foreigners could pull their
money out of the South Korean market en masse, leaving banks unable to pay back
debts amid a worsening dollar shortage.
South Korea's currency has been hit hard by the global financial turmoil, with
the won falling to a near 11-year low against the U.S. dollar on Tuesday.
Experts see the envisioned tax break could help entice further foreign investment
into the bond market here, which will increase demand for the local currency and
support the won's value.
kokobj@yna.co.kr
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