By Kang Seung-woo
The government and the ruling Saenuri Party are considering lowering tax rates on gains from bond investments by foreigners, officials said Thursday.
Ruling party lawmakers and officials of the Ministry and Strategy and Finance discussed the idea of reducing the tax burden on foreign bond investors during a meeting at the National Assembly.
They agreed on the need to apply "flexible tax rates" on interest income accruing from such investments by foreigners, the officials said.
The meeting came amid concerns that an imminent rate hike by the U.S. Federal Reserve may prompt foreign investors to flee the Korean bond market for higher returns.
"Cutting taxes for foreign bond investors will prevent the flight of foreign funds in the event of a U.S. rate hike," Rep. Kang Seog-hoon of the Saenuri Party told reporters after the meeting.
Kang heads a party task force that is reviewing plans to stabilize the financial market as a U.S. rate rise seems to be a fait accompli this month.
The U.S. Fed's Federal Open Market Committee is expected to raise the key rate next week.
The government is concerned that when U.S. interest rates move higher, the local bond market will be less attractive.
The Bank of Korea kept its base rate at 1.5 percent, Thursday, after sending it to a record-low level through four rate cuts in less than a year starting August 2014.
Amid growing expectations for the U.S. rate hike, the government and the ruling party plan to hold meetings to seek countermeasures.
They expect that a possible rate increase by the U.S. may have negative effects on the local market, including an outflow of foreign capital and fluctuations in foreign exchange rates.
The government and the ruling Saenuri Party are considering lowering tax rates on gains from bond investments by foreigners, officials said Thursday.
Ruling party lawmakers and officials of the Ministry and Strategy and Finance discussed the idea of reducing the tax burden on foreign bond investors during a meeting at the National Assembly.
They agreed on the need to apply "flexible tax rates" on interest income accruing from such investments by foreigners, the officials said.
The meeting came amid concerns that an imminent rate hike by the U.S. Federal Reserve may prompt foreign investors to flee the Korean bond market for higher returns.
"Cutting taxes for foreign bond investors will prevent the flight of foreign funds in the event of a U.S. rate hike," Rep. Kang Seog-hoon of the Saenuri Party told reporters after the meeting.
Kang heads a party task force that is reviewing plans to stabilize the financial market as a U.S. rate rise seems to be a fait accompli this month.
The U.S. Fed's Federal Open Market Committee is expected to raise the key rate next week.
The government is concerned that when U.S. interest rates move higher, the local bond market will be less attractive.
The Bank of Korea kept its base rate at 1.5 percent, Thursday, after sending it to a record-low level through four rate cuts in less than a year starting August 2014.
Amid growing expectations for the U.S. rate hike, the government and the ruling party plan to hold meetings to seek countermeasures.
They expect that a possible rate increase by the U.S. may have negative effects on the local market, including an outflow of foreign capital and fluctuations in foreign exchange rates.
