1/25/2012

Tax Exempt Foreign-Denominated Bonds in Korea Coming to an End for Holders with Offices in Korea

Some bad news for the Korean bond market.  A law passed in 2011 entitled the Special Tax Treatment Control Law of Korea makes, for many investors, the Korea bond market much less attractive when compared to the bond market of regional rivals.

Non-Korean currency denominated bonds issued in 2012 will no longer receive tax exempt status in Korea if they are payable to any company with an establishment in Korea or were issued in Korea. 

This and other punitive-like taxes were passed in 2011 as a populist reaction to foreign-currency established companies doing business in Korea that were alleged to not be paying enough taxes in Korea and were gaining too much profits from doing business in Korea.  Many of these targeted companies were responsible for turning around failing companies. 

The alleged foreign-friendly Lee Administration has proven not to be as foreign friendly as alleged by the more liberal media sources.

Recent articles on Korean Tax Law:
IPG will be updating the readers of The Korean Law Blog, The Asian Law Blog and The China Law & Business Blog on updates to China, Bangladesh, Cambodia, Korea the Philippines, Vietnam tax law over the next couple of weeks on the IPG's blogs.
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SeanHayes@ipglegal.com