South Korea
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Proposal to streamline the KTB/MSB tax-exemption application process for certain Overseas Investment Vehicles
Category
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NetInfo® Custody Account -
Legal/Regulatory, Taxation
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Summary
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The Ministry of Economy and Finance announced the 2024 Tax Revision Bill, which includes a proposal to streamline the tax-exemption application process for Private Overseas Investment Vehicles (Private OIVs) on interest income and capital gains from South Korean Treasury Bills (KTB) and Monetary Stabilization Bonds (MSB). |
Impact
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NetInfo® Custody Account
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South Korea
If the proposal passes, all Private OIVs may benefit from our KTB/MSB tax-exemption service, effective January 1, 2025.
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Effective Date
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January 1, 2025
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On July 25, 2024, the South Korean Ministry of Economy and Finance announced the 2024 Tax Revision Bill (the “Bill”). The Bill includes a proposal to streamline the tax-exemption application process for foreign Private Overseas Investment Vehicles (Private OIVs) on interest income and capital gains from South Korean Treasury Bills (KTB) and Monetary Stabilization Bonds (MSB). Currently, only Private OIVs “deemed beneficial owner” are able to benefit from our KTB/MSB tax-exemption service offering. As a reminder, a Private OIV “deemed beneficial owner” is a non-Public OIV that meets the following conditions: - Is liable to taxation in the jurisdiction where it is established, and
- Is resident in a country with an effective double taxation treaty (DTT) with South Korea, and
- Meets the conditions for reduced tax rate or exemption with respect to South Korean source income, stipulated in the applicable DTT.
If the Bill passes, all Private OIVs may benefit from the KTB/MSB exemption, irrespective of whether they meet the above-mentioned conditions. We expect that all Private OIVs will be required to submit either a Form 72-6 or a Form 19-13 (collectively referred to as “South Korean Tax Exemption Form for KTB/MSB” in NEXEN) and a supporting document (Certificate of Residence or an alternative document as defined by the South Korean Tax Authorities). Once confirmed, we shall inform you accordingly through a NetInfo® update. Another proposed change in the Bill is that foreign Private OIVs would be able to apply for KTB/MSB tax-exemption even if some of their investors / shareholders are South Korean residents. Such South Korean investors would then be responsible for reporting their income and paying the tax to their respective tax administration. The tax-exemption application process remains unchanged for all other categories of investors. If the Bill passes, it shall become effective on January 1, 2025. Action required For your information. We will send a NetInfo® update if the Bill is passed and provide more information on the documentation requirements therein. Should you have any specific tax technical questions on the above, please contact Diego Morisco on taxtechnicalecrm@bnymellon.com
Transmitted on July 31, 2024
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