A South Korean parliamentary subcommittee at the weekend gave a nod to reinstating taxes on foreigners' local bond investments in a flexible manner, a media report said on Sunday. The tax subcommittee of the National Assembly agreed to imposing a zero-to-14 percent withholding tax on bond holdings by foreign investors, online news outlet EDaily reported, citing the parliamentary panel.
Officials involved in the tax subcommittee could not immediately be reached for comment. The next legislative step is to send the draft bill to a broader committee, then to put it to a vote at a plenary session.
Lawmakers had debated two bills - the flexible tax rate and a fixed 14 percent rate, since they were submitted to parliament in November.
It was aimed at re-introducing withholding tax on capital gains earned by foreign investors from holdings of domestic treasury and monetary stabilisation bonds, which were lifted in May 2009. If passed by the National Assembly, the bill will retroactively apply to bonds bought by foreign investors since November 13.
Investment gains earned between November 13 and December 31 will be exempted from the prospective tax, only to apply the taxation on capital gains to be made starting from January 1, 2011, the report said.