Separate tax assessment applied to the gain and loss from specific bonds starting from January 2016

Under the current income tax law, interest or distributed income derived from specific bonds is subject to separate withholding taxation, which is, in general, 20.315% of the dividend income is withheld to pay the taxes (15.315% for national tax, 5% for local tax), and capital gain from the sale of bonds is not taxable.

Starting from January 2016, the taxation of income from specific bonds will be categorized into the same taxation of income from the listed stock, thus interest or distributed income derived from such bonds will be allowed to file on a separate taxation assessment basis for the individual income tax purpose. In other words, specific bonds investment is considered to be the same investment activity as stock investment, therefore, the interest income or gain will be allowed to deduct against the loss arising from the sale of listed stock.

Current tax applied (before January 2016)

Reformed tax applied (starting from January 2016)

*¹ Specific bonds consist of i) governmental bonds such as national bonds and municipal bonds, ii) foreign governmental bonds and iii) bonds issued by entity other than a corporation.

*² General bonds consist of bonds other than specific bonds.