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South Korea to tax futures and options
09 August 2012
The country’s equity derivatives market could be threatened
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South Korea
futures
options
South Korea’s equity derivatives market could suffer as plans were announced on Wednesday to introduce a transaction tax on index futures and options from January 2016.
According to a revised tax bill from the ministry of strategy and finance, a 0.001% tax will be imposed on the value of futures contracts linked to the KOSPI 200 index, and a 0.01% tax will be charged on the premiums of options. The ministry expects to take in $89m from the tax.
Index futures and options account for around 96% of derivatives trades on the Seoul bourse. The ministry said the tax would promote fairness in taxation given that other financial products and earned income have already been taxed. A tax of 0.3% to 0.5% is currently imposed on share transactions.
The proposal follows the French government’s introduction of a 0.2% levy on financial transactions. There have long been calls for a Europe-wide financial transactions tax but it has never been realised due to opposition from several countries including the UK.