National Tax Service

The government decided on May 9, 2005 to levy taxes on all kinds of foreign exchange gains in the near future.
In order to maintain fairness in taxation, it was decided to impose taxes on any foreign exchange gains from dollar and euro swap deposit accounts following the early decision in April to levy taxes on foreign exchange gains from yen swap deposit accounts.
With the new taxation plan in place, depositors must pay 16.5 percent of their foreign exchange gains as interest income tax if they signed a futures exchange contract with banks to avoid foreign currency risks and also earned gains from the arrangement.
It was already notified to the National Tax Service that foreign exchange gains from yen swap deposit accounts are subject to taxation if such gains are considered interest income.
The measure was taken in the view that if dollar and euro swap deposits are the same as yen swap deposits, they are also taxable. Tax authorities will complete its research on yen swap deposits this week.

The National Tax Service has launched a research project to sort out taxable financial products, and plans to develop taxation criteria for foreign currency deposits this month and notify taxpayers of the results.
Foreign currency swap deposits refer to financial products that allow customers to deposit money in foreign currencies and withdraw the money in the local unit after a certain period.
The value of yen swap deposit accounts is estimated at 5.9 trillion won and annual foreign exchange gains at 236 billion won last August.

< Source : Ministry of Finance and Economy >