A Study on Foreign Investment Fund’s Tax System －Focusing on Taxation Case of Exchange Gain－
Asian Tax Journal Vol. 12 No. 4 (2011), pp. 9-43
Abstract
When global financial crisis had occurred since 2008, investors were burdened with taxes on exchange gains although they suffered losses from foreign investment fund's redemption. In the process of this, many problems of foreign investment fund's tax system are exposed. so government suggested a solution that make a partial amendment of foreign investment fund's tax system in 2009 and extended time limit of tax exemption on foreign investment fund. This study considers korean taxation on on－shore and off－shore foreign investment fund and investigates problems of these fund's taxation. To examine concretely taxation problems on exchange gain of foreign investment fund, we look into tax burdens from investor's perspective according to scenarios that consist of foreign stock price's change and domestic currency's change. According to examination of foreign investment fund's tax system and analysis of scenarios,because of differences between on－shore and off－shore foreign investment fund's tax system, tax burdens of investors are different when senarios of stock price and currency changes are changed. In addition, the solution that government suggested for foreign investment fund's tax includes possibility to be taxed unfairly as to changes of investment environments. so, taxation formula on exchange gain through investigations of concrete situations should be introduced, and fund taxation should be improved toward same application of taxable amount and whether to tax between on－shore and off－shore foreign investment fund, and toward the reduction of tax discriminations between domestic and foreign investment fund.
Keywords
- On－shore fund foreign investment fund
- Off－shore fund foreign investment fund
- Taxation on exchange gain
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