Minimum Purchase Limit 100,000 KRW
Additional Interest and Compound Interest Applied for Holding Until Maturity
Separate Taxation Up to 200 Million KRW
On the 2nd, the domestic stock market started slightly lower for both KOSPI and KOSDAQ. Various index statuses such as stock prices and exchange rates are displayed on the electronic board in the dealing room at the Hana Bank headquarters in Euljiro, Seoul. Photo by Younghan Heo younghan@
Starting next month, individuals will be able to invest in Korean government bonds through securities firms with a minimum amount of 100,000 KRW. When held until maturity, they can also enjoy tax benefits with a separate taxation rate of 14% on interest income, up to a purchase limit of 200 million KRW.
The Ministry of Economy and Finance announced on the 30th that it has launched the operational system ahead of the first issuance of government bonds for individual investors next month.
At the 'Government Bonds for Individual Investors System Opening Ceremony' held at the Korea Securities Depository Seoul office, Kim Yoon-sang, the 2nd Vice Minister of the Ministry of Economy and Finance, said, “Government bonds for individual investors will contribute to helping citizens establish stable long-term investment and savings plans amid uncertainties in the financial market.”
Government bonds for individual investors can be purchased during the subscription period after opening a dedicated account through the sales agency (Mirae Asset Securities), with a minimum purchase of 100,000 KRW and an annual limit of 100 million KRW per person.
If held until maturity, interest calculated with compound annual interest on the nominal interest rate and additional interest rate will be paid in a lump sum on the maturity date, and a separate taxation rate of 14% on interest income will apply up to a purchase limit of 200 million KRW. Early redemption can be requested after one year from purchase, but in this case, additional interest, compound interest, and separate taxation benefits will not apply.
The government plans to issue a total of 1 trillion KRW in government bonds for individual investors this year, including the first issuance of 200 billion KRW next month (100 billion KRW for 10-year bonds and 100 billion KRW for 20-year bonds).
The nominal interest rate will be applied based on the winning bid rates of government bonds with the same maturity issued last month (3.540% for 10-year bonds, 3.425% for 20-year bonds), and the additional interest rate will be set at 0.15% for 10-year bonds and 0.30% for 20-year bonds, considering market conditions. The subscription period is from the 13th to the 17th of next month.
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