South Korea seeks tax from gold trading
26 March 2014
Posted by: Author: Mary Swire
Author: Mary Swire (Tax-News)
The Korea Exchange (KRX) has brought the launch of South Korea's first gold spot market forward to March 24, as part of the Government's attempt to cut out underground gold dealings and increase its tax revenues.
The spot gold exchange will only be open to qualified gold dealers, including wholesale or retail distributors, importers, and goldsmiths. Individual investors will also be allowed to trade gold on the exchange if they do so via a qualified gold dealer.
The Government has previously suggested that South Korea would benefit from legalizing the underground economy in gold trading, as this would reduce the ability of taxpayers to hide income, and open up a new revenue stream for the Government. It has been estimated that more than half of the 100 tons of gold circulated in the local market each year is traded via illegal channels, and tax evasion through gold dealings is estimated to cost over KRW300bn (USD278m) in unpaid taxes every year.
Trading through the KRX will offer a reduction in taxes. The 3 percent import duty on gold will be waived for exchange traders for an initial fixed period, and the 10 percent value added tax on purchases will also not be imposed if a trader does not take physical delivery of the gold.
This article first appeared on tax-news.com.