This is a brief summary of the taxes expected to be paid by you if you make an investment in our Korean funds, but please note that we are not
able to cover all possible situations in this summary, and you should also consult your tax adviser if you need to make certain of your own particular
Country of Residence of Investor
Our funds, both equity and bond, are not subject to any taxes in Korea, but investors may have to pay withholding tax whenever they receive any
money from the fund, either as a dividend or at the time of redemption or liquidation of their units in the fund. .This withholding tax is calculated
based upon the country of residence of the investor. Rates of withholding taxes for the various types of gains are shown for a selection of countries
in the table under "Withholding Tax".
The taxation of income and capital gains of both the Trust and Holders is subject to the fiscal laws and practices of Korea and the jurisdictions in
which Holders are resident. The following summary does not constitute legal or tax advice. .Prospective investors should consult their own
professional advisers on the implications of making an investment in, holding, or disposing of, Units and the receipt of distributions (whether of
income or capital gains) under the laws of the jurisdictions in which they are subject to tax.
Under current legislation, the Trust is not liable to any Korean tax on income or capital gains earned by the Trust except that interest income
attributable to the Trust in connection with certain securities held by the Trust calculated generally based upon the holding period will be subject to
a 15 percent withholding tax and for such withholding purpose, the Trust is deemed a Korean corporation. The amount of tax so withheld will be
refunded to the Trust generally during the month following the month in which the withholding is made. Therefore, the Trust will not bear any tax
burden on income or capital gains earned by the Trust Fund.
The Manager is obliged under Korean law to withhold tax from payments to all such persons ("Taxable Persons"), to report such withholdings to the
relevant national or local tax office and to account to the relevant national or local tax office for all tax so withheld.
If a Taxable Person presents to the Manager or any of its agents a certificate as to residence in the relevant form at the same time as requesting
realization or any payment in respect of the relevant Units, the Manager will withhold tax at the rate prescribed under any treaty or other
arrangement between Korea and the country within which the Taxable Person is resident as evidenced by such certificate as to residence.
In the absence of any such treaty or other arrangement or if the Taxable Person fails to present a certificate as to residence in the form and at the
time specified above, tax will be withheld by the Manager at the rate prescribed by Korean law, which is 22.0 per cent in the case of distributions of
income. In the case of capital gains, the appropriate rate is whichever of 22.0 per cent of the capital gain or 11 per cent of the gross realization
proceeds (before deduction of any allowance in respect of fiscal and sale charges) produces the lower amount of Korean tax.
Each non-resident Holder should inquire for himself whether he is entitled to the benefit of a tax treaty with Korea. It is the responsibility of the
party claiming the benefits of a tax treaty in respect of dividend payments or capital gains to submit to the Manager a certificate as to his residence.
In the absence of sufficient proof, the Manager will withhold tax at the normal rates.
At present, Korea has not entered into any tax treaties regarding inheritance or gift tax.
The following table gives the tax rates currently applicable to Holders who are residents of selected countries with which Korea has taxation treaties
and who have no permanent establishment in Korea to which dividends or capital gains are attributable:
|Papua New Guinea||10||15||0|
|Republic of South Africa||111)||5.5/16.51)3)||0|
|United Arab Emirates||10||5/103)||0/NR|
- Source: National Tax Service (as of 1 April 2012)
- 1) Tax treaty does not exempt residents' tax and the above tax rate has been raised accordingly.
- 2) Rates vary depending upon the term of the loan or debenture.
- 3) Rates vary depending upon whether the dividend paying company is owned over a particular percentage by the dividend receiver.
- 4) Capital gains tax is payable if the shares sold are of a corporation in which the seller owns 25 per cent or more of the shares at any time during the
previous one or two year period.
- 5) Capital gains tax is payable if the shares sold are of a corporation in which the seller has at any time owned 25 per cent or more of the shares.
- 6) NR: Normal rate (see below)
Although we have tried to provide accurate information above, please note that the tax rates provided are of a general nature based on investment
into securities. The rate could be different depending on the particular circumstances of the investor and/or the investment. Please check with your
tax advisor or the relevant tax treaty for confirmation of the actual rate of withholding tax.
For investors from countries with which Korea has no double tax avoidance treaty or who do not provided any evidence of their residence, normal
rates (NR) of withholding tax should be paid, which are currently 22.0 per cent in case of dividend or income gains and 22.0 per cent in case of
capital gains (or 11 per cent of gross realization proceeds if this gives a lower amount of tax).
In the table there are three types of gains: capital gains, interest gains, and dividend gains. Any capital gains from investments will be regarded as
capital gains and subject to withholding tax on capital gains; however, all income gains, either interest and dividend, obtained by collective
investment schemes established in accordance with the Financial Investment Services and Capital Market Act, which became effective from 4
February 2009, will be regarded as dividend gains and subject to withholding tax on dividend gains. Also, gains from the transaction of listed
securities, whether through direct investment or through a collective investment scheme, are generally not subject to withholding tax as capital gains.
Overpayment of Tax
Korean law does not entitle a person who has suffered a withholding of Korean tax to recover any part of any tax withheld, even if he
subsequently produces evidence that he should have been entitled to a withholding at a lower rate. In addition, he may not be entitled to any tax
credit in respect of such withholding to the extent that it exceeds the rate of withholding tax which should have been applied. However, Korean
law in general provides that, in the event of any overpayment of tax, an appeal may be made by the person withholding the tax to the Office of
National Tax Administration, with a subsequent right of appeal first to the National Tax Tribunal and then to a Korean court of competent
Inheritance and gift tax
Inheritance tax is imposed in the case of an individual of either: (a) if the deceased is domiciled in Korea; or (b) the property transferred is situated
in Korea. The latter category includes interests in Units under the Trust. Gift tax is imposed in the circumstances similar to the above and in a
situation where a person having a residential address in Korea donates property located abroad to another person having a residential address in
a foreign country (except in the case where the gift tax is assessed on the said property pursuant to the laws of the foreign country) and is
payable by the donee in the first two circumstances and by the donor in the last circumstances. The taxes are imposed if the value of the property
transferred is above a certain limit, which varies according to the identity of the deceased or donor. The rates of inheritance tax and gift tax range
from 10 per cent. to 40 per cent. but with different tax brackets depending on the value of the relevant property, subject to certain deductions in
the case of the inheritance tax.