Government Bonds for Individual Investors, Prohibited from Market Circulation, Transfer, and Gift

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[Asia Economy Reporter Moon Chaeseok] The government has decided to introduce individual investment government bond products in the second half of the year, prohibiting personal transfers, gifts, and circulation in the market. Ownership transfer is only allowed in the case of inheritance due to the purchaser's death.

According to the Ministry of Economy and Finance on the 28th, the "Partial Amendment to the Government Bond Act" was legislatively announced on the 21st to establish the basis for individual investment government bond products.

First, the circulation of government bonds in the market and ownership transfers such as personal transfers and gifts are prohibited. An exception is made to allow personal transfers only in the case of inheritance due to the purchaser's death.

Since the interest rate on this product is higher than that of general government bonds issued by the government, it was judged that if circulated in the market, it could potentially affect the price of general government bonds and distort the market.

The additional interest rate level is known to be "about 30% of the base interest for a 10-year maturity, and 60% additional payment for a 20-year maturity."

A Ministry of Economy and Finance official said, "The exact additional interest rate has not yet been finalized."

Measures such as applying separate taxation or a 15.4% reduction in interest income tax benefits are also being considered.

The Ministry official added, "We recently started a preliminary feasibility study on tax reduction, which is expected to take up to six months until completion," and "Whether to grant separate taxation or interest income tax reduction benefits has not been finalized."

Since this product offers higher interest rates and tax benefits compared to general government bond products, the Ministry expects it to gain favorable responses from investors.

According to feedback from private bankers (PBs) and the financial investment industry, the Ministry explained that there were responses indicating "there is some investment incentive."

This content was produced with the assistance of AI translation services.