KSD Releases QFI Guide... "Demand for Government Bond Investment Will Expand"

by Kim Minyoung

Published 01 Apr.2024 10:23(KST)

The Korea Securities Depository (KSD) announced on the 1st that it has released the 'Qualified Foreign Financial Institution (QFI) Approval Application and Operation Guide' to enhance the tax-exemption convenience for foreign investors using the integrated government bond account.

The guide, published by KSD on the 29th of last month, serves as a practical manual for QFIs. A QFI is a foreign financial institution approved by the National Tax Service Commissioner to handle tax-exempt interest and capital gains income for foreign investors investing in government bonds through the integrated government bond account.

Since January last year, the government has introduced tax exemption on interest and capital gains income not only for foreign investors' direct accounts but also for investments made through the integrated government bond account. Accordingly, KSD prepared the guide over approximately four months to assist foreign financial institutions with QFI application, approval, operation, and related procedures.

The guide is composed of four sections: △ related system information △ QFI system overview △ frequently asked questions (FAQ) related to QFI △ and supplementary materials. In particular, it organizes the most common inquiries from foreign financial institutions into six categories with 36 Q&A items and includes a statement form related to QFI approval requirements.

Through this, KSD expects to help foreign financial institutions avoid trial and error in QFI applications and related processes, handle tasks based on clear standards, and smoothly acquire QFI qualifications. Additionally, it anticipates that foreign investors will be able to conveniently apply for tax exemption through QFIs abroad, thereby expanding investment demand in Korean government bonds.

KSD plans to successfully complete the establishment of the International Central Securities Depository (ICSD) integrated government bond account scheduled for the end of June. As the sole operator of the integrated government bond account domestically, KSD stated it will fully support foreign financial institutions' QFI applications and the National Tax Service's QFI approvals without disruption, striving to advance the Korean government bond market.