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  • [금융/투자/외환] Act on Real Name Financial Transactions and Confidentiality
    • Competent Ministry : Financial Services Commission
    • Advance Publication of Legislation : 2018-05-18
    • Opinion Submission Deadline : 2018-06-01
Reasons for Proposal

The current Act requires that up to 90% of income be withheld on income accruing from non-real name assets, but differential taxation and conversion into real names have not been properly carried out because it is unclear whether the financial assets transacted using the real names of others may also be classified as non-real name assets.

In addition, it was impossible to levy an administrative charge on any non-real name accounts opened after the introduction of the real name financial transactions system because there has not been any provision for collecting the administrative charge.

Accordingly, this Amendment aims to promote the normalization of real name financial transactions and realize economic justice by clarifying that the financial assets, which are identified as having the actual owner different from the account owner through the provision of information etc., on transactions between the prosecution and taxation and financial authorities, shall be subject to differential taxation as the "income accruing from non-real name assets," and by collecting the unfair gains through an administrative fine equivalent to 20% of the value (Article 4 and Article 5, and Article 5-2 and Article 5-4 newly inserted etc.). 

Major Provisions

With respect to the income from interest and dividends accruing from financial assets which have been notified as having an actual owner different from its account owner, the withholding tax rate for income tax shall be 90/100 from the date of opening the account to the date of converting into the real name (Article 5 (1) 2).

A financial company shall not redeem, return, repurchase, etc. non-real name financial assets before its conversion into real names; and shall be subject to administrative fines for violations (Article 5-2 (1) and Article 7 (1)).

Where the actual owner of a non-real name financial asset converts the account owner’s name to his/her real name, a financial company shall withhold the amount, as an administrative penalty, corresponding to 20% of the value of the non-real name financial asset as of the date it was converted into the real name (Article 5-4 (1)).

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