`Retirees` Interest Income Tax Exemption`

The government has decided to give tax benefits for investment trust companies` financial commodities according to the allotted shares` performance for retirees who invested their pensions in such commodities.

A Ministry of Finance and Economy authority said on August 21, ``Recently, interest rates fell four percent and we are entering a time for stringent saving. This is making a lot of middle and older age people, who have invested in financial organizations and lived off of interest, uncomfortable. We are working hard to find measures that can create new financial commodities for retirees and a preferential tax policy that will exempt them from interest income tax.``

The Ministry of Finance and Economy is preparing for this by investigating the details of actual conditions for prime commodities and how actual tax benefits will be implemented.

Specifically, it is investigating exemptions for interest income tax and apportionment income tax, which amounts to 16.5 percent after retirees make their portfolios from investments in stocks and bonds.

The authority added, ``The financial commodities available now are designed for the general populace making a round sum of money and are not the most suitable for retirees. If we exempt allotted performance commodities sold by investment firms from taxation, the interest rate will increase about 2 percent more than other commodity interest rates.``

In the case of the recently tax exempted high profit ranking commodities, it requires at least 30 percent investment in credit whose value is lower than BB. This places significant restrictions on management of one`s assets and is turning away potential middle and retirement age customers who want stability.

However, the Ministry`s plan is expected to run into difficulties when adjusting the existing long-term tax management policy which aims to reduce tax benefits and exemptions for greater equal distribution.

yhchoi65@donga.com