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Gov't to levy tax on derivatives trading from next year
SEOUL, July 28 (Yonhap) -- The government will push to impose a tax on derivatives trading starting next year as part of an effort to increase tax revenue, despite a strong market backlash, ministry officials said Sunday.

   To that end, the Ministry of Strategy and Finance will propose a revised tax bill for 2014 to the National Assembly early next month for approval, according to the officials.

   Under the revised tax bill, investors will be levied a tax of 0.001 percent of their turnover value per futures trading, with the figure coming in at 0.01 percent for an options dealing.

   Futures and options are types of derivatives in the stock market that yield higher returns on greater risks. In Korea, the world's 11th-largest derivatives market, they track the KOSPI 200 index as the benchmark.

   The government expects the derivatives transaction tax to generate a fresh revenue of up to 120 billion won (US$107.9 million) every year, the officials said.

   But market watchers warned that the bill will likely face more backlash from financial players. Local brokerages and related firms have resisted the introduction of the bill citing their worsening profitability stemming from the prolonged downturn.

   The government had tried to implement the derivatives tax a number of times over the past few years but failed due to the market opposition.

   The industry has complained that applying a derivatives tax will seriously hinder stock trading that has already been dented. According to the data compiled by the Korea Exchange, the KOSPI 200 futures saw its daily turnover fall 11.6 percent in the first half to 28.3 trillion won, and that of the KOSPI 200 options also declined 8.1 percent to 1.12 trillion won in the same period.
The ministry, meanwhile, has decided to extend the sunset provision for a tax cut in credit card usage, after facing tax resistance from the public. The tax cut for credit card payments was supposed to end in 2014, from which the government had estimated it could secure an extra 2 trillion won.

   Instead, the percentage of the tax cut will be lowered to 10 percent from 15 percent of the total amount of the credit card transaction, according to the government.