27 January 2018

By Electronic Delivery

Mr. Youngrok Choi
Deputy Minister for Tax and Customs
Ministry of Strategy and Finance
Sejong Government Complex, 477, Galmae-Ro, Sejong-Si, 30109
Republic of Korea
Email: choi5097 @korea.kr

Dear Mr. Choi,
RE: Impact of Korean Capital Gains Tax on non-Korean CIVs

The asset management and banking associations signing this letter1 represent collective investment vehicles ( CIV s )2 organized in North America, Europe, Australia, and Asia. The total market value of regulated and publicly-offered CIVs, at the end of the third quarter of 2017, totaled US$47.37 trillion.3 We have profound concerns, on behalf of our members’ non-Korean CIVs and their investors, with the proposed reduction in the ownership threshold at which capital gains withholding tax will be triggered on listed securities. Most specifically, we are concerned that the proposal would result in these CIVs (and other non-Korean investors) losing 11 percent of their total sales proceeds to inappropriate withholding. Given the expected administrative burden of seeking refunds, and the uncertain prospect of timely success, the impact on foreign demand for Korean listed securities could be substantial.

Our concerns are not diminished by the MOSF’s 22January statement addressing “concerns about the backlash from the financial investment industry.” We understand that the MOSF believes that “the proposed change will only apply to investors who do not have tax treaties with Korea or non- residents who are subject to levy according to tax treaties.” This statement, however, does not address unique CIV industry issues. Most specifically, the statement does not announce, as the CIV industry repeatedly has requested, that CIVs will be recognized by Korea as treaty-entitled.

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1 These organizations, as listed at the end of this letter, are: Association Francaise de la Gestion financiere (ArG); Association of Global Custodians; Association of the Luxembourg Fund Industry; Assogestioni; EF AlviA- European Fund and Asset Management Association; Financial Services Council (Australia); Hong Kong Investment Funds Association; ICI Global; The Investment Association; The Investment Funds Institute of Canada; Irish Funds Industry Association; and SIFMA AMG. Support also has been received from other organizations.

2 We use the term “CIV” as it was used by the Organisation for Economic Co-Operation and Development (OECD) in its 2010 Report on “The Granting of Treaty Benefits with Respect to the Income of Collective Investment Vehicles” (the “CIV Report”). http: //www.oecd.org/dataoecd/ 59/7/45′)5926 l.pd£ This Report, approved by the OECD’s Committee on Fiscal Affairs in April 2010, limits the term CIV to funds that arc widely-held, hold a diversified portfolio of securities and arc subject to investor-protection regulation in the country in which they are established.

3 https://www.ici.org/research /st ats/worldwide/ww q3 17.