[Alpha Biz= Paul Lee] Toss Securities has acknowledged an error in calculating taxes related to foreign bonds and has decided to pay the income tax on behalf of its customers.
On Tuesday, Toss Securities explained that during a review of the tax laws concerning foreign bonds, it discovered that income tax had been incurred on some bonds where they had previously indicated no tax. The issue was related to U.S. Treasury bonds with a 0% coupon rate, commonly known as zero-coupon bonds. These bonds are issued at a discount to their face value, with no periodic interest payments, and the face value is repaid at maturity.
Toss Securities initially judged that the discount on the zero-coupon bonds was not considered interest income under income tax laws, and thus did not withhold taxes. However, after further review, the company realized that the discount should indeed be treated as interest income, meaning it should have withheld and paid 15.4% tax (including local income tax) to customers.
To rectify the situation, Toss Securities has taken responsibility for the miscommunication and will cover the taxes that should have been withheld, reimbursing the affected customers. The total amount of the tax payments due to this error has not yet been disclosed.
Toss Securities launched its foreign bond services in July last year, offering short-term bonds, mostly with maturities of around one year, and making it easier for customers to trade U.S. Treasury and corporate bonds, similar to stock trading.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
