South Korea will push to exempt taxes on interest income and capital gains from foreigners' investment in government bonds and monetary stabilization bonds in a bid to help stabilize the debt market, the finance minister has said.

Finance Minister Choo Kyung-ho made the remarks on the details of the government's planned tax code revision at a meeting with reporters Saturday (local time) in Bali on the sidelines of a Group of 20 (G-20) gathering of finance chiefs.

"The government plans to seek the exemption of taxes on interest income and capital gains for non-residents and foreign companies' investment in Treasuries and monetary stabilization bonds to help broaden the demand base for government bonds and advance the debt market," Choo said.

The move is expected to stabilize the country's bond and foreign exchange market as an increase in foreign bond investment will likely help lower bond yields and curb the won's weakness, according to the finance ministry.

South Korea is pushing to join the World Government Bond Index (WGBI) compiled by FTSE Russell, an index measuring the performance of government bond markets, in a bid to lure more investment by foreigners. Most countries joining the WGBI do not tax the interest income of foreigners' investment in government bonds.

Choo also said the government plans to raise the limit of the duty-free allowance for inbound travelers to US$800 per person from the current $600.

Currently, international arrivals -- both Korean nationals and foreigners -- can receive tax exemptions for the purchase of items worth up to $600 per person.

"To better support the tourism industry hit hard by the COVID-19 pandemic, the government will seek to raise the limit of the duty-free allowance that has not been changed since 2014," Choo said. (Yonhap)