South Korea's finance ministry will announce a list of "tax havens" through which foreign investors will no longer be able to automatically claim double-taxation treaty benefits, a move that banks and multinational companies warn could significantly damage investor confidence in Asia's third largest economy.

From July 1, investment income derived in Korea including interest, dividends and capital gains earned by foreign investors located in designated tax havens will be subject to domestic Korean withholding tax rates - usually 27.5 per cent - regardless of double taxation treaties.