Korean Blockchain Groups object to crypto exchanges tax revisal, which has been proposed by the South Korea’s Ministry of SMEs and Startups. In case approved, the suggestion would place cryptocurrency exchanges across South Korea along with entertainment and gambling businesses.
16 August, AtoZ Markets – A number of Blockchain associations in South Korea have decided to push back against a government plan to exclude cryptocurrency exchanges from the category of SMEs and startup.
Korean Blockchain Groups object to Crypto Exchanges tax revisal
The associations believe that the plan will slow down the process of industrial development. The groups are referring to a proposal that has been published by South Korea’s Ministry of SMEs and Startups. The authority has proposed to change the country’s existing venture business law. In case the amendment gets an approval, cryptocurrency exchanges across South Korea will be excluded from the category of SMEs and startups. These would be categorized along with entertainment and gambling businesses.
Referring to the “emergence of social problems like speculation led by cryptocurrency exchanges,” the initiative from the Ministry aligns with the government’s recently issued plan to review existing laws to cut down the tax benefits for cryptocurrency trading platforms.
The South Korean government has announced the proposed revision to the existing tax law. The revision would exclude cryptocurrency exchanges from the class of startups or small and medium enterprises (SMEs) that are eligible for claiming a tax cut of up to 100 percent.
The present law in South Korea enables startups and SMEs to apply for a deduction of 50-100 percent of their income tax or corporate tax. This can be done in the first five years after they establish their operations. The 5-30 percent tax cut is possible after the first 5 years of operation for these businesses.
Proposal received a flow of criticism
However, the proposal has attracted criticism from a number of Blockchain associations, which believe that the government is restricting innovation. Groups claim that the change might further escalate not only to involve crypto exchanges but also affect the whole Blockchain industry.
The associations have been quoted as saying:
“If this legislation is implemented, domestic companies with the second largest number of blockchain technology patents after IBM will be excluded from classification as venture businesses just because they operate a cryptocurrency exchange.”
They also added that the investment in R&D by Blockchain companies will be affected. As a consequence, companies that are not able to receive benefits will choose to move overseas.
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