The Ministry of Finance and Economy is considering to impose 20% crypto income tax on transactions in South Korea. Also, the South Korean government is considering to classify gains from digital asset trading as other income. The Income Tax Department has already started to review taxation plans for capital gains from virtual asset transactions.
20 January, 2020 | AtoZ Markets – South Korean crypto regulation has seen significant developments, since they introduced the taxation policy for crypto in 2017. According to a report published by a local news outlet, the ministry allegedly ordered its income office to review the cryptocurrency taxation.
South Korea May Classify Gains from Cryptocurrencies Trading as “Other Income”
An anonymous official stated that the ministry had not completed its plan. But the government may impose a 20% crypto income tax in South Korea. Earlier this month, South Korea is drafting a tax regime for profits made from trading cryptocurrencies.
According to the country’s tax laws, this category of income attracts taxation at 20% for 40% of the income. Moreover, the remaining 60% will be tax-deductible. Income from sources like a lottery or winning prizes falls into this category.
Earlier, the ministry was attempting to impose capital gains tax on earnings from digital currencies, primarily trade. The Ministry of Economy and Finance was trying to put crypto income on the other income category. But the Ministry of Finance and Strategy issued an official notice stating that crypto earnings cannot be taxed under current laws. An anonymous government source said:
“The Ministry of Finance has not yet defined its direction. But virtual asset trading income will be labeled as other income, not as capital transfer earnings as real estate”.
If the recent proposal is imposed, the tax agency can tax crypto income with immediate effect.
Crypto Tax Clarity in South Korea
The debate over taxation fueled last month when the National Tax Agency (NTS) ordered Bithumb to pay $ 69 million in withholding tax. The crypto industry heavily criticized this step, as the agency had no clear assessment standard for crypto firms.
In the meantime, the exchange moved to tax tribunal appealing against the decision. A clear scheme for crypto cryptocurrency taxation is much needed in South Korea.
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