South Korean officials plan to cut tax benefits for crypto exchanges, explaining that “cryptocurrency transaction brokerage is not effective in generating added value.”
30 July, AtoZ Markets – Reportedly, digital currency exchanges in South Korea might soon lose their privilege of significant tax benefits. Such benefits are currently granted to smaller companies in the country.
South Korea Plans to Cut Tax Benefits for Crypto Exchanges
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.
Yet, the South Korean officials believe that cryptocurrency platforms do not quite justify the benefits. Reportedly, the officials have explained that “cryptocurrency transaction brokerage is not effective in generating added value.”
The draft of a revised bill will be supposedly presented to the National Assembly by 31th of August. The draft is expected to undergo a parliamentary debate prior to the final decision regarding the change in the law.
Blockchain-focused Companies are still eligible
That being said, the South Korean government has recently signaled that Blockchain startups that focus their efforts on the research and development could still be eligible for tax benefits. This move comes as a part of the country’s wider initiative to aid emerging technologies in South Korea.
The announcement has followed a meeting of ministers from eight different government agencies that specialize in the economic policy of South Korea. The officials have revealed that they plan to reduce tax rates for companies that deal within a range of 157 “new-growth technologies” in 11 fields.
In addition, local reports state that ministers have suggested cutting the threshold for companies to be eligible for tax reduction privileges. As of the moment, a firm needs to assign more than 5 percent of the previous year’s gross sales to the R&D and 10 percent of its R&D investment should be focused on the new growth of the nascent technologies, including Blockchain.
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