South Korean ministers proposed a plan to reduce tax rate for Blockchain-focused companies. Officials have suggested cutting the threshold for companies to be eligible for tax reduction privileges.
19 July, AtoZ Markets – The government of South Korea has announced its plan to review the current tax rules in order to advance the benefits for companies that work on the development of the emerging technologies, such as Blockchain. The authorities are looking into the long-term plan that focuses on the push for innovations.
South Korea Plans to Reduce Tax Rate for Blockchain-focused Companies
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. In case a firm meets this requirement, it can be eligible for a tax reduction benefit.
Officials acknowledge that there might be a lack of sales in startup’s first year of operation. This could pose an obstacle for such firms to apply for the tax reduction. Therefore, the ministers proposed to set the R&D investment requirement at more than 5 percent of the current year’s gross sales.
South Korea Crypto Regulations’ Transformation
Yet, the government still did not disclose how much of the tax rate they are planning to cut. The officials stated that the further announcement will follow on July 26. It is also expected that the changes will take effect by the end of the first quarter of 2019.
This South Korean ministers’ meeting comes second in a week regarding the same matter. Earlier last week, we reported that the South Korean government has established a panel to look into crypto exchanges and their dealings. This move appears following the reports of multiple hacks and frauds in the crypto industry. The central bank of Korea has also released a report on using cryptocurrency as a payment method.
The new classification system in regards to the cryptocurrency and Blockchain activities has been designed by Statistics Korea, which is a division of the Ministry of Strategy and Finance.
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