Experts from South Korea’s Tax Policy Association have proposed a low-level crypto income tax. The government is preparing to include digital currency taxation in its tax reform plan, which will take effect next year. The government may announce its plan in the second half of this year.
26 February, 2020 | AtoZ Markets – Asia is becoming a booming market for the crypto industry. South Korea, one of the countries active in the crypto industry, recently proposed new digital asset tax laws. South Korea see crypto as a driving force of the future economy and did everything in its power to integrate into the decentralized industry.
According to a report from Business Korea, South Korean tax experts have advised the government to apply a low-level trading tax on the crypto profits. It is before subjecting citizens to a transfer income tax. The Korean government will announce its tax reform plan in late 2020.
Two Step Tax on Cryptocurrencies
The low-level trade tax has been recommended due to the lack of legal infrastructure to implement a transfer tax. At a seminar on February 21, tax experts in the country spoke about how digital assets should be taxed based on the growth rate expected for the country.
Members of the Korean Tax Policy Association have advised the government to adopt this plan in two stages. They also argued that a deliberate approach to implementing an income tax in cryptocurrency would be the most effective. The Korea Blockchain Association approved the tax experts’ proposal, justifying its recommendation by noting that:
“Related laws are still missing, and the tax infrastructure is still insufficient to cover cryptocurrencies and, as such, some supplements need to be added on the expense side.”
The Association also added that before imposing a tax on transfers, it is necessary to define the costs of acquiring cryptocurrencies clearly. But it is not easy to define them, because cryptocurrencies are traded at multiple rates on a wide variety of exchanges in Korea. It said:
“The infrastructure must be established after the imposition on case-by-case trading tax”.
Korea is one of the governments that believed that taxing cryptocurrencies would make it harder to misuse them. The country’s crypto tax laws may reveal in the second half of this year. Experts have also argued that income taxation should be possible after the application of the trade tax. It planned to start improving the calculation of expenses from the acquisition costs of the cryptocurrency.
Crypto Taxation in South Korea
The South Korean Ministry of Economy and Finance said last month that it plans to impose a 20% tax on cryptocurrency transaction revenues. More concrete tax framework for cryptocurrencies developed in South Korea.
South Korea has also made efforts to monitor cryptocurrency exchanges more closely. The country’s decision based on several cases where millions of assets have looted in cryptocurrency exchanges. Countries such as Japan, the United States, and the United Kingdom have urged South Korea to implement crypto tax laws quickly. South Korea’s ministry of strategy and finance commented last month that:
“All virtual currency transactions that increase the entity’s net assets are subject to taxation under current law. Therefore it is taxable, but it is practically impossible to produce tax revenue results by distinguishing only virtual currency transactions. “
Think we missed something? Let us know in the comment section below.