South Korea is preparing legal tools to tax capital gains from cryptocurrency transactions. Specific legislation aimed at targeting digital asset transactions is expected to be adopted starting in the 2020 tax season.
09 December, 2019 | AtoZ Markets – Until recently, South Korea was one of the most active markets for cryptographic speculation. But there was no direct framework for taxing capital gains from the sale of digital assets, The South Korea Times reported. The Ministry of Economy and Finance is working on the development of the measure that will become a tax invoice from next year.
South Korea Tax Cryptocurrency Transactions
Discussions on this subject have taken place, said an official of the Ministry of Economy. The revised bill will draft by the first half of next year.
The South Korean National Assembly has also worked on a bill on cryptographic taxation. An eventual bill would increase transparency at all stages of trading digital coins process. But South Korea will undoubtedly try to tax capital gains from the sale of digital assets.
If the legislation follows the usual approach to capital gains taxation, South Koreans may have to provide a detailed history of crypto trading transactions. According to the news, virtual exchange offices will also be required to keep separate records for each user, as well as detailed personal information.
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Most crypto exchanges already have a KYC procedure for any significant amount of coins exchanged. South Korean transactions also bind their accounts to bank accounts and are made directly in South Korean won. Beyond decentralized exchanges or obscure markets, it is almost impossible to negotiate anonymously in 2019.
The taxation of Bitcoin (BTC) and other digital coins goes against the cryptocurrencies’ spirit. That exists beyond the fiat supported by the government. However, the sale of a virtual currency generates fiat gains and is taxable.
But the idea of collecting a crypto transaction and ownership database also looks like another attempt to control Bitcoin.
The only reason more people aren't using Bitcoin as money is because our overlords want to tax and surveil every single transaction you ever make.— Ryan Selkis (@twobitidiot) December 7, 2019
South Korea’s interest in the crypto trade declined in 2019, with a smaller share of South Korean won pairs. Part of the decline comes from the decrease in activity on the markets of altcoins. But BTC remains attractive and remains one of the primary sources of earnings in 2019.
The South Korean won currently accounts for only 0.84% of BTC’s total trade, which has declined significantly since the peak of activity. Nevertheless, last month saw temporary spikes in trade, which may have led to the handing over of equipment to the local tax authorities.
South Korea joins a long list of countries that have turned to cryptographic transactions and trade tracking. The settlement follows a more hawkish approach from the US IRS, as well as other governments.
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