The Ministry of Economy and Finance, South Korea is planning to bring cryptocurrencies under the tax bracket by imposing a 20% tax on income accrued from cryptocurrency transactions. The imposition of tax on cryptocurrencies has long been the point of discussion for the government authorities worldwide. While some countries have been active in drafting tax rules and regulations for digital currencies, other countries are working hard to frame the necessary guidelines.
On January 20, 2020, leading news outlet, The Korea Times published a report stating the claims made by finance minister nominee Hong Nam-ki in a written answer given to the National Assembly Sunday for his confirmation hearing. The official stated that the final taxation plan would be drafted following the taxation infrastructure, market conditions, investor protection issues, and in sync with the international discussions made by the government. The ministry has ordered the income office to indulge in the review of tax implications around the crypto income.
“A task force consisting of experts from relevant government agencies, including the National Tax Service and the private sector, will be formed to examine overseas examples and hammer out the taxation plan. We will determine our policy orientations on ICOs with relevant agencies after reviewing the results of the financial regulator’s market survey and getting feedback from experts,” said Hong in the letter.
The news comes following the recent reports released earlier this month that stated about the South Korean government’s plan to bring crypto profits under the tax bracket. The speculators affirmed that the government will categorize crypto profits as “income from other sources” rather than capital gains. The need for a well-defined tax regime for accounting crypto gains has been taken into consideration by the South Korean government on a serious note. The categorization of crypto income in taxation gained popularity, especially after the Bithumb controversy. The exchange was burdened with a tax bill worth a whopping $68.9 million.