In accordance with the present tax law regime, income tax cannot be levied upon the profits earned from trading of cryptocurrencies, stated the South Korean Ministry of Economy and Finance, while putting an end to all the confusions regarding the crypto taxation.
On December 30, the government organization responsible for framing and managing South Korea’s economic policy, the Ministry of Economy and Finance clarified that as the term ‘virtual currency’ or any other similar term used for describing them, do not find a legal mention in the South Korean tax laws, such transactions cannot come under the purview of taxation. The officials affirmed that not all capital gains concerning financial transactions are taxed in the country, and any activity that is not clearly defined in the tax laws can never be subjected to taxation.
However, to bring in a change in the tax laws, the government organization has been under constant discussions to frame out a policy that could bring cryptocurrencies in the tax block. The government officials are analyzing the international laws and approaches of major countries regarding crypto taxation. The officials stated that the amended tax laws might be drawn up in the early part of 2020. The officials clarified that before drafting the laws, the team has to take several crucial decisions like giving a well-defined definition to crypto-assets, categorizing the crypto trade profits, ways to track down the trading records from exchanges in a clear and transparent manner, etc.
We are preparing a taxation plan for virtual assets by comprehensively reviewing the taxation of major countries, consistency with accounting standards, and trends in international discussions to prevent money laundering,
stated the officials.
Recently, the South Korea government took stringent action against leading cryptocurrency exchange, Bithumb. The National Tax service imposed a fine of 80.3 billion won on Bithumb Korea for not disclosing trades operated by foreign investors. The NTS considers crypto gains of foreign traders’ as miscellaneous income for which the tax is collected once during a year.
Putting income from cryptocurrency trades under capital gains would have required the government to receive every trading record from domestic exchanges,
stated the organization.
South Korea has followed a strict regime against cryptocurrency trading exchanges to achieve the highest standards of transparency and security for the customers. Renowned crypto exchange Upbit delisted privacy coins like Zcash and Monero following the government’s guidelines.