South Korea’s finance minister is considering levying a 20 percent tax on income from cryptocurrency transactions.
Under the current tax law, there is no income tax imposed on individual investors’ profits from crypto transactions but the Ministry of Economy and Finance has ordered the income tax office to review a taxation plan for cryptocurrencies.
According to officials, this could mean the government may categorize gains from trading digital currencies as other income, instead of capital gains.
Other income currently includes gains from prizes and lottery purchases.
The finance ministry hasn’t finalized its plan on tax cryptocurrencies but there’s a possibility the government would impose a 20% tax, the local news site reported a government official as saying.
No “Virtual Currency” or Related Term in Tax Law
Last month, the ministry clarified that because the term “virtual currency” or any other term used for it isn’t included in the tax law, its transactions cannot be taxed.
“Profits from individual virtual asset transactions are not listed income and are not taxable.”
The ministry, however, did say that they are preparing for a taxation plan by “comprehensively reviewing the taxation of major countries, consistency with accounting standards, and trends in international discussions to prevent money laundering.”
Government Going after Crypto Companies for Taxes
Last year, in November, one of the largest crypto exchanges of Korea Bithumb got slapped by 80.3 billion won ($69.2 million) in withholding tax on behalf of its foreign customers. The company confirmed the decision taken by the National Tax Service (NTS).
Bithumb Korea, according to Bithumb Holdings’ largest shareholder Vidente is planning to take legal action against the withholding tax.
Hankyung, a mainstream publication said the government first has to provide clear guidelines and standards for crypto taxation before going after individuals and companies.
PCFIR says Focus on Crypto Institutionalization
In other development, the South Korean Presidential Committee on the Fourth Industrial Revolution (PCFIR) is making recommendations that the government work towards the institutional adoption of crypto assets.
PCFIR is a committee focused on coordinating the policies surrounding cryptos and blockchain technology in the country. It has been suggesting the launch of crypto-related products such as Bitcoin derivatives for the “institutionalization of cryptocurrencies.”