South Korea May Impose 20% Tax on Cryptocurrency Gains
Executives representing South Korea’s private sector debated on a crypto focused taxation bill aimed at imposing capital gains tax on cryptocurrency transactions. During discussions, members pointed out that taxes on cryptocurrency transaction gains could be as much as 20%.
In this regard, an amendment to prevailing tax law also intends to categorize cryptos as “goods,” instead of currencies.
Legislators have categorized that digital assets can be regarded as digital certificates of commercial value that can be bought and sold electronically.
Nevertheless, when a sale transaction is commenced, it could be considered as an asset.
A South Korean court referenced Bitcoin (BTC) in their judgement, stating:
“Until now, virtual assets have been recognized only as a function of currency and have not been subject to income tax, but recently, virtual assets (like Bitcoin) are increasingly being traded as goods with property value. Considering various conditions, such as the recognition of intangible assets with property value, the necessity of taxation, and the recognition of the property value of virtual assets are being raised at the same time.”
The document also mentions that capital gains tax is not applicable to those crypto traders who reside outside the country. Data provided by Financial Services Commission, the South Korean financial market regulator, indicates that an average of won 1.33 trillion (~$1.10 billion) worth crypto was traded per day.
Furthermore, an average of won 7.609 billion (~$6.33 million) worth crypto was traded in January-May of this year.
Sung Tae-yoon, an economist at Koreas Yonsei University, cautioned that the plan to impose capital gains tax on cryptocurrencies in South Korea may act as a drag on the emerging technology.