South Korea Planning to Impose 20% Tax on Cryptocurrency Income
A 20% income tax on income generated from cryptocurrency transactions is being considered by South Korea’s Ministry of Economy and Finance. As per a report published The Korea Times, the ministry has directed income tax department to study cryptocurrency taxation.
The English media outlet, referring to an anonymous official, has reported that the ministry is yet to make its final decision, but pointed out that the government is highly interested in slapping a 20% tax on cryptocurrency related income.
Reports about the suggested income tax rate has come weeks after media reported that South Korea is drafting a new tax structure that takes into account income generated from cryptocurrency trading.
There has been speculation that the government may classify gains generated from cryptocurrency trading as “other income” and not capital gains. Other income category also takes into consideration income generated from lottery purchases, lectures and prizes.
A transparent, uncomplicated plan for cryptocurrency taxation is required in South Korea. This became clear last month when popular South Korean cryptocurrency exchange Bithumb stated that it was studying the possibility of filing a case challenging the $68.90 million tax bill raised by the income tax department.
Bithumb believes that there is no legal basis for such a tax bill. Recent news reports indicate that the exchange is pursuing its plan to file a case in court.
South Korea’s cryptocurrency rules has gone through considerable changes since Park Young Jin, National Policy Committee member representing the governing Democratic Party, unveiled the first crypto tax policy in 2017.
Last year, the National Assembly’s national policy committee endorsed a bill that would provide greater legality to crypto assets by bringing them under higher investigation and government supervision.