South Korea one of the most progressive nation in terms of evolving technology adoption might impose a 20% tax on crypto gains in the country as per a report published by a local daily, The Korean Times. The Ministry of Economy and Finance has asked the Income-tax office to review the crypto taxation plan as well.
South Korea was among the earliest adopter of blockchain technology and have regulated crypto trading as well. However, as per their existing tax laws, there was no tax levied on digital assets as these assets were not defined under the existing income tax laws. However, there were several reports that the officials were mulling to either tax crypto gains under the existing security laws or frame new laws completely.
The Korean Times cited an anonymous official as their source who confirmed that the ministry has proposed a 20% income tax on crypto gains saying,
“The finance ministry is yet to finalize its direction but it surely has become more likely for the income from virtual asset trading to be labeled as other income, not as gains from transfer of capitals like real estate properties.”
The Need For Crypto Tax Laws
Bithumb, one of the leading crypto exchanges in South Korea was recently slapped with a $69 million tax fine for failing to collect taxes from foreign traders on its platform. The exchange decided to challenge the fine imposed on them as they believed they have been paying all their corporate taxes on time.
The Bithumb case became a shining example of why South Korea needed a well-defined income tax laws on digital assets. However, South Korea won’t be the first country to impose taxes on crypto gains. Many other countries like Singapore, Japan, Germany and France have also imposed some form of tax on digital asset gains.
Apart from these countries who either treat digital assets as a commodity or tax crypto gains either as lottery findings or treasure findings, many other nations are also mulling to regulate and tax digital assets depending on their security laws.