The Ministry of Economy and Finance of South Korea, is considering levying a 20% tax on the incomes made through cryptocurrency transactions.
According to a news report published by The Korea Times on the 20th of January, 2020, the ministry had reportedly ordered its income office to review cryptocurrency taxation. The Korea Times cited an anonymous official who reportedly said that the ministry has not finalized its plan, but noted that the government may impose a 20% tax on crypto income.
“A government official, who spoke on the condition of anonymity, said the finance ministry has not finalized its plan to tax cryptocurrencies.” stated The Korea Times article.
Some have speculated that the government may categorize gains obtained through cryptocurrency trading as “other income” and not capital gains. The other income category also includes gains made from lectures, lottery purchases and prizes.
A clear scheme for crypto cryptocurrency taxation is much needed in South Korea. This became particularly apparent when, at the end of December, major local cryptocurrency exchange Bithumb announced that it was considering administrative litigation over an $68.9 million tax bill that it believes has no legal basis. More recent reports indicate that the firm decided to follow through and take tax authorities to court.
As an article on Cointelegraph exemplified, South Korea’s cryptocurrency guideline has seen noteworthy progress since Park Yong-jin, a member of the National Policy Committee from the ruling Democratic Party, presented the first-ever taxation policy for crypto in 2017.
In 2019, the National Assembly’s national policy committee approved a bill that would give more legitimacy to digital assets by subjecting them to more scrutiny and government oversight.