South Korea considers 20% tax on cryptocurrency gains

South Korea considers 20% tax on cryptocurrency gains”

The change comes as a result of a shift in the Ministry of Strategy and Finance, which has overseen tax rules regarding cryptocurrency up to this point, to handle income tax issues instead of property tax issues.

According to multiple government sources, the Ministry of Economy and Finance in South Korea has been contemplating levying a 20% tax on gains made from cryptocurrency transactions.

News of the proposed rate follows reports earlier this month that South Korea is drafting a tax regime for profits made from trading cryptocurrencies, Cointelegraph reported. Still, controversy may arise with regard to acquisition and reference cost calculation and withholding taxation on cryptocurrency exchanges if miscellaneous income taxes are applied to locals' cryptocurrencies.

"Other income" in South Korea is described as any money that is received as prize winnings or as abnormal income that is infrequent or unusual.

When the Ministry of Economy and Finance is looking to put crypto income on the other income category, the Ministry of Finance and Strategy issued an official notice mentioning that crypto earnings can not be taxed under the present laws. The 60% is considered tax-deductible. This has led to speculations that the government may no longer categorize cryptocurrency trading as capital gains but as other income, the report said. Once labeled as other income, the Korean tax bureau will be allowed to impose tax on gains from virtual asset trading immediately.

"One official noted, "[In 2017, the government struck traders and killed the market by basically classifying us as criminals.]" Three years later, with no meaningful legislation made on cryptocurrencies or the infrastructure, it is a further insult to tax trades so high. Withholding tax refers to income tax paid by the payer of the income rather than the recipient, with the tax typically withheld or deducted from the income in advance. The revision of the related law is now under review at National Assembly as the country is seeking to reform related law to tax cryptocurrency gains this year.

Upon the implementation of the crypto tax plan, the South Korean tax authority, the National Tax Service (NTS) will be given full authority to tax crypto gains with immediate effect.

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