Tax on South Korea

South Korea back on track to roll out 20% digital currency tax by 2022: report

South Korea is reportedly bringing forward—yet again—plans for a tax on digital currency profits, which will see gains liable to a 20% tax, according to local media.

Reporting on an announcement from the Ministry of Economy and Finance, the Korean Herald said profits from trading and holding digital currencies in Korea would be subject to the new tax from as early as January 1, 2022, as part of the country’s commitment to establish a more robust legal framework for digital currency dealings.

The tax is liable on gains of over KRW2.5 million, roughly equivalent to about $2,300. Any gains up to that level will not be liable for taxation, but must still be reported to the tax authorities at year end, as with other forms of income.

The country had previously sought to introduce the tax in 2020, but encountered significant pushback from the digital currency community. Several delays in policy followed, including pushing a previous 2022 deadline back to 2023, until the latest announcement.

With the latest update, it looks as though the tax authorities are set to impose the levy from the start of 2022, in line with the reclassification of digital currencies as financial assets.

Digital currency inherited and gifted will also be subject to the tax, according to the reports, which the Herald says will be calculated using weighted average values for digital currency over a period of time.

“In such cases, the price of the asset will be calculated on the basis of the daily average price for one month before and one month after the date of the inheritance or gift.”

The tax has again met with local opposition, with some 38,000 citizens having signed a petition against the plans to introduce the tax.

Nevertheless, the authorities are intent on pressing forward with the new levy, as part of its ongoing process of overhauling securities laws.

See also: CoinGeek Live panel, Digital Currency & Global Compliance: Tools & Tips for Exchanges, Wallets & Other Service Providers

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