Business 26 June 2018Erik Gibbs
South Korea government refutes 10% crypto tax claims
South Korean cryptocurrency traders can breathe a little easier. According to the South Korean news outlet Chosun, the country’s Ministry of Strategy and Finance (MSF) has denied rumors that South Korean crypto traders will soon have to begin paying capital gains taxes on cryptocurrency profits. The bad news is that, at some point, the tax will be implemented.
The MSF was rumored to be considering a 10% capital gains tax for the industry. Regardless of the investment amount, everyone would have been liable for paying the 10%. However, the MSF isn’t ready to move forward yet. According to a government official, “We have already decided to tax profits from investments in cryptocurrency. The question is only how much time we should give investors and when to start implementing it.”
The South Korean government doesn’t believe cryptocurrencies are either financial or investment products. To that end, it will classify profits on cryptocurrency investments as “other income.” This category is used as a catch-all for anything deemed unclassifiable and defines the tax structure for irregular or temporary income. The new cryptocurrency tax was previously reported as being considered for inclusion in the current tax year, allowing for a grace period of one to two years before being implemented.
The MSF trashed a possible bill, saying that there is still not enough consensus on the information gathered to establish the tax criteria. Another media outlet, Business Korea, opines that any tax structure will “take a considerable [period of] time.” Even if the government moves to implement taxes on crypto trading earnings, there would still need to be a complete system created to hash out the legal framework of the tax structure.
The tax division of the Ministry of Information and Communication could be looking at introducing a proposal to the National Assembly this August that would revise the country’s tax code. The government has been conducting a lot of research into taxation in various countries, including the U.S., Japan and Germany.
South Korea has warmed up to cryptocurrencies. While it is pushing for regulation, it is also working to ease cryptocurrency trading regulations. The moves come following a great deal of speculation at the beginning of the year that the country was considering a complete ban on digital currency. However, recent moves show that just the opposite is happening, and many watch cryptocurrency movements in South Korea to gauge how the markets will act.
Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.
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