The South Korean government intends to tax capital gains on cryptocurrency transactions. The government is already working on regulations which could be reflected in 2020’s tax regulations.
An official from the Ministry of Economy and Finance told the Korea Times that discussions have been taking place for some time now, noting that a revised tax bill will be drawn up by the first half of 2020.
The move is in tandem with a push by the country’s National Assembly to increase transparency in cryptocurrency trading. A bill towards this is already being pushed by the Assembly and is expected to be passed soon, coming into effect one year after its promulgation. The South Korean government intends to tax capital gains on crypto transactions regardless of whether the Assembly passes the bill.
The report notes that the government will have to determine whether the crypto capital gains will be treated as the type of gains that come from stock trading or real estate transactions. Moreover, it will need to define cryptos more precisely.
To move forward with this kind of taxation, the government will need to obtain trading records from crypto exchanges and trading platforms. This has already happened in some other countries, such as in the United States. The IRS obtained data from Coinbase which it then used to target crypto holders who hadn’t accounted for crypto holdings in their tax returns.
South Korea has been moving closer to regulating the crypto industry in recent times. As CoinGeek reported recently, the National Assembly approved legislation that recognized cryptos as digital assets, giving them a legal status. The bill requires crypto platforms to adhere to the same anti-money laundering and know-your-customer regulations as the other financial institutions.
The bill further requires all crypto platforms to register with the Financial Intelligence Unit, a division of the country’s financial markets regulator.
New to blockchain? Check out CoinGeek’s Blockchain for Beginners section, the ultimate resource guide to learn more about blockchain technology.