The authorities in South Korea will be passing a crypto tax law eventually after several back-and-forth discussions. In an announcement from South Korea’s ministry of economy and finance, a 20% tax is now applicable to all cryptocurrency profits in the country. This law will take effect from the first day of next year, but it would be legislated this year – as early as this month. This announcement was part of the Korean Herald’s News bulletin today.
However, there are caveats to this law. Trade gains that aren’t up to about $2,300 or 2.5 million in annual profits won’t be subject to this tax regulation. For example, if a Korean should win 2.4 million from his/her crypto trade deals during the year, these profits won’t be taxed.
On the contrary, if a Korean should win 2.6 million profits within the same year under review, they are expected to pay 520,000 as tax. The South Korean government would have passed this tax law in 2020, but a rebellion from several crypto lobbyists and enthusiasts prevented the government from making this tax decision various times.
They argued that local crypto companies need some period to adjust to the new regulation. One of such adjustments involves establishing a reliable infrastructure to report their tax.
Reports from various grapevine sources suggest that the beginning of next year was the regime’s previous recommendation, but after due consultation, they moved the implementation of that law to 2023. However, it does seem that the start of next year is now in the offing once again.
The South Korean government now recognizes bitcoin as an asset since it is now acceptable for institutional investors to own crypto assets. Hence, all cryptocurrency transactions, including bitcoin, will now be classified as taxable ventures.
It is crucial to keep in mind that gifted and inherited cryptocurrencies are also taxable.
“According to the Korean government, when you receive crypto as gifts or you inherit it, the average daily monthly price of the previous and latter month after receiving the crypto will be used to determine the current value of your asset.”
Can The Crypto Tax Law Be Reversed or Suspended?
From February 10 till date, almost 40,000 Koreans have signed a petition to object to the proposed tax. The South Korean government can be forced to respond officially, but the petition’s signatures must at least 200,000.
From the beginning of next month, the specific financial transactions act will be revised to allow a more thorough look at the activity of crypto exchanges.
Apart from taxing cryptocurrency deals, the revised law will also tax 300 million in profits from buying and selling stocks at 25%. Also, the rule proposes a 20% tax on earnings of 50 million made from buying and selling of listed shares.
Apart from more robust anti-money laundering actions and enhance steps on information security, that legal proposal will also compel exchanges to use their real name on their crypto accounts. That’s the inside information that the Korean Herald is reporting.