Uncertainty About Crypto Tax Regulations In South Korea
Officials from the South Korean government have caused consternation this year by issuing contradictory statements on the possibility of repealing or amending the forthcoming cryptocurrency tax, which is due to take effect in 2022.
Throughout the year 2021, the National Assembly, South Korea’s legislative body, has been debating whether or not to change the crypto tax and how to do so. If the tax remains intact, a 20% tax will be levied on any revenue earned by cryptocurrency transactions that exceed 2.5 million Korean won, or around $2,100.
Confusion Regarding NFTs
The NFT guidelines are the latest evidence of the country’s misunderstanding of crypto assets.
In a definitive statement on Nov. 5, FSC authorities indicated that nonfungible tokens (NFTs) would not be subjected to the crypto tax since FATF standards treat NFTs differently from cryptocurrencies.
However, FSC Vice Chairman Do Gyu-sang stated Wednesday that the Ministry of Strategy and Finance is formulating tax rules for nonfungible tokens in line with the Special Reporting Act. This effectively overturned the previous judgment.
It is mandated by the Special Reporting Act that cryptocurrencies be subject to certain restrictions, including taxation.
With how often official policy orientation appears to change, several people are doubtful that the government is acting in the best interests of the cryptocurrency business. The Korean government stated that they may change their stance, but that crypto enthusiasts will be “slapped” until that happens.
Conflict In The House
From April 2021, multiple suggestions to defer the tax from the Democratic Party, which controls a majority in the parliament, had gathered traction in the National Assembly until they were squashed by Finance Minister Hong Nam-ki of the opposition People’s Power Party.
The same thing happened in September, and it will probably recur again before the year is up. While the battle between the opposing groups is based on facts, there is also an element of disinformation since news sources have claimed incorrectly that the tax has been postponed as a result of the dispute.
This is a cause of uncertainty for many involved in Korea’s cryptocurrency business, which is worsened by the fact that non-Korean-speaking media are covering the story.
When asked about the tax, Jun Hyuk Ahn, the Head of Communications at Vegax Holdings, said that with national races coming up in March, the Democratic Party is attempting to win popularity with the 20-to-30 age group by postponing implementation of the tax.
Even though the FSC has demonstrated that there is internal debate over how to execute the legislation as it is worded, Ahn pointed out that the ability to modify the law belongs to the National Assembly.
Political partisanship in the National Assembly, where the Democratic Party has been forced to square off against Minister Hong, has inevitably limited the ability of legislators to effect legislative reform.
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