South Korea’s cryptocurrency regulation has seen tremendous developments in the last 2 years. However, Park Yong-jin, a member of the national policy committee from the ruling Democratic Party, brought in the first-ever taxation bill in South Korea.
The Ministry of Economics and Finance recently ordered the department of income tax to start reviewing the cryptocurrency taxation plan as per the report published by one of the local South Korean news channels, Pulse. South Korea’s government is planning to impose a 20% tax on all the income generated from Cryptocurrencies.
Nevertheless, the income tax department will likely consider all the income generated by Cryptocurrencies as ‘Other Income’ instead of ‘Capital Gains’. Interestingly, this news has brought a healthy amount of consideration in the Korean Expert community.
If implemented, all the Cryptocurrency income will come under the banner of ‘Other Income’. The income tax department will collect a 20% tax on 40% of the total income. The rest 60% comes under the band of tax deduction.
Reportedly, the government is yet to finalize the working procedure. But, it is for sure that income generated with Cryptocurrencies will be labeled as ‘Other Income’. Earlier it was considered as capital gains.
The National Tax Service (NTS), the Korean tax authority, is supposedly waiting for a green signal from the government authorities. Once levied, they will be allowed to start imposing a tax on Cryptocurrency gains on an immediate effect.
Consequently, Bithumb, a South Korean Cryptocurrency Exchange, was asked to pay $69 million as a tax by NTS. This was the first of its case where NTS levied the taxation on Cryptocurrency gains under the label of other income. More so, Bithumb is planning to take the authorities to court for negating the amount inflict on them by NTS. They are in the mood to nullify the tax.
Meanwhile, the Korean authorities have started marking gains earned by the immigrants from virtual assets as the source of ‘Other Income’. They have been actively collecting the tax indirectly at the time of any exchange of Cryptocurrency.
It is now a game of curiosity about what the government decides and how NTS will shift its gears.