Asia has become a burgeoning market for the cryptocurrency industry, and countries like the United States have become wary of it. South Korea, one of the countries active in the cryptocurrency industry, has recently proposed new laws on digital assets.
Tax experts in the country talked about how digital assets need to be taxed on the basis of the country’s projected growth rate. This was discussed in a recent public seminar in South Korea.
Officials of the Korean Tax Policy Association recently argued that profits derived from crypto trading should be taxed on transfers of income.. According to them, the transfer income defined by the Income Tax Act must also include cryptocurrencies. They added:
“Still, related laws are still absent and the taxation infrastructure is still insufficient to cover cryptocurrencies and, as such, some supplements need to be added on the expense calculation side.Acquisition costs need to be clarified for transfer income tax imposition, but cryptocurrency acquisition costs are hard to clarify because the currencies are traded in various exchanges and related information and data are restricted,” it said, adding, “Infrastructure needs to be established after case-by-case trading tax imposition”
Korea is one of the governments that believed that taxing cryptocurrencies would make it harder for people to misuse it. The country’s crypto tax laws are expected to be revealed in the second half of this year. The experts argued that the taxation of income should be possible after the application of the tax on trade. This was expected to be done by starting the expense calculation improvement from the cryptocurrency acquisition costs.
Seoul has seen crypto as a driving force in the economy of the future and has done everything in its power to integrate with the decentralized industry. During one of the events co-chaired by the Korea Blockchain Association, speakers sided with laws proposed by the government. Back then the agency had mentioned a flat tax rate of 20 percent on cryptocurrency holdings.
South Korea has also put in the effort to supervise cryptocurrency exchanges more carefully. The country’s decision was based on several cases where millions worth of assets were looted from cryptocurrency exchanges. Countries such as Japan, the US, and the UK have urged Seoul to implement the crypto tax laws soon.
Although the directives have been identified, sources close to the government have suggested that it may take up to a year before the new law comes into effect. Until then, the government has intended to find more ways to make the fintech world healthier and more available to all.
