The Finance Ministry of South Korea is examining to impose 20 per cent tax on income gained from cryptocurrency transactions. The Ministry of Economy and Finance are in serious conversations with its officials regarding the review of taxation plan for cryptocurrencies.
According to The Korea Herald, there is an assumption that the government may categorize the gains from trading of cryptocurrency as ‘other income’ and not as capital gains. Currently, other income includes profits resulting from lectures, lottery purchases and prizes.
Major Announcement by South Korea is still in “Pipeline”
The Ministry of South Korea pushed to amend the tax laws to impose a tax on the profits of crypto investors back in December. The Ministry which oversees the country’s economic policy, earlier clarified that taxes could not be imposed on the income from activities that are not exclusively defined under tax law. The recent step of mulling 20% tax on cryptocurrency gains is the result of discussions which took place in December.
However, some of the crucial decisions will be finalized before the amendment in tax laws. Significant decisions may include the “precise definition” of crypto assets, government’s plan to gain trading records of CryptoExcahnges to precisely levy taxes.
Taxes on Cryptocurrency Transactions Around the World
Many countries are involved in amending the taxation laws regarding cryptocurrencies. While some of the countries already had the laws related to taxation of cryptocurrency.
For instance, in Singapore, the profits while buying and selling virtual currencies during business are taxed under income tax. Germany has exempted crypto-to-crypto transactions from VAT, but the businesses need to pay corporate income taxes on the gains derived from cryptocurrencies. Japan, which gained a reputation in the cryptocurrency world, treats the cryptocurrency as commodities which are subjected to corporate, capital gains and income tax.
Thus, most of the countries around the world are either looking to put digital assets under existing tax laws or have regulations on cryptocurrencies. So, the recent move of South Korea to examine the tax structure for the cryptocurrency is a way forward to embrace the digital economy.