South Korea Won’t Tax Crypto Profits
The South Korean government decided to not impose a tax upon the earnings of digital asset trading, in order to ease confusion.
This clarification was made by the Ministry of Finance and Strategy of the country. Crypto trading profits are not subject to tax under current laws.
Although crypto traders are exempted from tax at the moment, the South Korean government will be reviewing international trends and will include digital currency into the tax laws.
The ministry said that they are currently preparing a taxation program for virtual assets. This includes a comprehensive review of the taxation in major countries, compliance with accounting standards, trends in international discussions to stop money laundering, and a thorough review of the taxation laws in other countries.
Define ‘digital currency’ first
It’s been a decade since Bitcoin was launched; however, the government is still struggling to impose tax laws properly for digital currency gains.
Despite the official notice, different governmental departments are still debating on the prospect of taxing digital assets. Last month, the Korea Times reported that the Ministry of Economy and Finance is seeking to impose capital gains tax on incomes from digital currencies.
However, per the recent announcement, the peninsular nation does not recognize “virtual currencies,” so it will be tough to categorize them as the country does not impose capital gains tax on all financial instruments, and it also varies from stock trading to real estate transactions.
Meanwhile, the tax agency of the country recently imposed $69 million in withholding tax on local crypto exchange Bithumb. This created chaos in the local industry as the country still does not have any law in place to access the books of any crypto business.
Last year, Portugal adopted a similar stance and waved taxation on incomes generated from both crypto trading and payments.