The South Korean government, struggling with its attempts to tax crypto earnings, is now considering classifying gains from digital asset trading as ‘other income.’
Reported by local news outlet Pulse, the income tax department at the Ministry of Economy and Finance already began to review taxation plans for gains from virtual assets transactions.
Per the country’s tax laws, this category of income attracts taxation at 20 percent for 40 percent of the income, while the other 60 percent will be tax-deductible. Income from sources like a lottery or prize winnings falls under this category.
Capital gains to other incomes
This came when reports were pointing out that the ministry is mulling to impose capital gains tax on earnings from digital currencies, primarily trading.
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When the Ministry of Economy and Finance is looking to put crypto income on the other income category, the Ministry of Finance and Strategy issued an official notice mentioning that crypto earnings cannot be taxed under the present laws.
“The finance ministry is yet to finalize its direction but it surely has become more likely for the income from virtual asset trading to be labeled as other income, not as gains from transfer of capitals like real estate properties,” an anonymous government source told the local publication.
If the recent proposal is imposed, the tax agency can tax on crypto incomes with an immediate effect.
The taxing debate in the country fueled last month when the National Tax Agency (NTS) ordered local crypto exchange Bithumb to pay $69 million in withheld tax. The step was highly criticized by the crypto industry as the agency did not have any clear assessment standard for crypto businesses.
Meanwhile, the exchange moved to tax tribunal appealing against the decision.