To ease the confusion of crypto taxation, the South Korean government has decided not to impose a tax on earnings from digital asset trading.
The clarification came in a recent announcement by the country’s Ministry of Finance and Strategy, per which crypto trading profits cannot be taxed under the current laws.
Though for the time being crypto traders are relieved from any taxation, the South Korean government is reviewing international trends to properly include digital currency in the current tax laws.
“We are preparing a taxation plan for virtual assets by comprehensively reviewing the taxation of major countries, consistency with accounting standards, and trends in international discussions to prevent money laundering,” the ministry stated.
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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.