After months of debate, the South Korean government has finalized its decision to tax cryptocurrency earnings at 20 percent.
In the taxation policy amendment notice published on Wednesday, the country’s Ministry of Economy and Finance detailed that all annual income above 2.5 million won (around $2,000) obtained from crypto trading or liquidation will be taxed at 20 percent, while any amount less than that will not attract any taxation.
The revised tax code is now subject to parliamentary approval, and the ministry will submit it with the National Assembly before September 3. The approval process will hopefully not see any debate between the lawmakers, and if passed, the new laws will come into effect from October 1 next year.
The big tax debate
Taxing crypto incomes properly is always a matter of debate between the lawmakers globally, and South Korea was no exception. In fact, the different government bodies in the country were pushing to tax digital assets differently.
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While one South Korean ministry was in favor of not taxing crypto incomes until a proper law is drafted, another wanted to categorize crypto earnings as “other incomes.” This went for months without any proper set of rules for taxing crypto.
The debate of taxing crypto in South Korea also ignited late last year as the country’s tax authority slapped $69 million in fines at Bithumb, one of the leading local crypto exchanges, as withholding taxes.
While South Korea successfully drafted a crypto tax law, other counties are still struggling with it. Earlier this year, the Spanish tax agency sent notices to 66,000 citizens asking their income from crypto trades while in India, the crypto exchanges are seeking clarification on tax rules from the monetary regulator.
In the United States, the Internal Revenue Services (IRS) is working to bring proper taxation rules on crypto incomes and is also seeking advice from the industry players.