South Korea parliament has put forward a private members’ bill that will start taxing profits from cryptocurrencies, according to local media reports.
The taxation will also apply to mining operations and income from ICOs, should it be approved by parliament.
In addition, Yang Kyung-sook, an influential representative of the Democratic Party, proposed an amendment to classify digital assets as ‘commodities’ rather than ‘currencies’.
“Until now, virtual assets have been recognized only as a function of currency and have not been subject to income tax, but recently, virtual assets are increasingly being traded as goods with property value,” said a recent court’s judgment regarding bitcoin. “Considering various conditions, such as the recognition of intangible assets with property value, the necessity of taxation and the recognition of the property value of virtual assets are being raised at the same time,” the ruling further states.
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The South Korean government is set to announce the final details of taxing income generated from cryptocurrency transactions after years of discussion about the virtual asset that yet remains in a grey area.
Authorities are getting tough on crypto taxes
The South Korean government was said to be considering imposing a 20 percent tax on crypto income. Although no specific taxation standards for crypto assets have been put in place, but the finance ministry was reportedly considering re-classifying returns made on cryptocurrencies as a type of “other income.” This places crypto profits it in the same category as those earned from lotteries which has a 20 percent tax rate.
Despite the high tax tag levied on “other income” but it remains better than being taxed as a form of capital gains, as it is currently treated, which calls rates of up to 42 percent.
Historically, South Korea is one of the hottest investing and trading markets for cryptocurrencies. However, authorities have been hesitant to regulate the virtual asset class, due to their belief that cryptocurrency regulation could lend legitimacy to the sector.
Separately, the central bank is taking a “wait-and-see” approach over the issue of a government-controlled cryptocurrency, or a so-called central bank digital currency (CBDC), as of now.