The South Korean government’s Ministry of Strategy and Finance has refuted a recent news report that claimed authorities are preparing to levy a 10% capital gains tax on cryptocurrency profits.
On June 22, domestic media outlet Chosun cited a ‘high-ranking government official’ to claim that the government was preparing to slap a flat 10 percent tax rate on profits from cryptocurrency returns irrespective of the size of the investment.
“We have already decided to tax profits from investments in cryptocurrency,” the government official was quoted as stating. “The question is only how much time we should give investors and when to start implementing it.”
The government had decided to classify those profits as “other income”, the report claimed, suggesting that the government did not view cryptocurrencies as financial or investment products.
Under domestic taxation laws, ‘other income’ pertains to irregular or a temporary income, unlike an earned income. This supposed 10 percent tax was reportedly being considered to be included in a revised tax bill this year with a one to a two-year grace period before coming into effect.
However, the Ministry of Strategy and Finance – the government agency that oversees its financial policies – has moved to rubbish the report, claiming it “is different from the fact.”
A report from Business Korea further adds the likelihood of taxation will ‘take a considerable [period of] time”, even if the government decides to mandate taxes on crypto trading profits. It would be necessary to establish a legal system to source details of any relevant taxation information from domestic cryptocurrency exchanges before enforcing a tax framework, the report added.
Despite previous reports of a tax plan that was expected to be announced in June, the tax division of the Ministry of Information and Communication is expected to propose a revision of the tax bill at the National Assembly in August this year. The South Korean government has notably been studying taxation frameworks in other countries, including Japan, Germany, and the United States, among others.
In related news, Thailand’s tax authority recently waived a 7% value added tax (VAT) on individual cryptocurrency adopters to reduce their tax burden, which already sees a 15% capital gains tax on crypto investment returns.
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Last modified: July 2, 2020 10:36 PM UTC