South Korea proposes tangible taxation framework for cryptocurrencies
Tax experts in South Korea have advised the Korean government to apply a low-level trading tax on cryptocurrency profits. This is intended to come into effect before Korean citizens will be subject to a transfer income tax, as expected to be announced in its tax reform plan in late 2020.
It is argued by the Members of the Korean Tax Policy Association that the most effective step forward for the South Korean Government is to take a deliberative approach to implementing a cryptocurrency income tax.
The Korea Blockchain Association agreed with the tax experts' proposal, and said:
Related laws are still absent and the taxation infrastructure is still insufficient to cover cryptocurrencies and, as such, some supplements need to be added on the expense calculation side.
The Association elaborated by stating that before imposing the transfer tax, there should be increased clarity on determining cryptocurrency acquisition costs is necessary. But it’s not easy to define these since cryptocurrencies are being traded at multiple rates on a wide variety of exchanges in Korea.
South Korea’s Ministry of Economy and Finance has recently considered imposing a 20% tax on income from cryptocurrency transactions. South Korea’s previous Ministry of Strategy and Finance commented last month that:
In the case of a corporation's virtual currency transaction, all transactions that increase the entity's net assets are subject to taxation under the current law, so it is taxable, but it is practically impossible to produce tax revenue results by distinguishing only virtual currency transactions.
It is clear that a more concrete tax framework for cryptocurrencies is underway in South Korea, and we should definitely be keeping an eye out for further developments over here in Australia.