Taxation Authorities in South Korea amends tax laws regarding cryptocurrencies. Imposes taxes upon crypto trading and exchange which are to be collected from the start of the year 2022.
After long delays, finally, the South Korean Government had been able to successfully amend its taxation laws in respect of cryptocurrency trade/exchange. It took a while for the South Korean lawmakers to arrive at a consensus regarding the imposition of taxes upon the crypto industry. It was revealed that the major hurdle was the lack of a proper legal framework for the crypto industry.
It was informed by the South Korean Government that the proposed tax had been levied upon exchanging and trading of cryptocurrencies. The amendments will come into force in the month of February, however, the collection will be done at the start of 2022. The amendment suggested that crypto trading will be subjected to levy of 20% tax. But levy had been imposed upon those crypto owners whose annual income is above the scale of US$ 2,300. Any owner of crypto assets whose annual income is below that average had been exempted from 20% tax.
South Korean Finance Ministry stated that the enforcement decree had not been finalized yet as it required approval from the Cabinet. For the time being, meetings have been scheduled in which the enforcement decree would be endorsed.
Ministry also clarified that though the amendments had been implemented from February however the collection will only be done in 2022. Further clarification was rendered in connection with the stock transactions as well. It was revealed that the stock transactions shall also be taxed for 20%. However, it will be levied if the annual profits exceeded the amount of US$ 47,000. Similarly, tax had also been imposed upon shares trade @ 20%.
The proposed amendments were initially suggested in 2020, however, no consensus was arrived at between the lawmakers and National Assembly. It was earlier also suggested that the tax should be collected from October 2021.
At that time Blockchain Association of South Africa also urged the Government to postpone the tax since 2023. The Association said that it will take considerable time for the crypto industry to ensure compliance with the proposed rules. But it was due to non-approval from the National Assembly that the new rules were not implemented. Yet recently it had been decided to postpone the collection until the end of 2021.
An official of the South Korean Tax Collection Authority said that the tax had been imposed to give due recognition to crypto assets. This is the first step towards adopting the innovation through digitalization, he said. Speaking on behalf of the Government, he also added that further laws will soon be prepared and presented for approval. These laws shall be made in accordance with international laws so as to provide legal cover to crypto owners, investors, and assets.