South Korean Parliament has submitted a bill for crypto profits to be taxed up to 20%.
A private member’s bill is recently put forward to increase the Capital Gain tax on crypto incomes that could be as high as 20%. It will also apply to all kinds of blockchain mining operations and ICOs. Whenever someone sells and gains on cryptocurrencies, they need to file return within two months from the last day of closest half. For non-residents, the cyptocurrency exchange withholds the tax.
Historically, South Korea has been one of the most active crypto trading and mining countries in the world. However, the authorities have been very reluctant to impose taxes or regulate digital assets because this would legitimize the sector as a whole. With the Crypto Transaction Bill’s decision, the nature of cryptocurrencies will foster a growing discussion with true value.
Yang Kyung Sook, a reputed and influential representative of South Korea’s Democratic Party, proposed reclassifying cryptocurrencies and other digital assets as “commodities” instead of ‘currency.’ He specifically explained that classifying the crypto assets as ‘goods’ or ‘commodities,’ instead of currency, is because of investors’ behavior. He believes that due to this, these assets qualify for a capital gain tax.
Addressing the Parliament, Yang said that, so far, no income tax was imposed on the virtual assets, and they were only recognized as a function of money. Recently these are being traded as commodities with actual property value. He added that after considering various aspects, like the recognition of digital assets with commodity value, the government’s attention and taxation of these cryptocurrencies have become very necessary. Soong Tae-Yoon, a Korean Yonsei University Economist, critically warned that taxing the cryptocurrency market may slow down the technology’s emerging capabilities.
However, the Financial Services Commission submitted data according to which, an average of US $1.10 billion make up the average cryptocurrency trade per day. Additionally, an average of 6.33 million US dollars crypto tradings took place in the first five months of 2020.
Many countries, including Japan and the United States, are taxing the cryptocurrencies because the sums being traded are huge, and the revenue can be incredible on taxation.
Therefore, after years of continuous discussions and deliberations about the virtual assets, the South Korean Government is all set to announce the taxing income’s final details to be generated from crypto transactions.
In April of 2020, South Korea’s central bank announced its intention to develop the Central Bank Digital Currency system, like other countries in the world. The bank made a six-man panel, including lawyers, focused on Fintech and professors of commercial laws to launch this process. The committee will be reviewing all the potential regulatory issues impeding this novel project with some additional staffing from the Bank of Korea’s legal policy office.
The committee has started working from early June with a timeline of May 2021. This committee’s work will play a crucial part in the 22-month project timeline set to launch CBDC.