- South Korea is reportedly planning to levy a 20% tax on crypto income, which will be deductible and collected immediately.
- Crypto-related earnings will be subject to tax but not as capital gains but rather winnings from lotteries.
- A South Korean economist believes it is premature for the govt to impose crypto taxes when the market is still unstable.
South Korea’s Ministry of Economy and Finance is planning to roll out reforms in July, offering guidance on cryptocurrency taxation. According to a CoinDesk report, gains made from holding or trading cryptocurrencies will be classified as “other income” in the country.
Crypto-related earnings will be subject to tax but not as capital gains but rather winnings from lotteries. The Korea Times reported that the ministry’s tax office had proposed a 20% tax on crypto income, which will be deductible and collected immediately. South Korea’s take on crypto income is quite different from what tax authorities in other nations are following. For instance, in the US, digital assets are classified as commodities whose profits are subject to a capital gains tax rate of 39% depending on income brackets.
Sung Tae-Yoon, an Economist at Yonsei University, said the government must be careful about how it handles digital currencies. He said:
It is premature for the government to impose cryptocurrency taxes at a time when the market has not developed enough in a stable manner. The financial authorities should think twice before imposing taxes on the market, as the digital currency industry is still in its infancy. Any rash taxation or introduction of regulations can be a stumbling block for sustainable growth of the industry.
Share
