South Korea to Impose a 20% Tax On Cryptocurrency Trades

South Korea’s ministry of finance and economy prepared and published amendments to the income tax act according to which transactions with cryptocurrencies as well as profits for mining will be taxed starting in 2021.

According to local media, this new law will also conserve profit earned during the initial tokens ICOS and perhaps this will soften the country's attitude to the ICO and give them a green light since this method of raising funds is still prohibited in the country.

At the same time, transactions with digital assets will be taxed only if traders profit from such transactions.

These amendments were prepared back in July and should be submitted to the National Assembly that will revise them by the third of September.

If approved, the law will come into act on the 1st of October 2021.

In its proposal, the ministry indicated that it was a tax on capital gains or other taxes on the income of domestic and foreign investors in the transfer of virtual assets, however, it is still unclear whether the profit received from transactions with cryptocurrencies can be equated with the profit from other assets such as stocks and real estate.

South Korea’s treasury department read with the possibility of introducing a 20% tax on income from cryptocurrencies at the beginning of this year despite the fact that tax legislation regarding cryptocurrencies in the country is just beginning to take shape as six months ago, the National Tax Service of South Korea (NTS) recovered from the Bithumb exchange( A south Korean cryptocurrency exchange) about $70million accusing it of not withhold taxes on foreign clients from profiting in their cryptocurrency transactions.

Under the new tax assessment scheme, foreign organizations just as non-residents that exchange on the country's crypto exchanges will start getting taxed. It will be the exchanges' obligation to deduct the corresponding amount of tax on the income of their crypto traders.

Nonetheless, the government clarified that tax collection for virtual resources is essential as different nations have actualized their own crypto tax collection schemes that are similar to those imposed on subsidiaries and stocks exchanging income.

Crypto taxing has become a typical subject of discussion around the globe as there is just a small number of nations that despite everything, won't present a law explicitly for virtual currencies such as bitcoins.

Despite the fact that most nations, paying little mind to how friendly they are towards the blockchain have presented taxation on crypto, some such as Japan and Belgium go overboard taxing crypto investors a whopping 55% and 33% respectively which to me looks like extortion of its citizens who are interested in cryptocurrencies.

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