Cryptocurrency transactions are still tax-free in South Korea due to a lack of tax regulations. As the law stands, citizens are able to profit millions of won from cryptocurrencies without being required to pay taxes on them. However, the regulators have set a tentative timeframe for the introduction of the crypto tax law.
Still No Tax on Crypto Transactions
A lawyer in his early 40s recently revealed that he “made a profit of nearly 30 million won last year on investments in bitcoin and ether, but he did not pay any tax on virtual currency investments,” Money Today reported. The news outlet reiterated:
There is no obligation to pay tax even if you earn hundreds of thousands of won or even hundreds of millions of won in virtual currency investments.
Meanwhile, when selling stocks, there is a sales tax of 0.3% for listed securities and 0.5% for unlisted ones, the news outlet detailed.
“In the case of the ‘major shareholder,’ the obligation to pay tax on capital gains is also imposed. Unlisted shares also pay taxes on capital gains.”
Tax Regulation Timeframe
To rectify the situation, the tax authorities have set up “a virtual currency taxation standard in the first National Tax Administrative Reform Committee in 2018,” Money Today informed. Furthermore, the 2018 economic policy direction, announced by the Ministry of Strategy and Finance, has a schedule set for crypto taxation plan for the first half of this year, the news outlet added, noting that:
Korea will be able to pass the tax bill in the first half of this year if it is included in the amendment bill of the August tax law. Virtual currency taxation will be implemented next year.
Recently, local media reported that “Virtual currency taxation will come out in June.” However, the Ministry of Strategy and Finance subsequently issued a statement, clarifying that, “we are currently considering the taxation data through virtual currency taxation task force regarding virtual currency taxation,” adding that the media report was “not true.” An official of the ministry confirmed:
We did not set a specific time frame but we are thinking about announcing a virtual money tax during the first half of the year.
Crypto exchanges will also pay taxes. While reiterating that “Virtual money exchanges will have to pay taxes,” an official of the ministry was quoted by local publications early this year explaining that “we have yet to decide the exact tax rates as we are in talks with the National Tax Agency.”
What do you think of South Korea’s tax plan for crypto transactions? Let us know in the comments section below.
Images courtesy of Shutterstock, and Getty Images.