A recent news report had claimed that the authorities of the South Korean government are preparing to levy a 10% capital gains tax on cryptocurrency profits but the Korean government’s Ministry of Strategy and Finance has refuted all such allegations.
A local news media outlet in Chosun, Korea, mentioned a government official claiming that the government was going to impose a flat 10% tax rate out of the blue on the profits from cryptocurrency returns, irrespective of the magnitude of the investment.
“We have already decided to tax profits from investments in cryptocurrency, the question is only how much time we should give investors and when to start implementing it”, the government official was quoted saying in the article.
The report claimed that the government had taken the step to classify those profits as “other income”, implementing that cryptocurrencies would not fall under the category of financial or investment products in the eyes of the government.
The ‘other income’ pertains to irregular or a temporary income unlike an earned income under the domestic taxation laws. Thus, it was supposed that a 10% tax was being considered to be included in a revised tax bill from this year onwards giving a year or two of grace time before it would come into effect.
However, the Ministry of Strategy and Finance has dumped the rubbish report by claiming, “it is different from the fact as the government agency always oversees its financial policies”.
Even if the government decides to mandate taxes on crypto trading profits, the likelihood of taxation will ‘take a considerable [period of] time”, stated a report from Business Korea. It would be mandatory to establish a brand new legal system to enforce details of any relevant taxation information from any of the domestic cryptocurrency exchanges before they could actually build a tax framework, the report added.
The tax plan that was expected to be announced in June according to previous reports, the tax division of the Ministry of Information and Communication will get to propose a revision of the tax bill at the National Assembly only during the month of August this year as the South Korean government has been especially studying taxation frameworks of other countries like Germany, the United States and the Japan among others.