South Korea: Crypto Traders To Pay 20% Tax on Profits From 2022
According to media reports, South Korea will impose a crypto tax of 20% on profits from 2022. This development is part of the Korean government’s plans to regulate cryptocurrency in its jurisdiction.
20% Tax on Profits above $2,260
Local news outlet Arirang revealed this development today, February 22, 2021. According to the report, the Ministry of Economy and Finance stated that income gained from trading bitcoin and other cryptocurrencies would be subjected to taxation from January 1, 2022.
Traders and Investors will have to pay a 20% tax when their annual profits from cryptocurrencies exceed 2.5 million won ($2,260). This means that if a trader made $10,000 from trading or holding bitcoin. He will have to pay the 20% tax on the remaining $7,740, which equates to $1,548 in taxes.
The tax will be on the net income, which excludes the coin’s initial acquisition value and commission fee paid to the crypto exchange used. Also, crypto-assets held before 2022 will be assessed to get the correct value for taxation. The tax law also mandates crypto investors and traders to report profits on income statements or risk fines.
Crypto Tax Regulation Not Without Controversy
South Korea is considered one of the countries that have a well-established blockchain industry. The nation is home to several crypto exchanges and blockchain firms. The move to impose a 20% tax on cryptocurrencies comes after the Korean government classified Bitcoin as a financial asset. This was the first step taken by the government towards taking proper regulatory measures in the crypto industry.
Since then, several regulations have been proposed towards ensuring a robust crypto framework in the Asian nation. However, the new tax law is controversial as the local crypto community has been left infuriated by the law. A petition has already begun against the tax law and has garnered about 40 thousand signatures so far.
For the petition to be received by the government, it would have to hit 200-thousand signatures by the end of March. It remains to be seen if the crypto-community will generate up to the required amount of signatures. Nevertheless, this development shows the growing interest in cryptocurrencies in the Asian nation.