Published: Tue, January 21, 2020
Markets | By Otis Pena

Government Considering Applying 20% Tax Rate to Cryptocurrencies

Government Considering Applying 20% Tax Rate to Cryptocurrencies

The finance ministry is yet to finalize its direction but it surely has become more likely for the income from virtual asset trading to be labeled as other income, not as gains from transfer of capitals like real estate properties. When viewed as capital gains, the bureau had to first be given trading data from crypto exchanges in order to ascertain the tax obligations and calculate the baseline for the payments.

South Korea proposes to tax cryptocurrency at 22%.

The finance ministry of South Korea is mulling to impose a 20 percent income tax on cryptocurrency transactions, the officials announced on Monday, The Korea Times reported.

In 2019 reportedly, the country's financial regulator, the Fair Trade Commission, implemented laws stating that crypto exchanges would be entirely liable for hacks and subsequent damages. The tax amount is calculated by the initial amount of the position taken up. Another very important event for the crypto space in the country came a few weeks ago. Therefore, traders within the country wouldn't have to pay taxes on anything they earn in this way. The call for taxing cryptocurrencies has raised speculations that the government may categorize gains from cryptocurrency trading as other income.

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Naturally, the industry is strongly opposed to the move, with one long-term investor considering it the "worst proposal" possible and others are simply in shock, wondering "isn't this the craziest thing you've ever heard?"

It is also expected that the OTC market for cryptocurrency in Korea will see a sharp increase. If the government aimed to tax capital gains, it had to work with cryptocurrency exchanges to receive information about trading activity at cryptocurrency exchanges.

South Korean Investors with a large amount of capital in cryptocurrency are expected to flee before the implementation of the taxes. With crypto tax havens in desirable and easily-accessible SIngapore, Switzerland, and Germany openly inviting investors, there won't be much question as to where the Korean investors will flee to.

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