South Korea’s crypto capital gains taxes could rise as high as 20% as discussed by members of the South Korean private sector on a crypto-related taxation bill. A bill was proposed by the National Assembly to impose taxes on cryptocurrencies.
Proposed amendments to the existing laws of South Korea also plans to classify cryptocurrencies as “goods,” rather than currencies.
According to the lawmakers, virtual assets can be considered as electronic certificates of economic value that can be traded electronically. However, when transactions are for sales purposes, it could be then viewed as an asset.
A South Korean court referenced on Bitcoin stating:
“Until now, virtual assets have been recognized only as a function of currency and have not been subject to income tax, but recently, virtual assets (like Bitcoin) are increasingly being traded as goods with property value. Considering various conditions, such as the recognition of intangible assets with property value, the necessity of taxation, and the recognition of the property value of virtual assets are being raised at the same time.”
The report also highlighted that crypto trading withholds capital gains tax even for those who do not reside in the country. In addition, Yang Kyung-sook, representative of the Democratic Party, proposed an amendment to the Income Tax Law and imposed a 20% capital gains tax on income generated by transferring virtual assets. Judging from cryptocurrencies as goods rather than money, it is to be considered as a taxable capital gains tax.
Figures from South Korea’s Financial Services Commission shows that an average of 1.33 trillion won ($1.10 billion) was being traded per day using crypto. In addition, an average of 7.609 billion ($6.33 million) won was traded between January – May of 2020.
Tax rates and methods of taxation may change in the course of discussion at the National Assembly. The government also said it will announce the taxation plan for cryptocurrency in July.
Korean Yonsei University economist, Sung Tae-yoon have recently warned that the decision to tax crypto capital gains in South Korea could slow down the technology’s emerging market.