As the laws are getting stricter in South Korea, tax filings in the country will also include crypto earnings from 1 January 2022, as per local reports. Earlier, South Korean authorities were mulling over postponing the tax code until 1 January 2023.
Noh Woong-rae, a member of the ruling Democratic Party, had stated that the country needs to defer the taxation plans until a sufficiently prepared infrastructure is in place. However, a recent government meeting reportedly decided otherwise.
The aspect of “coin-taxation” is also a matter of difference of opinions between the political parties. The majority Democratic party wanted to push the legislation for 2023 while the Ministry of Strategy and Finance opted for earlier implementation.
An official quoted in the local reports said,
“There was an opinion that it is right to raise the tax first before creating a proper safeguard to protect them.”
Going forward, virtual assets will attract a 20% income tax on transfer gains. But it will exclude a minimum taxable amount of 2.5 million won. For example, a profit of 3.5 million won by buying and selling cryptocurrencies in 2022 will attract a 20% tax on 1 million won i.e a tax of 200,000 won. It will have to be reported in the following year.
Earlier, it was reported that there was some opposition from investors, who said,
“We will start paying taxes without any institutional supplements.”
It is estimated that 3.8% of the country’s population, which is over 1.9 million people, own crypto. The last survey estimated that the average South Korean trader invests more than $6000 in the asset class. Which is over the exemption limit of 2.5 million won or $2100 if it includes profits.
The guidelines come amid a survival struggle among crypto exchanges in South Korea. As the National Assembly continues to discuss the compliance requirements of crypto businesses, Upbit, Bithumb, Coinone, and Korbit met the initial set of requirements. Upbit recently announced new verification and KYC norms, and other exchanges are expected to follow suit.