South Korea is considering imposing a 20% income tax on cryptocurrency transactions

South Korea is considering imposing a 20% income tax on income from cryptocurrency trading.

South Korea’s economic sector has recently been discussing a cryptocurrency-related tax bill that aims to establish a capital gains tax on cryptocurrencies. During the discussion on July 13, members said that cryptocurrency income tax could be raised to 20%.

Cryptocurrencies can be considered “commodities”

Proposed amendments to existing laws would classify cryptocurrencies as “commodities” rather than currencies.

Legislators have determined that virtual assets can be considered electronic certificates of economic value that can be traded electronically. However, if the transaction is for the purpose of sale, it can be considered an asset.

A South Korean court cited Bitcoin (BTC) in its ruling, stating: “Until now, virtual assets have only been recognized as a function of currency and have not been subject to income tax, but recently, virtual assets such as Bitcoin have been increasingly traded as commodities with property value. While considering various conditions, such as recognizing that intangible assets have property value, the necessity of taxation and the property value of virtual assets are also recognized.”

The provision also states that income tax on cryptocurrency transactions will be withheld from those who are not resident in the country.

Data from the Financial Services Commission, South Korea's financial regulator, shows that an average of 1.33 trillion won ($1.1 billion) is traded using cryptocurrencies every day. In addition, the average transaction amount between January and May 2020 was 7.609 billion won ($6.33 million).

Sung Tae-yoon, an economist at South Korea’s Yonsei University, warned that South Korea’s imposition of income tax on cryptocurrencies could hinder the development of the technology’s nascent market.

Image source: pixabay

By Xiaofan Liu

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