South Korea considers taxing crypto profits from next year

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South Korea considers taxing crypto profits from next year

By Benson Toti - min read

The Ministry of Economy and Financed has proposed taxing profits from cryptocurrencies next year

According to local media reports, South Korea is planning to start taxing profits from Bitcoin and other cryptocurrencies next year.

The taxation is also going to apply to Bitcoin mining operations as well as income from initial coin offerings (ICO), if it is approved by parliament.

Supported by the Ministry of Information and Technology, South Korea’s Ministry of Economy and Finance proposed the amendments to the existing tax law.

The ministry will present the amendments before parliament by September of this year. Once it is approved, the law will enter into force by 2021. This will allow authorities to tax profits that are generated from the sale of digital assets for cash. Trades between cryptocurrencies will remain tax-free, and similarly those sold at a loss.

“We are reviewing capital gains tax or other income tax on profits gained by domestic and foreign investors in the transfer of virtual assets,” a representative from the Ministry of Strategy and Finance was quoted to say.

Officials said that the planned changes have been prompted by the idea of implementing “tax where income is located.”

In the past, the South Korean Government has tried to tax Bitcoin, most recently in January. However, they failed to thoroughly enforce the regulations. This is due to different government ministries unable to agree on whether Bitcoin was an asset or not.

Local crypto experts believe that these proposed amendments may go down the same road.

Seung Seung-young, a researcher from the Korea Regional Tax Institute, revealed to E Daily that the law is not fully comprehensive in its current format, which opens it to potential exploitation by investors.

“If you do business through a peer-to-peer transaction without going through an exchange, there is a possibility of avoiding taxation. Even with IP tracking, if there are a large number of targets, administrative costs will increase and it will be difficult to track each day.” Seung-young said.

Chairman of the Korea Blockchain Association, Kim Yong-min, believes that it may take approximately three to four years before the government can set up the infrastructure that has an in-depth understanding of how cryptocurrencies operate.

Recently, the Seoul Central District Court Criminal Settlement Division 30 froze 15 wallets owned by the alleged manager of Telegram channel Nth Room, Cho Ju-bin. He has been under investigation for circulating child pornography and other explicit criminal content.

This prominent case is also connected with cybersex trafficking, blackmail, and sexually exploitative images and videos.