Deputy Prime Minister Hong Nam-Ki, Minister of Strategy and Finance and Kim Hyeon-Jun, Director of the National Tax Service announced the new draft bill that will determine how much tax will be levied on profits or income generated by transactions involving digital assets, according to South Korean media Edaily. The new law will encompass even crypto mining activity and fundraising from Initial Coin Offering (ICO) projects.
“We are looking at ways to tax if profits are made through transactions, mining, and public offerings (ICOs) in accordance with the principle of ‘taxation where income is located’. There are few countries that impose VAT and transaction taxes abroad,” an official from the Ministry of Information and Technology said.
While some other countries in the region have moved ahead with levying individual income tax or even value-added tax (VAT) on cryptocurrency transactions, South Korea citizens are not subject to either at present. If the proposal is passed this year, the new laws is slated to go into effect next year.
“We are considering the capital gains tax or other income tax tax on the profits gained by domestic and foreign investors in the transfer of virtual assets. The proposed tax amendment will be announced in July and submitted to the regular assembly in September,” another official from the Ministry of Information and Communications shared.
Jeong Seung-Yeong, a researcher at the Korea Local Tax Institute, voiced his concerns over the almost impossible scale the government has to cover with the implementation of this new bill as a lack of administrative planning will give citizens the opportunity to avoid taxation.
Previous discussions early in the year on the new crypto taxation law suggested that the taxation amount could be as high as 20%. In March, South Korea’s National Assembly approved a new ‘Special Financial Information Law’ which oversees the crypto industry in the country.
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