What to expect from crypto taxing in South Korea

07.03.2022
What to expect from crypto taxing in South Korea

It has become quite an announcement for many that by years 2022-2023 South Korea will present its own crypto tax law that is going to regulate the cryptoindustry within the country. But, actually, there are some points that still need to be discussed in order to ensure the maximal benefit both for the government and crypto users. At first, the final decision should have been made this year, but the committee took another year to cover the issues that could potentially bring discord.

Which points should be taken into account

The primary version of the law project implied setting the general tax of twenty percent on any cryptocurrency gains over 2.5 million won or 2.1 thousand dollars, which was rejected by crypto investors. There even existed a petition placed on the website of Blue House, signed by more than two hundred thousand people in less than a month. By its results, it was stated that the law in its formulation back then had two main weak spots:

  1. The taxation would be named as premature because of poor protective measures applied for investors. In that case the country could be situated among the ones who only want to reap the benefits before ensuring the comfortable conditions of its newly established sphere of interest.
  2. If applied like this, the law project would ruin the interest to crypto sphere completely, as such taxation was much heavier than the one applied to traditional stock market. Compared to the tax for virtual assets, the traditional capital gains start at 50 million won or around 42 thousand dollars, exceeding the threshold for crypto for more than twenty times.

That was the reason, why, despite persistent remarks made by Ministry of Economy and Finance, the delay for application was established. Although some may state that crypto assets relate more to other categories which are non-related to traditional stock market, the truth is that they are rather similar than one may think.

Possible improvements to expect in the next versions of law

As mentioned above, the similarity of traditional and crypto trading can lead to setting equal thresholds for both platforms, calming down the arguments between investors from these spheres. That is the top priority for many interested in law’s further development. It is also expected to regulate the taxes from crypto based on collecting the information directly from participants. With the crypto work principals, tracking the investor or trader is rather hard, as the assets are stored in blockchain which keep the data anonymous and encoded from outer invasions. And not the last issue is setting the individual conditions for taxable currencies and NFTs, which may differ a lot between each other.

It is still unknown how the process is going to occur and which measures will be applied for the taxing law, but many hope the South Korea will take into account all the ideas offered by actual crypto users and make the best out of it, creating the fair law project for everyone’s satisfaction over results.

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