According to Yonhap News Agency, the South Korean government plans to enforce crypto tax laws commencing from January 2022. A meeting by the legislative body on 30th November stated that the government is planning to move ahead with the tax amendment law. Therefore, South Korea will impose a 20% tax on any profits derived from crypto trading, which surpasses the threshold limit of $2000, starting from the first month of 2022.
The South Korean Ministry of Economy and Finance formulated the crypto tax amendment laws in July 2020. It planned on implementing a 20% tax on the crypto trading capital gains that exceed 2.5 million won from October 2021.
However, The National Assembly Planning and Finance Committee decided upon amending laws relating to the Income Tax Act and Individual Consumption Tax Act. However, the tax method remains the same as the government draft. The legislative committee elucidated that the bill’s postponement was to carry out the voting process on the bill. Also, there were several concerns about local players having insufficient time to comply with the amended law due to a lack of appropriate tax reporting infrastructure.
Is South Korea a crypto-friendly nation?
South Korea houses a high percentage of cryptocurrency enthusiasts in the country. It is a country known for cryptocurrency markets, technology advancements, and large investments. However, the South Korean government is not quite keen on adopting cryptocurrencies. Therefore making it difficult for crypto entities to operate with the country. South Korea’s financial watchdog maintains increased supervision and regulatory oversight, making it difficult for various crypto entities to operate.
Owing to the regulatory concerns and ongoing pandemic, South Korea’s biggest exchange, Bithumb, temporarily shut down some of its offices. Recently, the South Korean police also raided Bithumb’s offices in relation to alleged frauds. It reportedly interrogated the company’s Chairman Lee Jung-hoon in respect to the same.
The South Korean watchdog also called out “dark coins,” which are privacy-oriented cryptocurrencies specifically owing to high money laundering risks. Hence it mandated crypto service providers to remove handling such coins as they are difficult to trace. Conclusively, many crypto services provides forgo privacy coins due to international regulations.
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