South Korea is growing in the cryptocurrency world. It has projected new ways for the development of cryptocurrency in the country which is still taking its baby steps.
The South Korean government in a recent has announced 20% tax on cryptocurrency in the initial build up.
“Taxation on Virtual Asset Transaction Income,” the ministry introduced the new rules with a note that at present, both personal (resident and non-resident) and foreign corporations’ virtual assets are non-taxable.
The South Korean government cited the example of other countries where taxes are a mandate to cryptocurrency. It said that it is important to impose tax on the virtual assets.
It is now understood that the gains made from virtual currencies and intangible assets will be classified as taxable income.
Income from virtual assets below 2.5 million won per year ($2,000) falls below the minimum threshold and will not be taxed.
Non-residents and foreign corporations that trade on South Korean exchanges will also be taxed: under the new rules, Korean exchanges will be responsible for deducting the tax from transaction gains and paying it to the Korean customs office, according to a Cointelegraph report.
Cointelegraph has previously reported, South Korea’s government has spent months reviewing how to update its tax regime to respond to the trading of virtual assets.
Discussions in the country’s private sector had, as recently as mid-July, appeared to indicate that a capital gains tax of 20% would be established for cryptocurrency gains.
“Until now, virtual assets have been recognized only as a function of currency and have not been subject to income tax, but recently, virtual assets (like Bitcoin) are increasingly being traded as goods with property value.”