South Korea: Government Mulling Taxing Cryptocurrency Capital Gains
The South Korean government is mulling imposing taxes on capital gains arising out of cryptocurrency transactions – including Bitcoin (BTC) – reports The Korea Times, December 9, 2019.
South Korean Authorities Taming the Crypto Conundrum
In their short history, cryptocurrencies haven’t exactly been able to earn the trust of a large number of financial watchdogs and regulators across the world. However, despite the taboo surrounding digital currencies, some financial regulators have seemingly adopted a soft stance toward them due to their high potential ceiling, with the South Korean administration being one of them.
However, according to the latest developments, the South Korean Ministry of Economy and Finance has reportedly made it a priority to push for crypto tax reporting measures so as to reflect them in the country’s tax regulations in 2020.
Per sources close to the matter, the South Korean government is set to introduce a bill in the National Assembly that seeks to tax digital currency capital gains. An official from the Ministry told The Korea Times:
“Related discussions have been taking place.“
“The revised bill will be drawn up by the first half of next year.“
That said, the Korean law and policymakers still need to tackle multiple issues with regard to cryptocurrencies. Firstly, the authorities need to come up with a more precise definition of virtual assets.
Further, the government also needs to decide whether to consider capital gains coming out of crypto transactions as the type of gains coming stock trading or real estate transactions. If the government does put crypto-based capital gains in the same category as those made out of stocks and real estate transactions, then it would be required to obtain trading records from virtual currency exchanges so as to levy taxes according to the transaction value.
Taking a cue from Recent Events
In addition, the Korean administration is also planning on introducing a bill that would bring a much-required degree of transparency to the virtual currency trading space.
This move from the government comes soon after the hack of major South Korean cryptocurrency exchange UpBit which reportedly lost over 340,000 Ether (ETH), approximately worth $50 million according to the current market price.