The South Korean government has recently confirmed that it isn’t possible to levy an income tax to an individual investor’s profits from crypto transactions. While this may be true within South Korea’s current tax law, the relevant authorities are seeking to change this. The country’s government is reviewing the world’s trends and the approaches of major countries when it comes to crypto taxation. This is all in an effort to amend Korea’s existing tax laws to incorporate cryptocurrencies.
Exemption By Omission
South Korea’s Ministry of Economy and Finance is in charge of, as the name would suggest, overseeing South Korea’s economic policy. The ministry has officially stated that the profits of an investor that was done by way of crypto trading, cannot be taxed under South Korea’s current tax law. South Korea has a very literal take on tax law, with several forms of capital gains being exempt from taxes because of it.
Under Korean law, unless the activities are explicitly defined within the country’s tax law, it’s impossible to be taxed for the income you make from such activities. In accordance with both this and the fact that the term “virtual currency,” or anything else it’s known by, isn’t within the tax law, these transactions cannot be taxed.
The ministry made this clarification clear on the 30th of December, explaining that “profits from individual virtual asset transactions are not listed income and are not taxable.”
Taking Steps To Remedy Legislation
Even if this is the facts of the here and now, the Ministry of Economy and Finance has been heavily pushing for an amendment of tax law. Specifically, one that allows for crypto taxation. A Ministry official explained that discussions of this amendment have already started. The official speculated that the revised bill would be drawn up by 2020’s first half.
There are, however, many hoops to jump through to properly amend the country’s tax law to allow for this. First, the state must give a definitive description of what crypto assets are and whether or not the currency should be considered a form of capital gain. Furthermore, it must define how the government is planning to gain trading records from its cryptocurrency exchanges to properly levy its taxes.
Comprehensive Review Of Other Nations
The ministry further elaborated on this. They explained that the ministry was preparing for a taxation plan of virtual assets by “comprehensively reviewing the taxation of major countries.” Furthermore, they will review “consistency with accounting standards, and trends in international discussions to prevent money laundering.”