The government of South Korea is stepping up its tax regulations as far as cryptocurrencies are concerned, as it seeks to go into the new year with a renewed crypto-related tax code.
According to a December 9 report from local news medium The Korea Times, the country’s Ministry of Economy and Finance is currently in the process of drafting a new bill that will introduce a regulatory framework for taxing capital gains on cryptocurrency transactions.
Per the report, the Korean National Assembly is also working on advancing a related bill that will enhance transparency in trading activities across the industry. If the bill does pass, its resolutions will be introduced exactly a year after the next plenary session of the National Assembly.
Anonymous Trading Will Effectively be No More
If the legislation passes, then South Korean cryptocurrency traders will need to provide detailed histories of their trading activities. In addition, exchanges and trading platforms will also need to keep proper records for each user, as well as get quality identification on each of their customers.
This could mean an end to the possibility of trading crypto assets anonymously, something which, for all intents and purposes, contradicts the very basis of crypto-assets and their operation. However, if the assets are to be recognized by the powers that be, several concessions are to be made, and forgoing anonymity is just one of those.
It is expected that the capital gains bill will go through regardless of any related legislation, but the news medium also notes that the legislation will need to properly define cryptocurrencies to provide a clear basis for future government interventions. For instance, the bill will need to note whether crypto gains are to be treated similarly to those gotten from other asset classes, such as real estate or traditional stocks and bonds.
Tax Authorities Haven’t Fully Grasped the Asset Class
A lack of clarity is beginning to become the order of the day for government ills that aim to provide regulation to cryptocurrencies viz a viz taxation.
In October, the Internal Revenue Service (IRS) of the United States made an attempt to provide crypto taxation clarity, after it drafted a bill to bring the asset class, as well as gains made on trading, under its control. However, apart from setting the tax rates and providing guidelines on filing, the bill also sought to clarify what the tax authority considers as being a taxable activity.
Hidden in the fine print was a misnomer, as the IRS seemed to have wrongfully defined the terms “airdrop” and “hardfork.” Now, with its new bill, The Korea Times is noting that the Ministry of Economy & Finance still needs to do some more homework to make its proposed guidelines encompassing. Hopefully, this gap is bridged before the Ministry rolls out the plan next year.