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- The Korean Blockchain Association argues that related laws and current taxation infrastructure are ineffective in covering cryptocurrencies.
- Tax professionals in South Korea have indicated the imposition of a low-level trading tax on cryptocurrencies.
- Cryptocurrency taxation is a very evolving area, and many developed countries try to perceive returns from crypto-trading as a means of capital gains.
According to a seminar held on Feb 21, 2020, tax professionals in South Korea have indicated the imposition of a low-level trading tax on cryptocurrencies. This comes as a result of the South Korean government’s agenda to include a tax on cryptocurrencies as a part of its new tax reform plan for the year 2020.
This tax reform is supposed to be announced in the latter half of this year. Cryptocurrency taxation is a very evolving area, and many developed countries try to perceive returns from crypto-trading as a means of capital gains. A tax levied on the difference between sales and purchase price often turns out to be a lucrative approach.
Unlike the USA, which treats cryptocurrencies as a form of property, countries like South Korea treats them as a form of miscellaneous income, which puts it into the same category as that of money earned through lottery. Experts from Korean Taxation Policy Association believe that profits earned from cryptocurrency trading should be subject to transfer income taxation.
The Korean Blockchain Association argues that related laws and current taxation infrastructure are ineffective in covering cryptocurrencies. Thus some additional tools and strategies need to be applied on the expense calculation side.
That being said, the expense calculation improvement should start from cryptocurrency acquisition costs. This will ease the process of transfer income taxation after trading tax imposition.
However, cryptocurrency acquisition costs are hard to clarify, given the various exchanges and unavailability of restricted data and information on the subject. This paves the way for gradual tax levying as infrastructure needs to be established after case-by-case trading tax imposition.
