- The State Council of South Korea has passed the 2020 Tax Law Amendment.
- Cryptos like BTC and ETH will also be taxed following the law.
- crypto assets were considered as a form of currency but from now, they will trade as a goods with a property value.
Per Korean Media, The State Council of South Korea has passed the 2020 Tax Law Amendment on Tuesday. The new law not only raises the rate of income tax rate to 45% but also makes amendments on 16 different tax laws including Basic National Tax Act, the Income Tax Act, the Corporate Tax Act, and the Inheritance and Gift Tax Act. As of the new law, the rate of income tax for people with an annual income of above 1 billion won will rise by 3% from 42% to 45%. The news was announced by the Ministry of Strategy and Finance on 22nd July and is hereby confirmed by the government.
Income Tax of 20% Imposed on Crypto
Digital assets have also been taxed for the very first time. Cryptos like BTC and ETH will also be taxed following the law. Any individual who earns 2.5 million worth of cryptocurrency after October 1 will be subject to a total 20% taxation. The rate of the income tax was decided earlier in the month of July during the Tax Development Committee meeting and is finally confirmed by the government now. The ministry has separated the entire rules involving cryptocurrency in the section called Taxation on Virtual Assets Transaction Income.
Income under the 2.5 Million Won Threshold not to Taxed
The South Korean government felt that taxation of crypto assets was a much required reform. This is because a handful of other nations have already started treating digital assets as a means of income that is similar to stock and derivative trading. However, people having gains less than 2.5 million won from the digital assets will not be taxed. But, above the 2.5 million threshold the individuals have to pay a total of 20% of their incomes as mentioned above. The incurred taxes must be reported as well as paid by the month of May every year, with the implementation starting from October.
International Corporations and Exchanges also Have to Pay Taxes
Moreover, all the international and immigrants entities that are operating on the South Korean exchanges are also subject to taxation. The indigenous Korean exchanges are put in charge of the supervision of these entities in paying and reporting taxes from their transactions. The South Korean government has spent quite some time in determining its tax regime. The court order said that before the confirmation of the tax law, crypto assets were considered as a form of currency but from now, they will trade as a goods with a property value.