TL;DR Breakdown
• South Korea will start taxing 20% on cryptocurrency transactions.
• Investors must declare on crypto transactions.
South Korea will place high taxes on cryptocurrency transactions. The East Asian country is attempting to reach 20% taxes on each crypto movement. Sources suggest that South Korea could hit its targets, according to the latest reports on Friday.
In the next few years, profits from cryptocurrency transactions will be classified as “miscellaneous income” and must be reported to the authorities. The investor will have to file an income tax return from May 2023.
South Korea’s plans on cryptocurrency transactions
The South Korean government, backed by President Moom Jae-In, announced the new plan after discussing it at the vice-ministerial interagency meeting. At least 60 domestic cryptocurrency trading companies were up and running on May. The number of crypto companies may decline after these imposed measures.
But the government also sharpens security in cryptocurrency transactions to prevent illegal acts. The decision also comes after Eun Sung-Soo, FSC president, announced last month that the national crypto exchange could close in September. Amid the announcements, at least 200 crypto transactions were affected.
The authorities point out that their goal is to stop the illegal activities that surround cryptocurrency transactions. South Korea made new policies that will stop money laundering. This battle has affected thousands of investors in the country.
South Korea against cryptocurrencies
Beyond paying high taxes on cryptocurrency transactions, South Korea is against virtual currencies. On more than one occasion, the authorities of the country have suggested that trading cryptocurrencies bring many risks. Officials believe that speculation on cryptocurrencies is more dangerous than on other centralized digital assets.
South Korea has had an excellent crypto market on the rise for many years, and it still has that popularity. The “kimchi premium” highlights the country’s market, or the difference between crypto prices on the country’s exchanges compared to the currencies on others.
South Korea has four massive crypto exchanges such as Coinone, Korbit, Bithumb, and Upbit. Trading with Upbit surged to $9.9 trillion last Saturday, according to figures from CoinMarketCap.
Transactions in these decentralized currencies may fall after the announcements imposed by the South Korean government. An interest payment subject to 20% seems exaggerated, as stated by officials. The authorities may restructure the measure and impose lower payments, so it does not affect the investors in the country.
