A recently tabled South Korea crypto tax bill proposed a 20 percent tax on capital gains arising out of crypto trading. The proposed exorbitant tax bill is sending shock waves through the country’s crypto corridors.
The bill, discussed by the South Korean private sector members, aims to tax capital gains earned via cryptocurrencies. If approved, the 20 percent crypto gains tax will be amongst the highest in the world. South Korea has been enacting legislation to regulate the crypto sector and also bring transparency.
South Korea crypto bill could impact the trading realm
In South Korea, the government is fast regulating the cryptocurrency trading arena. They have classified crypto as ‘goods’ which means that it will attract capital gains tax instead of a currency trading regime.
The upcoming proposed legislation also categorizes crypto assets as ‘goods’ and aims to tax them at 20 percent. Technically, the legislators have categorized these digital assets as e-certificates carrying financial value and capable of e-trading. Once sold, the particular transaction would fall under the purview of an asset and hence is accountable under capital gains mechanism.
A court in South Korea mentioned in its judgment that cryptocurrencies have characteristics of goods and they carry specific inherent property value. Therefore, these must be classified as intangible assets signifying individual value according to the transaction.
South Korean crypto market fears excessive regulatory hurdles
South Korea is a vast crypto destination. Official figures mention that $1.10 billion worth of cryptocurrency trades are completed daily. Foreigners often get away with crypto taxes, thereby causing loss to the exchequer.
However, aggressive tax policies can bring a sense of fear into the trading community. Excessive red tape can also derail innovation in the industry. Still, a looming South Korea crypto tax bill stares the trading community in their face.