The South Korean National Tax Service has announced its plan to impose taxes on cryptocurrencies including bitcoin. The agency is also discussing ways to make it compulsory for cryptocurrency exchanges to hand over their users’ transaction data.
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South Korea’s Cryptocurrency Tax Plan
South Korea’s National Tax Service (NTS) has revealed its plans regarding the taxation of cryptocurrencies including bitcoin. This was announced at the 2017 National Tax Administration Forum which the agency jointly hosted with the National Tax Administration Reform Committee and the Korea Institute of Public Finance on Tuesday.
The NTS “has decided to push for the plan to impose an income tax and transfer income tax on virtual currencies,” wrote Business Korea. An NTS official at the forum was quoted by Korea Times:
We will pursue taxation on virtual currencies such as bitcoin. Since virtual currency is a kind of property such as real estate or securities, it should be taxed according to the principle that ‘there is a tax on income.’
Hank Kyung-soo, Deputy Director of the VAT Division, stressed the importance of collecting “detailed history data like who made transactions and how in a bid to impose taxes.” If the agency can find a way to obtain this data, he claims, “it will be possible to make a full taxation if this is done.” To this end, he said:
We are discussing with the related ministries, such as the Ministry of Strategy and Finance, how to make it compulsory for virtual currency exchanges to submit transaction data.
Amending Tax Laws
Professor Kim Byung-il of Kangnam University’s Department of Economics and Business Administration pointed out that advanced countries overseas are already taxing cryptocurrency-related income and transfer income.
He explained that while standards such as the classification of digital assets and the method of measuring their fair value are needed, “business income tax, corporation tax, inheritance and gift tax can be taxed without an amendment of the law.” However, he believes that in the case of transfer tax, it is necessary to “revise the income tax law or impose a transaction tax.”
The NTS also indicated at the forum that it is necessary to amend existing tax laws to levy transfer income tax on profits generated from cryptocurrency trading.
Tax Law Not Ready for Next Year
Deputy Prime Minister and the Minister of Strategy and Finance Kim Dong-yeon held a press conference at the Sejong government office last week. He revealed that the issue of bitcoin and other cryptocurrency taxation is still being discussed and was quoted by Etoday saying:
We have not progressed enough to put it into the next year’s tax law revision.
What do you think of South Korea’s plans to tax crypto users and force exchanges to hand over data? Let us know in the comments section below.
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Source: News Bitcoin