South Korean Government has included few issues regarding cryptocurrency into its ‘2018 revised plan of tax law’. However, it postponed announcements regarding taxation on profits from cryptocurrency expected by cryptocurrency industry.
South Korean Government announced that it will be excluding companies that handle cryptocurrency from companies that will be exempted or have tax reduction. This means that it will not provide tax benefits to cryptocurrency exchanges as it is going to look at them differently from other venture and small companies.
“It is not advisable to give tax reduction or exemption benefit to companies that handle cryptocurrency.” said Deputy Director General Lim Jae-hyun of Ministry of Strategy and Finance’s Tax Policy. “We are aware that there is yet to be any cryptocurrency company that receives tax reduction or exemption benefit.”
Deputy Director General Lim announced that South Korean Government is currently discussing about how it is going to handle imposing taxes on profits from cryptocurrency.
“The Office for Government Policy Coordination is currently looking into such matter by operating a task force.” said First Vice-Minister Ko Hyung-kwon of Ministry of Strategy and Finance. “We are continuously researching and discussing about how we are going to regulate and apply rules on cryptocurrency.”
Cryptocurrency industry is predicting that South Korean Government will levy capital gain tax on profits earned from cryptocurrency investment. It is saying that transfer tax will also be applied when cryptocurrencies are being sold.
However, there are many tasks that need to be resolved before these taxation laws are levied on cryptocurrency. Because international societies such as G20 have yet to define cryptocurrency clearly, it is likely that it will take some time for South Korean Government to come up with relevant policies.
“Even other countries are looking into how they are going to deal with defining characteristics of cryptocurrency.” said Minister Ko. “However, because there is need to handle tax reduction and exemption differently, we have applied such information to our revised plan of tax law.”
Staff Reporter Yoo, Seonil | ysi@etnews.com