South Korean Tax Specialists Advocate for Lowered Crypto Taxation
Members of the Korean Tax Policy Association are calling on the government to consider applying a low-level tax on crypto transactions. The South Korean administration is contemplating taxing cryptocurrencies as part of its tax reform plan for 2021, but specialists feel it requires in-depth conceptualization.
The perplexing issue of crypto taxation
The tax experts aired their sentiments during a seminar where they brainstormed and saw it fit for the Korean government to consider introducing a low level of trading tax to act as a precursor to the gradual transfer income tax.
Last month, the administration revealed that it was contemplating categorizing proceeds from crypto transactions as other income, which is subjected to a 20% tax, as is the case with lottery or prize-winnings. This decision was reached because other incomes are usually infrequent, unusual, and considerable in size.
Nevertheless, this proposal seems not to be going down well with tax experts as they stipulated that profits from crypto trading ought to be subjected to transfer income taxation as spelled out in the Income Tax Act, whereby crypto-assets should be included through prior legislation.
The Korea Blockchain Association echoes these sentiments. It asserted, “Still, related laws are still absent, and the taxation infrastructure is still insufficient to cover cryptocurrencies and, as such, some supplements need to be added on the expense calculation side.”
The association feels that the expense calculation improvement ought to begin from crypto acquisition costs as this will open the door to transfer income taxation based on trading tax imposition.
It added, “Acquisition costs need to be clarified for transfer income tax imposition, but cryptocurrency acquisition costs are hard to clarify because the currencies are traded in various exchanges, and related information and data are restricted. Infrastructure needs to be established after case-by-case trading tax imposition.”
Crypto taxation taking shape
As cryptocurrencies continue gaining traction, the issue of taxing them is making airwaves across the globe. For instance, in November 2019, the tax and payments customs authority in the United Kingdom called Her Majesty’s Revenue, and Customs (HMRC) updated its guidelines for crypto taxation pertaining to both businesses and individuals.
A similar trend was noted last month in China after the Shenzhen Taxation Bureau announced the establishment of a new blockchain tax system with Ping An Group.
The South Korean experts, therefore, feel the crypto taxation issue is a tricky one, and this is the reason why thorough consultations are needed.
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