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South Korea leads way to tax digital assets under current law

Jan 09, 2018 Posted /  3676 Views

South Korea leads way to tax digital assets under current law

The South Korean government has remarked that certain taxes can be applied to cryptocurrencies under the current law. According to the government officials these laws will be validated in the first half of this year. Some additional taxes are also being considered however, it is still to evaluate if these can be implemented under the current tax system.

Some taxes are being evaluated

The South Korean government has been deliberating on methods to tax cryptocurrency transactions. Digital currencies are not taxable under the present Income Tax Act. Earlier, the regulators had not established if the current legal framework permits the taxation of cryptocurrencies. Nonetheless, after a consultation on the amendment bill for the Enforcement Decree of the Revision of the Tax Code on Sunday January 7, the South Korean media quoted Choi Young-rak, head of the tax department of the Ministry of Strategy and Finance that there were some things that can be taxed under the present law.

Particularly, “Under current law, corporate taxation is possible,” the media quoted Choi explaining about the taxation implications. The media also noted that the taxation plan would be finalized within the next six months. Another media outlet News1 Korea supplemented, “The part that can be taxed by the current law will be taxed in the first half of this year.”

The other tax queries

The Virtual Currency Taxation Task Force was lately created subsequent to the releases of government’s measures for crypto regulation. The group met for the first time of late with associated professionals and ministries including the Korean Ministry of Internal Affairs and Internal Revenue Service, according to the statement made by Choi.

Choi was again cited by Asia Today, “There are some areas where legislation is necessary, such as capital gains tax. We need to review whether it is appropriate to impose capital gains tax and legislate.”

On the other hand, News1 Korea detailed that at present, it can be elucidated that the taxation of income tax, corporation tax, transfer income tax, and many more such areas is achievable in the case of virtual currency, while taxation of digital currency is complicated in relation to value-added tax.

Furthermore, at a meeting of late organized by the National Economic Advisory Council, and presided over by President Moon Jae-in, the media referenced the statement of an official saying, “Countermeasures against the difficulty of tracking tax revenue are also necessary.” The news outlets repeatedly used these statements. He was also found explaining that, “there is a need to regulate brokers who mediate virtual currency transactions such as exchanges and accumulate taxation information

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Tags: virtual currency South Korea tax digital assets

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