Experts from the Korean Tax Policy Association have proposed for a low-level of trading tax in advance to actual transfer income tax on cryptocurrency profits, as the government prepares to include digital currency taxation in its tax reform plan, which will be effective in the next year.
The tax experts proposed a low-level of trading tax for cryptocurrency at a seminar held on February 21, advising the government to take up the method before making subjected them to a transfer income tax, as per the news outlet, Business Korea.
The experts acknowledged the transfer income tax application on profits derived from digital currencies; however, they added that it shouldn’t be imposed directly. A low level of trading tax should instead precede gradual transfer income tax on cryptocurrency.
The Korea Blockchain Association supported the proposal by the tax experts that the transfer income tax on crypto-assets should be included through prior legislation, as they further explained in the report:
“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 Blockchain Association also suggested that the expense calculation improvement should begin from the acquisition costs for digital currency so that the transfer income taxation can be possible after the imposition of the low-level trading tax.
“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,” the Blockchain Association said.
Crypto Taxation in South Korea
The South Korean government is planning to include taxation on digital currencies in its tax reform plan for 2021. The government will announce the tax reform plan in the second half of this year.
The government’s intention to impose taxes on residents’ crypto-related profits came to limelight on December 9, as Coinfomania reported. The bill was said to be drawn up by the first half of this year, at that time.