The huge profit margin recorded by investors in cryptocurrency has drawn the attention of the South Korean government as they plan to impose a tax levy on profits gotten from such activities.
According to anonymous government sources, as reported on a local news outlet, The Korea Times today, the country’s Ministry of Economy and Finance is seeking to impose taxes on residents’ crypto-related profits, with the ministry working toward implementing the measure by Q1 of next year.
“Related discussions have been taking place. The revised bill will be drawn up by the first half of next year,” the source was quoted as saying by The Korea Times.
As per the report, to achieve success in taxing crypto-related profits, the regulators would need to get a clear definition of cryptocurrencies and decide whether or not to categorize monetary gains obtained from crypto-related transactions with stocks or real estate.
If crypto profits are considered to be similar to stocks’, then the regulators will have to get trading records from cryptocurrency exchanges in order to implement the taxation accurately.
To this end, crypto exchanges would be required to establish a separate record for every trader registered on the platform and conduct the Know-Your-Customer (KYC) process for every user.
Notably, the report stated that a similar bill is currently being deliberated on at the nation’s sub-committee level, which is aimed to boost the transparency of the crypto space, to curb financial fraud.
The bill is tipped to be implemented a year after it passes the assembly plenary session, although its outcome will not deter regulators from taxing crypto gains.
In a similar development, France is reportedly planning to tax revenues acquired from cryptocurrencies when they are converted to fiat currency as trades between digital currencies would be free from taxes.