South Korea plans to impose 20% income tax on cryptocurrencies: Report

The finance ministry of South Korea is mulling to impose a 20 percent income tax on cryptocurrency transactions, the officials announced on Monday, The Korea Times reported.

The Ministry of Economy and Finance has reportedly ordered its income tax department to review a cryptocurrency taxation plan. This has led to speculations that the government may no longer categorize cryptocurrency trading as capital gains but as other income, the report said.

Under the country’s tax law, once labeled as other income, the Korean tax bureau will have the power to immediately impose a tax on gains from virtual asset trading. On the other hand, if it is labeled as capital gains, the government will still need to get the information from cryptocurrency exchanges and the tax will be calculated based on the fair market price, Pulse reported.

Other income includes honorarium income and prizes from winnings like lottery, etc. It is subject to a 20 percent tax on 40 percent total other income with the remaining 60 percent being tax-deductible.

An anonymous government official also revealed that the finance ministry’s plan for cryptocurrencies tax has not been finalized yet.

“The finance ministry is yet to finalize its direction but it surely has become more likely for the income from virtual asset trading to be labeled as other income, not as gains from transfer of capitals like real estate properties,” the source said.

Last November, the country’s tax agency imposed 80.3 billion won ($69.2 million) in withholding tax on cryptocurrency exchange Bithumb. The exchange has filed a complaint with the tax tribunal, arguing that the tax imposed by the National Tax Service (NTS) was groundless.

Meanwhile, cryptocurrency exchange Binance is planning to launch a support center in South Korea after investing in fintech firm BxB.

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