South Korea will tax the proceeds from trading cryptocurrencies. On July 22, South Korea’s finance ministry announced a tax reform plan, Reuters reported. From October 2021, the South Korean government will impose a capital gains tax of 20 percent on local tax-paying residents who earn more than 2.5 million won from cryptocurrency transactions.
Cryptocurrencies are virtual currencies represented by Bitcoin. South Korea is one of the most active markets for cryptocurrency trading. According to data submitted by the Financial Services Commission, the average daily trading volume of cryptocurrencies in South Korea is 1.33 trillion won ($1.11 billion),media reported.
Since 2020, the South Korean government has accelerated its regulation of cryptocurrency trading.
In January, the Korea Times reported that the South Korean government was considering a 20 per cent tax on revenues generated from cryptocurrency transactions, citing anonymous sources, citing anonymous sources who said the country could reclassify the proceeds of cryptocurrencies as “other income” and classify them as lottery revenues rather than capital gains.
On March 10, south Korea’s parliament passed an amendment to the Law on The Reporting and Use of Information on Specific Financial Transactions, which aims to place the cryptocurrency industry under government supervision and require cryptocurrency exchanges to identify their users and trading history, thus providing a basis for the government to tax virtual assets, the Korea Times reported. The Korea Times reported that the Finance Ministry will announce details of the tax in July.
In addition to South Korea, in recent years, in the face of active global cryptocurrency trading, in order to further regulate the cryptocurrency trading market, a number of countries have introduced tax bills to tax cryptocurrency revenue.
Cryptocurrency revenues are classified as “miscellaneous income” in Japan, with a tax rate of up to 55% in progressive terms, according tomedia coindesk, and the United States issued guidelines in October 2019 reaffirming the status of cryptocurrencies as a form of property, with a tax rate of more than 39% if held for no more than a year, based on people’s income levels, and in the UK, cryptocurrencies such as Bitcoin are classified as commodities. Holders who earn more than 12,000 pounds ($15,600) in cryptocurrencies during the tax year may be subject to 20% tax.