SEOUL (Heartland Newsfeed) — Crypto holders living in South Korea may want to keep an eye out on recent actions being pursued by their government.
A report released Monday from South Korean-based Yonhap News Agency revealed the country’s Ministry of Economy and Finance’s (SKMEF) tax office is reviewing a proposal that could result in the adoption of a cryptocurrency income tax, which could be as high as 20 percent.
An unidentified official who spoke with Yonhap suggests that South Korea is considering the reclassification of income returns on cryptocurrencies as a form of “other income” and placing it in the same category as monies earned from lottery winnings, compared to the current classification under capital gains.
The legislation under consideration a 20 percent tax rate will be levied on 40 percent of all total income specified as “other income,” while the remaining 60 percent is tax-deductible. It is currently taxed at a rate up to 42 percent via a capital gains tax, based on a wide array of tax schedules.
SKMEF has been pushing for a new tax code on cryptocurrency for over a month, and a “revised bill” is being drawn up to be brought forth by June 30, according to a ministry spokesperson who spoke with a reporter from The Korea Times in December. No plans have been finalized, which may suggest the plan could be amended or thrown out altogether, the official stated.
While crypto taxation isn’t very common, governmental approaches in nations with highly developed economies have treated returns on crypto investments as capital gains, which is a tax levied on the difference between the sale price and purchase price.
The Internal Revenue Service in the U.S. issued tax guidance in October, reconfirming that crypto holdings are a form of property, even when received as a form of income, according to a Coindesk report. Under the IRS guidance and the individual’s income tax bracket, a capital gains tax could easily exceed 39 percent if the cryptocurrency is held for less than a year.
In the United Kingdom, it’s reported that cryptocurrencies like Bitcoin are classified as commodities and can be liable for a 20 percent disbursement tax for any disbursements exceeding £12,000 (or roughly $15,600) in a calendar year.
South Korea’s move could end up in line with Japanese regulations, who consider crypto as miscellaneous income, with tax brackets as high as 55 percent compared to 20 percent for trading equity.
The Japanese government stated last summer they would take forceful action against traders who stated they have not declared crypto income worth over 10 billion yen (or $90.7 million).
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