South Korean Authorities Are Considering 20% Tax on Crypto Gains

Updated on Jan 27, 2020 at 12:56 pm UTC by · 3 mins read

According to Korean experts, the government will now treat crypto trading gains as ‘other income’. As a result, a 20% tax on such incomes may be introduced.

South Korea’s Ministry of Economy and Finance has started to review the crypto regulation in the country. In particular, they are reviewing a crypto taxation plan. As South Korea’s Yonhap News Agency has reported, the Korean finance ministry may introduce a 20% tax on crypto gains.

Until now, the authorities considered profiting from digital assets as capital gains, and the tax law in South Korea did not see cryptocurrency trading profits as taxable income. However, with the regulatory rule changing, traders within the country will have to pay taxes on anything they earn in this way. According to Korean experts, the government will now treat crypto trading gains as ‘other income’. This includes gains from lectures, lottery winnings, and prizes subject to 20% tax on 40% of total other income. The remaining 60% was tax-deductible.

A 20% tax on crypto gains is not yet a final decision. The government representative stated:

“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.”

If the law comes into effect, the National Tax Service (NTS) — the Korean tax authority — will immediately impose a tax on gains from digital asset trading.

Bithumb Taxation Case

By the way, NTS has already started taking gains earned by foreigners from crypto trading for other income. Besides, the bureau has been collecting taxes indirectly through crypto exchanges. For example, in November 2019, NTS claimed that the country’s largest exchange Bithumb Korea would have to pay $69.2 million withholding tax on its foreign customers.

This claim was quite controversial as cryptos are not yet legally recognized currencies in Korea. Under local tax laws, those subject to taxation can withhold taxes on any income incurred by foreign residents from selling assets in Korea. But NTS categorized cryptocurrency trading of foreigners as miscellaneous income. The agency recognized capital gains from crypto trading as ‘assets’.

In response, Bithumb Korea has decided to take legal action against the withholding tax.

Crypto Taxation in Other Parts of the World

When it comes to cryptos, their regulation is a serious topic. Taxation rules are no exception. And each country is trying to find its own approach to crypto taxes.

For example, the U.S. Internal Revenue Service (IRS) categorizes cryptocurrency as ‘property’, or a capital asset, making it taxable in its jurisdiction as capital gains. Therefore, U.S. taxpayers should report to IRS when selling, converting, paying, donating, and earning cryptos as income.

In Canada, its Financial Transactions and Reports Analysis Centre mandates crypto exchanges to report all suspicious transactions and maintain records.

Australia taxes cryptocurrency considering the usage and the manner of obtaining the cryptocurrency. Cryptocurrency acquired and used for personal use is not subject to taxation.

In Japan, cryptos are ‘commodities’, and Japanese citizens pay income tax, company tax, and capital gains tax on crypto transactions.

Share:

Related Articles

Bithumb Lists Ethena (ENA) in KRW Market with Airdrop Event

By February 25th, 2025

Bithumb added Ethena ENA to the KRW market, with trading volume rising over 100% despite the token’s recent price decline.

Crypto Exchange Trading Volume Surged in 2024 but Remains Below 2021 Peak

By February 12th, 2025

Crypto exchange trading volume reached $18.83 trillion in 2024, rising 134% from 2023, with Binance leading and Crypto.com growing rapidly.

CEXs Will Be Required to Report Crypto Transactions to IRS This Year for First Time

By January 16th, 2025

The new IRS Form 1099-DA aims to streamline cryptocurrency tax compliance starting in 2026, but reporting for decentralized platforms will not begin until 2027.

Exit mobile version