The Ministry of Finance of South Korea announced today the “Tax Law Amendment 2020” targeting the enthusiastic trading of the local cryptocurrency market. The government intends to tax investors when they make profits from transactions. The tax rate is 20% of the profits. Currently, there are no taxes on individual investors (South Korean residents and non-residents) and cryptocurrencies held by foreign companies.
According to data from the South Korean Financial Services Commission, the average daily trading volume of local cryptocurrencies is about 1.33 trillion won, equivalent to 8.6 billion yuan. The government believes that it is necessary to start taxation now, and other countries such as Japan, the United States, and the United Kingdom have also imposed taxes on the proceeds of cryptocurrency. If the proposal of the South Korean Ministry of Finance is passed by the National Assembly before September 3 this year, the new tax system will take effect on October 1, 2021.
Under the new tax system, South Korean residents earn more than 2.5 million won per year from cryptocurrency-related transactions, which is equivalent to 16,000 yuan. They need to pay 20% of the income as tax, and this tax rate is the same as that of South Korea. The basic tax rates for other taxes are the same. As for non-residents and overseas companies, if they are trading on South Korean exchanges, the exchange will be responsible for deducting taxes from the investors and paying taxes to the customs when they make profits.
Earlier, the South Korean government has reported that it is studying and levying taxes on cryptocurrency transactions. Once the new bill is implemented, it will need to report the relevant benefits to the government every May. Currently, cryptocurrency is miscellaneous income in Japan, calculated in a progressive system, the tax rate is up to 55%. As for the UK tax rate is also 20%, but the income ceiling is 12,000 pounds.