South Korea Contradicts Claims of 10% Tax on Cryptocurrency Trading Profits

The South Korean government’s Ministry of Strategy and Finance has denied recent rumors that states authorities are planning to impose a 10% capital gains tax on cryptocurrency profits.

On June 22, domestic media outlet Chosun mentioned a ‘high-ranking government official’ to state that the government was planning to impose a uniform10% tax rate on profits from cryptocurrency profits regardless of the size of the investment.

“We have already decided to tax profits from investments in cryptocurrency,” the government official was quoted as stating. “The question is only how much time we should give investors and when to start implementing it.”

The government terms those profits as “other income”, according to the rumors, indicating that the government did not consider cryptocurrencies as financial or investment products.

According to domestic taxation laws, ‘other income’ applies to irregular or a temporary income in contrast to an earned income. This rumored 10% tax was claimed to part of a revised tax bill this year with a one to two year grace period before coming into effect.

Yet, the Ministry of Strategy and Finance- the government agency that runs its financial policies- has denied the reports, stating it “is different from the fact.”

There are further reports that the possibility of taxation will ‘take a considerable period of time”, even if the government decides to mandate taxes on cryptocurrency trading profits. It will be essential to create a legal system to source details of any relevant taxation data from domestic cryptocurrency exchanges prior to levying a tax framework, according to the report.

Notwithstanding earlier rumors of a tax plan that was predicted to be announced in June, the tax division of the Ministry of Information and Communication is expected to suggest a revision of the tax bill at the National Assembly in August this year. The South Korean government has particularly been considering taxation frameworks in other countries such as Japan, Germany, and the United States, among others.