The government of South Korea is planning to charge a 20% tax on income from cryptocurrency transactions.
The country’s Ministry of Economy and Finance recently ordered its office of income tax to review a crypto taxation plan, local news outlet Pulse reported Monday, citing “multiple” government sources. Previously, the ministry’s office of property tax had reviewed the plan.
This change has reportedly raised speculation among Korean experts that the government will treat crypto trading gains as “other income” and not as “capital gains.”
“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,” an anonymous government official told Pulse.
Other income in Korea is subject to a 20% tax on 40% of total other income, and the remaining 60% is tax-deductible, per the report.
South Korea has been planning to levy taxes on crypto gains for over a month now. Once finalized as other income, the Korean tax authority, the National Tax Service (NTS), will reportedly be allowed to tax crypto gains with immediate effect.
The NTS has already started labeling gains earned by foreigners from crypto trading as other income and has been collecting taxes indirectly through crypto exchanges. The authority recently hit Bithumb exchange with a withholding tax of over $69 million. Bithumb, however, has moved to court to nullify the tax.