South Korean Government Decides to Exempt Tax of Cryptocurrency Profits

The South Korean government has a New Year 2020 bonus for all crypto investors in the country. South Korea’s Ministry of Finance and Strategy recently announced that it has decided to exempt taxation on the earnings made through cryptocurrency trading or investing.

This comes as a surprise move from South Korea as a majority of the government regulators across the globe are going hard on cryptocurrency taxation. Although with the latest exemption under the existing tax law, the South Korean government is currently reviewing international trends and might bring cryptocurrency taxation ahead in future.

The ministry said: “We are preparing a taxation plan for virtual assets by comprehensively reviewing the taxation of major countries, consistency with accounting standards, and trends in international discussions to prevent money laundering”.

The ministry also stated that investors can expect a revised bill in the first half of 2020, this year. But before the new tax law is amended, the ministry will work on other major decisions.

First of all, the ministry will be working on a precise definition of crypto assets. Secondly, it will also decide whether profits derived from trading crypto assets should be categorized as capital gains.

The South Korean government also plans to have the right infrastructure of obtaining trading records from crypto exchange and trading platforms. Note that the Japan government has already brought regulations for crypto exchanges asking them to get registered with the central agency.

If a local crypto trading platform fails to register with the Japanese government, it won’t be allowed to do business anymore in the country. The South Korean government is likely to work on a similar structure. This will help them to define the legal status for cryptocurrencies before adding them in the tax structure.

But what about foreign traders trading on Korean crypto exchanges. Local news publication Korea Joongang Daily reported that the ministry identifies foreign traders’ crypto gains as miscellaneous income. On the other hand earning from stock trading and real estate are regarded as capital gains.

“Capital gains tax is collected for every deal, but tax for miscellaneous income is collected once each year. Putting income from cryptocurrency trades under capital gains would have required the government to receive every trading record from domestic exchanges,” wrote the publication.