The government of South Korea is seriously considering imposing twenty percent (20%) tax on crypto gains by classifying the revenue generated from crypto trading under the category “lottery or prize-winning,” reports a local news outlet on Monday.
When the South Korean government made known its intentions of boosting its economy by incentivizing the cryptocurrency industry earlier this month and declaring that crypto gains would not be considered as taxable income, many traders suspected that this joyous moment might be short-lived. After all, the government was yet to offer clarity on the appropriate classification of the asset category.
Crypto gains in South Korea could be taxable after all
Today, it appears that the suspicions might be proved right sooner than anticipated. Multiple unnamed sources from the government confirmed today that the income tax department at the Ministry of Economy and Finance is reassessing its recent and not-so-stringent stance over gains accrued from trading in cryptocurrency. Earlier, it was under the review of the property tax department.
The recent revelation raises all the more suspicions that the crypto gains may no longer be treated as “capital gains” but rather categorized as “other income,” which in South Korea, attracts twenty percent (20%) tax on the forty percent (40%) of the total other income generated, making remaining sixty percent (60%) other income fully tax-deductible.
An unnamed source from the government told the local news media that the decision to label crypto gains as “other income” is being positively reviewed. In all likelihood, it will no longer be considered as capital gains like real estate properties.
Once approved, the country’s tax regulatory body, National Tax Service (NTS), which, in related news is currently contesting cryptocurrency exchange Bithumb’s allegations of wrongful tax penalties, will be able to tax crypto gains with immediate effect.
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