• There will be no postponement of the taxation law; South Korea will begin taxing cryptocurrency gains in 2022

  • As South Korean laws become more stringent, tax filings in the country will include crypto earnings beginning January 1, 2022, according to local reports. Previously, South Korean authorities considered delaying the tax code until January 1, 2023.

    Noh Woong-rae, a member of the ruling Democratic Party, has stated that the country’s taxation plans must be postponed until a sufficiently prepared infrastructure is in place. A recent government meeting, however, reportedly decided otherwise.

    The issue of “coin-taxation” is also a source of contention among political parties. The majority Democratic Party wanted the legislation to go into effect in 2023, but the Ministry of Strategy and Finance wanted it to go into effect sooner.

    According to a local official quoted in the media,

    “There was some debate about whether it was better to raise the tax first before putting in place proper safeguards to protect them.”

    In the future, virtual assets will be subject to a 20% income tax on transfer gains. However, a minimum taxable amount of 2.5 million won will be excluded. For example, a profit of 3.5 million won from buying and selling cryptocurrencies in 2022 will be subject to a 20% tax on 1 million won, resulting in a tax of 200,000 won. It will be required to be reported the following year.

    Previously, it was reported that there was some investor opposition, with one investor saying,

    “We will begin paying taxes without the benefit of any institutional supplements.”

    Crypto is estimated to be owned by 3.8 percent of the country’s population, or more than 1.9 million people. According to the most recent survey, the average South Korean trader invests more than $6000 in the asset class. Which is more than the exemption limit of 2.5 million won, or $2100 if profits are included.

    The guidelines come amid a struggle for survival among South Korean cryptocurrency exchanges. Upbit, Bithumb, Coinone, and Korbit met the initial set of requirements as the National Assembly continues to debate the compliance requirements of crypto businesses. Upbit recently announced new KYC and verification standards, and other exchanges are expected to follow suit.

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