South Korean private sector members recently discussed a crypto-related taxation bill meant to establish capital gains tax for cryptocurrencies. During these discussions on July 13, members indicated crypto gains taxes could rise as high as 20%.
Proposed amendments to existing laws also plan to classify cryptocurrencies as “goods,” rather than currencies.
Lawmakers have established that virtual assets can be considered as electronic certificates of economic value that can be traded electronically. However, when the transactions are for sales purposes, it could be viewed as an asset.
A South Korean court referenced Bitcoin (BTC) in their judgement, stating:
“Until now, virtual assets have been recognized only as a function of currency and have not been subject to income tax, but recently, virtual assets (like Bitcoin) are increasingly being traded as goods with property value. Considering various conditions, such as the recognition of intangible assets with property value, the necessity of taxation, and the recognition of the property value of virtual assets are being raised at the same time.”
The article also states that crypto trading withholds capital gains tax for those who do not reside in the country.
Figures from South Korean financial watchdog, the Financial Services Commission show an average of 1.33 trillion won ($1.10 billion) were being traded per day using crypto. Additionally, an average of 7.609 billion ($6.33 million) won was traded between January – May of 2020.
Korean Yonsei University economist, Sung Tae-yoon, warned that the decision to tax crypto capital gains in South Korea may slow the technology’s emerging market.