According to the Ministry of Economic and Finance, the South Korean government will subject to a tax rate of 20% on qualifying crypto transactions, which drew up an amendment following a change in the rules in 2020, according to reports. As per a recently published legislative notice, the crypto tax amendment is still to be agreed upon by vice ministers and the cabinet but is expected to be signed off into law by the end of the month.
The crypto tax increases to 25% for profits of 300 million won.
The crypto tax applies only to transactions with profits of over 50 million won, roughly equivalent to US$45,685. The rate of tax increases to 25% for profits of 300 million won (US$273,950) or more. The crypto tax plans were originally slated to come into force in the fourth quarter of 2021, with October previously mooted as a date for implementation. However, plans have now been pushed back to January 2022, following concerns from cryptocurrency exchanges. Crypto exchanges had flagged the original timeline as too ambitious, asking the government for more time to implement the technical infrastructure required to apply the tax charges.
The new time frame would give exchanges time to adjust to new compliance obligations.
The new timeframe for launch is designed to allow flexibility for digital currency exchanges to meet their new compliance obligations before they come into force. The cryptocurrency tax looks set to hit at a time of increased interest in digital currencies and other digital assets in South Korea. Traditionally a forward-thinking market for digital currencies, consumer use of digital currency and exchanges is already high by international standards. The sector continues to grow amid rallies in digital currency pricing.