South Korea parliament has officially postponed a private members’ bill that will start taxing profits from cryptocurrencies from January 2022, according to local media reports.
Rumors suggested last week that the plan was to extend the implementation date by three months from the initial October 2021 date, a move that has been advocated by lawmakers belonging to the country’s National Assembly.
The country’s legislative body said more time is needed to build the relevant tax infrastructure as local cryptocurrency exchanges claimed the lack of time to build their reporting system by the deadline.
The taxation will also apply to mining operations and income from ICOs, and the new laws proposed an amendment to classify digital assets as ‘commodities’ rather than ‘currencies’.
The South Korean government is set to announce the final details of taxing income generated from cryptocurrency transactions after years of discussion about the virtual asset that yet remains in a grey area.
Authorities Are Getting Tough on Crypto Taxes
The South Korean government plans to charge residents a 20 percent tax on crypto income, which is worth more than 2.5 million Korean won (about $2,000).
Although no specific taxation standards for crypto assets have been put in place, the finance ministry was reportedly considering re-classifying returns made on cryptocurrencies as a type of ‘other income’. This places crypto profits in the same category as those earned from lotteries, which has a 20 percent tax rate.
Despite the high tax tag levied on ‘other income’, it remains better than being taxed as a form of capital gains as it is currently treated, which calls rates of up to 42 percent.
Historically, South Korea is one of the hottest investing and trading markets for cryptocurrencies. However, authorities have been hesitant to regulate the virtual asset class, due to their belief that cryptocurrency regulation could lend legitimacy to the sector.
Separately, the central bank is taking a ‘wait-and-see’ approach over the issue of a government-controlled cryptocurrency, or a so-called central bank digital currency (CBDC), as of now.