The National Assembly Strategy and Finance Committee of South Korea approved new amendments to the tax law. Furthermore, it postponed the imposition of income crypto trading tax until January 2022, local news agency Yonhap reported today.
The tax law was initially to take effect on October 1, 2021. Still, the commission argued last week that local cryptocurrencies need more time to build infrastructure that fully complies with the new rules; therefore, the committee suggested delaying the changes.
LawMakers Approved the Delay
During a rally on November 30, lawmakers formally approved the postponement as per the report.
In January 2022, the crypto trading tax will be at 20% on its revenue. However, it only applies if merchants’ profits exceed 2.5 million Korean earned (approximately $2,000) in one year. All income related to crypto trading above this threshold will be subject to annual taxation.
Currently, as part of the implementation of the Special Payments Act, South Korean cryptocurrencies must also complete procedures before September 2021 to know their customers. The changes also include a ban on anonymous cryptocurrencies.
As previously reported, South Korea’s Ministry of Strategy and Finance proposed a tax on profits from crypto and fiat transactions in mid-May. This offering also includes tokens sold by crypto mining organizations and through initial coin offerings (ICOs).
More on The South Korean Crypto Trading Tax
Crypto tax has become an increasingly hot topic of late as digital assets gain popularity in society. Recently, an expert spoke before a US congressional committee and described the cryptocurrency tax as a nightmare because of its complexity.
The Ministry of Economy and Finance has proposed a 22% tax – including 2% local income tax – on cryptocurrency gains of over KRW 2.5 million ( $ 2,000). If approved by the Korean National Assembly, the tax regime will take effect in October 2021. The new tax rules also apply to non-resident and overseas companies that trade on the Korean stock exchange.
Merchants must keep accurate records of their crypto activity and file them with the National Finance Ministry at the end of the tax year on May 31. Profits get based on the difference between asset price acquired at the purchase time and at the sale time. If the trader does not know the purchase price, it gets assumed that it will get obtained.
The government says new tax rules are needed because many other countries have also introduced their own cryptocurrency rules.