South Korea Snubs Rumors of Charging Capital Gains on Cryptocurrency Profits

Following an unprecedented cryptocurrency craze last year in 2017, the South Korean government stepped-in to take several regulatory measures this year to control the crypto frenzy growing among its citizens.

Last week on Friday, June 22, a local news publication from South Korea - Chosun had sighted an high-ranking government official claiming that the South Korean government is working on levying a flat 10 percent tax on profits derived from cryptocurrency investments. The report claimed that the tax would be applicable on any size of profit made.

The government official was quoted saying: “We have already decided to tax profits from investments in cryptocurrency. The question is only how much time we should give investors and when to start implementing it.”

The report also mentioned that the government has decided to classify these profits as income from other sources and didn’t view digital currencies as financial or investment products. Under the local taxation laws of South Korea, ‘other income’ is considered as an irregular or temporary income unlike the regular source of income. Hence under the local laws, 10% will be considered according to the revised taxation bill this year.

However, snubbing off all these possibilities, the Ministry of Strategy and Finance – the government agency that oversees its financial policies has called this report to be rubbish claiming that “it is different from the fact”.

Another report from Business Korea mentions that the existence of these tax laws will ‘take a considerable [period of] time”, even if the government finalizes on having taxes on the crypto trading profits. The report further adds that for the new taxation laws to be in practice, it would be necessary to establish a legal system to source the details of relevant taxation information from the domestic digital currency exchanges.

Ahead this year in August 2018, the tax division of the Ministry of Information and Communication is likely to propose a new revision of the country’s tax bill. The South Korean government is reportedly studying taxations structures pertaining to digital currencies in other countries like Japan. U.S and others.