South Korea plans to impose capital gains tax on cryptocurrency profits
The country’s Ministry of Economy and Finance says bill will be drawn up by mid-2020
The South Korean government is looking to impose taxes on capital gains from cryptocurrency transactions, according to government sources.
The country’s Ministry of Economy and Finance told the The Korea Times, that the bill to impose capital gains tax on crypto profits will be drawn up in the first half of next year and that it is pushing for the measure to be reflected in tax regulations.
A move to pass a related bill aiming to increase transparency in cryptocurrency trading is also in motion at the Korean National Assembly, although yet to pass committee level.
The purpose of this bill is to make trading less vulnerable to criminal activity such as money laundering. The bill would also require virtual currency exchange operators to identify traders and retain separate records for each trader.
Issues with this bill include the need for a more precise definition of what virtual assets are.
According to The Korea Times, the government's capital gains tax bill will go ahead regardless of the outcome of this related legislation.
Regarding capital gains tax, the South Korean government also needs to clarify if it will consider crypto-related gains as similar the type of gains coming from stock trading or real estate transactions.
If this is the case, the government needs to obtain trading records from cryptocurrency exchanges, to be able to levy taxes accordingly. This practice is already implemented in the US.
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