South Korea May Become First Country in World to Tax NFT

South Korea will become the first country in the world to tax non-fungible tokens (NFT). The country has already introduced a 30% tax on cryptocurrency transactions, which will take effect from 2022. The booming NFT sector is now also targeted by the Financial Services Commission (FSC), according to the Korea-Herald.

The regulator plans to review the proceeds from the sale of NFTs in accordance with the Act on the Reporting and Use of Specific Financial Transaction Information. According to this law, all profits from the purchase or sale of virtual assets are considered “other income” and, therefore, are subject to taxation.

According to the law, owners of virtual assets, any certificates that have economic value and are available for electronic transaction, must pay 20 percent tax on the income that exceeds 2.5 mln won ($2,102) from selling the assets, such as NFT artworks of a famous artist.

Like most new tax rules, this rule has met with resistance in South Korea. The country's treasury does not approve of the FSA's NFT valuation as a virtual asset. Finance Minister Hong Nam-ki said NFTs are not yet a virtual asset. Conflicting opinions are likely to cause a lot of confusion to the detriment of the crypto market.

Image: CryptoSlate