South Korea Finance Minister: Taxing Cryptocurrency Gains is 'Inevitable' Starting Jan 2022
On Tuesday, Hong Nam-Ki, South Korea’s finance minister, stated that the government is on course with the proposal to introduce capital gains tax on crypto trading starting next year. “It’s inevitable, we will need to impose taxes on gains from trading of virtual assets,” Hong stated during a news conference on Tuesday. Hong’s answer came after a question on whether there will be further delays on the tax to allow the government to have full and structured oversight over the crypto sector. The proposed tax was originally set to be introduced in October this year but has since been postponed to January next year. According to a report by Reuters, capital gains taxes will be imposed for any yearly gains exceeding 2.5 million won ($2,253) of crypto trades. The government expects to impose the gains tax at a rate of 20%. Additionally, Hong described cryptos as “intangible assets,” saying that it was wrong to call them currencies. The head of Korea’s finance sector also urged investors to remain vigilant as there is a hike in unauthorized fundraisings and fraud using digital tokens. He urged investors to make wise investment decisions when it comes to digital tokens. South Korea has been keen to regulate the crypto industry over the last few months. The recently enacted financial reporting rules came into effect on March 25. Failure to adhere to these rules will attract a $44,000 fine or a jail term of not less than five years. At the start of this month, South Korea’s Financial Supervisory Services (FSS), in conjunction with other financial sector regulators, agreed to come up with several measures to monitor crypto transactions closely. Earlier this week, the country’s Financial Services Commission (FSC) chair, Eun Sung-soo, reminded the commission’s employees to declare their crypto investments by May 7. South Korea also has a law that requires all the crypto exchanges to be registered as Virtual Asset Service Providers (VASP) with the FSC and indicate how their systems prevent money laundering. However, Eun stated that no single exchange has adhered to this requirement by now, which means that they might be closed when the law is enforced in September.
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