South Korea will collect 20% taxes on crypto earnings and treat them as “other profits” instead of capital gains.
In what would represent a clear change of position, the South Korean government plans to collect taxes on profits in cryptocurrency transactions.
A few weeks after the government said they would not tax the profits obtained from digital assets, a new report indicates that it could classify cryptocurrency gains in the same category as lottery earnings and, therefore, tax them with 20% .
South Korea will collect income taxes in crypto
Pulse news media recently said that the Ministry of Economy and Finance of the Asian country had recently ordered its income tax office to review a cryptocurrency tax plan. Pulse also said that according to “multiple” government sources, the ministry’s property tax office had reviewed the plan.
According to reports, there has been speculation among Korean experts about whether the government will treat crypto-commerce earnings as “other income” and not as “capital gains.”
An anonymous government official said:
“The Ministry of Finance has not yet taken a direction, but most likely, crypto-commerce revenue is labeled as other income, rather than capital gains.”
The same reports reveal that other income in Korea is subject to a 20% tax on 40% of the total “other income”. The remaining 60% is tax deductible.
South Korea has been planning to collect taxes on earnings in cryptocurrencies for more than a month. Once you finally decide to tax it as “other income,” the Korean tax authority, the National Tax Service (NTS), will be allowed to tax profits in crypto with immediate effect.
Even the NTS has already started labeling profits earned by foreigners from the crypto trade as “other income” and has indirectly collected taxes through crypto exchanges.
A recent example could be the blow to the Bithumb exchange with a withholding tax of more than USD $68.9 million. Bithumb, however, moved to court seeking to overturn the decision.
The decision of South Korea is another one in the list of countries that have decided to move towards the collection of income tax in crypto.