South Korea is planning to impose a 20% tax on crypto incomes

South Korea Crypto Tax

While it remains unknown what decision the officials might bring, in the end, this development might mean that crypto-based profits might be categorized as 'other income.' If this comes to pass, the country's National Tax Service (NTS) would be able to tax crypto gains itself.

Reported by local news outlet Pulse, the income tax department at the Ministry of Economy and Finance already began to review taxation plans for gains from virtual assets transactions. The income tax department, on the other hand, oversees taxes made on earned income, annuity incomes and other kinds of incomes.

A government official, who spoke on the condition of anonymity, said the finance ministry has not finalised its plan to tax cryptocurrencies. Under local tax law, other incomes include honorarium income, prize winnings such as money received from winning lottery and others that are infrequent, unusual and significant in size. The total amount has a 60/40 split, with the 40% charged the 20% tax.

But, there is a possibility that the government may impose a 20 per cent tax on cryptocurrencies, the official said. The 60% is considered tax-deductible. Once labeled as other income, the Korean tax bureau will be allowed to impose tax on gains from virtual asset trading immediately.

Following a previously covered news from Coinfomania concerning South Korea's preparation of a bill to tax profits made from cryptocurrencies, crypto traders and investors in South Korea will now have to pay a 22% on their trades including the ones at a net loss.

The NTS issued a withholding tax bill for $69.1 million on the crypto exchange firm in November 2019.

Bithumb Korea - South Korea's largest cryptocurrency exchange, operated by Bithumb Holdings - plans to take legal action against the withholding tax, according to Vidente. The NTS pushing ahead with the tax imposition is baseless and groundless, especially since it is still awaiting the ministry's opinion on the same matter is sought again. This payment is done by the income payer and not the recipient.

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