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20% tax on cryptocurrency transactions is a possibility

Jan 21,2020
Korea’s finance ministry has been considering imposing a 20 percent tax on income on cryptocurrency transactions, officials said Monday.

The Ministry of Economy and Finance has recently ordered its office of income tax to review a taxation plan for cryptocurrencies, according to officials. Previously, the ministry’s office of property tax had reviewed the plan.

The move raised speculation that the government may categorize gains from cryptocurrency trading as other income, not capital gains.

A government official, who spoke on the condition of anonymity, said the finance ministry has not finalized its plan to tax cryptocurrencies.

But, there is a possibility that the government may impose a 20 percent tax on cryptocurrencies, the official said.

Currently, other income includes gains resulting from lectures, lottery purchases and prizes.’

In November last year, South Korea’s tax agency imposed 80.3 billion won ($69.2 million) in withholding tax on Bithumb Korea.

Vidente, the largest shareholder of Bithumb Holdings, said in a regulatory filing that it confirmed the decision by the National Tax Service (NTS) on withholding tax of foreign customers.

Bithumb Korea -- Korea’s largest cryptocurrency exchange, operated by Bithumb Holdings -- plans to take legal action against the withholding tax, according to Vidente.

Under the law, an employer paying salary, pension and other income is required to withhold income tax at the time of such payment and to pay it to the government.