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South Korea Denies Crypto Taxation in the Country Right Now

South Korea Denies Crypto Taxation in the Country Right Now

The crypto market has always been haunted by taxation since the advent of 2018. Governments around the globe are trying to tame the wilderness and investors are hoping for flexible regulations.

Fortunately, few governments have cleared their outlook about the matter. Some of them have levied huge taxes over the crypto gains like Thailand while others have taken harsh decisions to demoralize investors like United States that has imposed capital gains taxes on every transaction within the crypto space.

However, it should be noticed that South Korea has been quiet about the whole issue even after being a hot spot for crypto enthusiasts.  Recently, a local publication named Chosun Ilbo reported that an unidentified high-ranking representative of South Korea’s ministry of finance stated that the government is planning to launch a ten percent tax over all crypto trades.

It stated, “We have already decided to tax profits from investments in cryptocurrency. The question is only how much time we should give investors and when to start implementing it.”

The article also claimed that the authorities will be providing a two-year window to crypto traders before the law gets completely active. But, it has turned out to be a mere speculation as the ministry of finance has denied the authenticity of the claims stating that it defies facts. The report from Chosun Ilbo is supported by articles from the past that informed that Korean authorities are planning to develop a crypto tax reform till June 2018.

Crypto believers from the country believed the publication as it dealt about a fair bond between regulators and investors.  But, it should also be noted that authorities classified bitcoin as an asset which removes the possibility of taxation.

The Suwon’s District Court noted, “It is not appropriate to confiscate bitcoins because they are in the form of electronic files without physical entities, unlike cash. […] Virtual currency cannot assume an objective standard value.”

The statement was part of the illegal pornography website case of December 2013 which involved 33-year-old Ahn. The investigation revealed that he had possessed 216 bitcoins through his illicit business conducts. Thus, the prosecution requested the judiciary to confiscate the number of bitcoins found under Ahn’s control.

Although 191 coins were eventually confiscated yet the case became fruitful for crypto supporters as the court addressed BTC as a traditional asset.

The decision is important as the Supreme Court of the country is second to only the Constitutional Court as per legislative powers. It should be noted that the statement is not legally binding, yet it carries a lot of weight. Till now, we have witnessed a lot of activities in relation to the subject. The Financial Supervisory Service (FSS) recently declared that the government is gearing up to alter the current regulations.  Last month, it was seen that the National Assembly of Korea is developing a license for domestic Initial Coin Offerings (ICOs).

It would be interesting see whether the authorities come up with heavier taxation or the investors are granted to take away 100 percent of their gains.

About the author

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Kim-Son Nguyen

Oncologist. Harvard, Stanford, Palo Alto Medical Foundation. Passionate about improving access to cancer care worldwide.

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