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National Tax Service unprepared to collect tax on crypto gains: lawmaker
National Tax Service (NTS) Commissioner Kim Dae-ji speaks during a parliamentary audit of the tax agency at the National Assembly on Yeouido, Seoul, Friday. Yonhap
By Lee Kyung-min
By Lee Kyung-min
An opposition lawmaker criticized the National Tax Service (NTS) for its lack of an administrative infrastructure to collect tax on gains from cryptocurrency trading, during a National Assembly Economy and Finance Committee audit of the tax agency Friday.
Rep. Yoo Gyeong-joon of the main opposition People Power Party questioned the feasibility of the government's plan to impose a 25 percent tax on gains of over 2.5 million won ($2,091) in crypto transactions over a one-year period set to take effect in January next year.
Yoo asked NTS Commissioner Kim Dae-ji for his view on non-fungible tokens (NFTs) that are widely recognized as digital assets around the world, to which Kim failed to give a clear answer.
“How can you say the authorities will be able to collect tax on crypto gains when the finance ministry and Financial Services Commission have yet to reach an agreement over whether NFTs are virtual assets or not? The public will not accept the government's steamrolling tax gains, if there is no clear definition for whether assets they own are taxable or not,” Yoo said.
The lawmaker's argument is backed further by an opinion by the FSC provided in response to his inquiry on whether the financial regulator recognizes NFTs as digital assets thus making gains from trading them taxable.
“I recently sought opinion from the FSC, and an official in charge of digital asset regulations told me that his team was struggling with the issue,” Yoo said.
The criticism concerning the apparent lack of clear tax guidelines was first raised during the committee's audit of the finance ministry two days earlier.
When Yoo asked a similar question to Deputy Prime Minister and Finance Minister Hong Nam-ki, he also failed to give a clear answer.
“We are receiving requests that the tokens should be recognized as virtual assets. The government is reviewing whether to accept them,” Hong said at the audit.
The answer prompted Yoo to criticize the ministry's plan further. “How can the government assert that taxation infrastructure is fully ready when the definition of taxable income has yet to be clarified with only three months left until the new law takes effect? Market participants including investors and crypto exchanges are confused,” he added.