By Kim Yoo-chul
The Ministry of Strategy and Finance plans to impose taxes on cryptocurrency operators in Korea this year, the ministry said Monday. The rate is expected to top 20 percent.
"Virtual money exchanges will have to pay taxes. But we have yet to decide the exact tax rates as we are in talks with the National Tax Agency," a ministry official said.
He added the government reached a consensus to levy corporate and other taxes on exchange operators during the first half of this year.
All companies reporting more than 20 billion won have to pay 22 percent and 2.2 percent of corporate and local income taxes out of their revenues under the relevant laws. But the rules were not applied to exchanges.
If the tax scheme starts as planned, Korea will join the United States, Singapore and Australia in having a tax treatments plan in place for digital token transactions.
Bithumb, a leading domestic cryptocurrency exchange operator, is expected to pay about 60 billion won in corporate and local income taxes according to the plan. Bithumb is estimated to have chalked up earnings of more than 300 billion won last year.
The exchange had generated 49.23 billion won in earnings on 49.27 billion won of sales for the first seven months of last year.
But some say the government should define "cryptocurrency" for tax purposes before imposing any tax treatment. Initially, the government said crypto-assets are not financial products or currencies eligible for taxation.
"There's no specific provision for digital assets. The government will have to consider if it wants to give the meaning of currency to digital currencies or to treat them as assets. For example, the U.S. treats cryptocurrencies as property for tax purposes and therefore they are subject to capital gains tax," said Lim Hye-yoon, an analyst at Daishin Securities.
The Ministry of Strategy and Finance plans to impose taxes on cryptocurrency operators in Korea this year, the ministry said Monday. The rate is expected to top 20 percent.
"Virtual money exchanges will have to pay taxes. But we have yet to decide the exact tax rates as we are in talks with the National Tax Agency," a ministry official said.
He added the government reached a consensus to levy corporate and other taxes on exchange operators during the first half of this year.
All companies reporting more than 20 billion won have to pay 22 percent and 2.2 percent of corporate and local income taxes out of their revenues under the relevant laws. But the rules were not applied to exchanges.
If the tax scheme starts as planned, Korea will join the United States, Singapore and Australia in having a tax treatments plan in place for digital token transactions.
Bithumb, a leading domestic cryptocurrency exchange operator, is expected to pay about 60 billion won in corporate and local income taxes according to the plan. Bithumb is estimated to have chalked up earnings of more than 300 billion won last year.
The exchange had generated 49.23 billion won in earnings on 49.27 billion won of sales for the first seven months of last year.
But some say the government should define "cryptocurrency" for tax purposes before imposing any tax treatment. Initially, the government said crypto-assets are not financial products or currencies eligible for taxation.
"There's no specific provision for digital assets. The government will have to consider if it wants to give the meaning of currency to digital currencies or to treat them as assets. For example, the U.S. treats cryptocurrencies as property for tax purposes and therefore they are subject to capital gains tax," said Lim Hye-yoon, an analyst at Daishin Securities.
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