- South Korea prepares to begin taxing 20% on cryptocurrencies from the 1st of January, 2022.
- The tax will be implemented when profits exceed 2.5 million won while gains made below this will be free from tax.
- 38,000 citizens have signed the petition to protest the proposed tax regulation.
- If the number of petitions reaches 200,000, it will elicit an official response from the South Korean government
South Korea’s Ministry of Economy and Finance has declared that all profits made from the trade of crypto-currencies like Bitcoin and Ethereum will be subject to taxation. A 20% figure has already been proposed by the government and it is expected that the tax reform will be implemented from January 1, 2022.
South Korea’s Proposed Tax on Cryptocurrencies
The Korean Herald reported that the ministry of Economy and Finance has unveiled plans to tax all profits on crypto-currency trading starting on the 1st day of January 2022. However, the tax will only apply to profits exceed 2.5 million won which is about $2,300. The proposed tax on crypto-currency is fixed at 20%.
This new legislation by the South Korean government has been met with stiff opposition from the South Korean citizenry. Already 38,000 citizens have signed a petition against the proposed tax plan.
If the number of petitions reaches 200,000 signatures, it will force the hand of the South Korean government to reconsider and give an appropriate response. Since February 10th, the social media space of South Korea has been awash with citizens at the intended government’s regulations.
Before the announcement by the Ministry of Economy and Finance, the country has always made several attempts to regulate and tax the fledging crypto-currency industry since 2020.
The government took a step back following the massive backlash from lobbyists and supporters of bitcoin. After several consultations, it seems the South Korean regime is about to go ahead with the proposed 20% tax on crypto-currency exceeding $2,300.
Cryptocurrencies that are given as a gift or as an inheritance will also be subjected to the proposed tax plan. According to the Korean Herald:
In such cases, the price of the asset will be calculated based on the daily average pace for one month before and one month after the date of the inheritance of the gift.
On the Flipside
- The Mayor of Miami proposes to pay government employees in Bitcoin and other crypto-currencies
- Similarly, Andrew Yang, the mayoral candidate of New York has pledged to transform New York City into a hub for crypto-currencies
- The market capitalization of bitcoin hits $1 trillion, signifying a global acceptance of the crypto-currency.
South Korea and the Blossoming Cryptocurrency Trading Industry
South Korea has proven to be a key market for crypto-currencies as it is a popular investment choice for millennials and generation Z who consider it as an escape to financial freedom. A research study carried out by Quartz noted that over a third of South Korean workers have been actively investing in cryptos.
South Korea’s romance with the gaming industry has seen a rise in the crypto-currency culture as gamers use them to make micropayments Hangane, a Korean gaming company hit revenues of $93million million a year from micropayments.
Another reason for the booming cryptocurrency sector is as a result of the political uncertainty posed by neighboring North Korea. North Korea with its nuclear warheads and the totalitarian regime is a threat to its neighbors.
It recently launched a submarine ballistic missile which fueled the tension already brewing in the Asian continent. Since Bitcoin and cryptocurrencies are decentralized currencies free from the interference of intermediaries third parties and governments. Thus it is attractive to investors looking to maneuver the political tensions brewing in the north.