South Korea officials are reportedly causing some confusion with the latest drafted legislation that will tax individual crypto profits. According to Cointelegraph, South Korea’s officials stated that under current law, the government cannot impose income taxes on individual profits that are from cryptocurrency transactions.
South Korea’s previous Ministry of Strategy and Finance confirmed it will levy taxes on virtual assets through a tax code revision bill, but at a later date. The officials further declared:
“In the case of a corporation’s virtual currency transaction, all transactions that increase the entity’s net assets are subject to taxation under the current law, so it is taxable, but it is practically impossible to produce tax revenue results by distinguishing only virtual currency transactions.”
The officials also noted that they are preparing measures to impose taxes on virtual currencies by reviewing cases of taxation by major countries, which is consistent with accounting standards, as well as trends, in international discussions of money laundering prevention.
Although the South Korean government it is holding off on imposing taxation on earnings from digital asset trading, legislation is in the works.reportedly does plan to create a bill that will address taxable cryptocurrency transactions by the first half of 2020.
The plans for crypto transaction taxes come just after the National Tax Service (NTS) of South Korea confirmed that it will be withholding taxes worth an estimated 80.3 billion Korean won (appr. $70 million) from digital asset trading platform, Bithumb. As previously reported, Bithumb Holdings’ largest shareholder, Vidente, which operates Bithumb’s Korea division, confirmed the withheld amount and noted that the tax would be imposed on the exchange’s overseas clients. The company’s stated:
“Bithumb Korea is planning to take legal action against the tax claim so the final payment can be adjusted in the future.”
The amount of tax to be withheld was determined by taking into account miscellaneous income, meaning irregular revenue sources such as lottery gain