South Korean Ministry of Economy and Finance has recently issued an amendment to enforce a 20% tax rate on cryptocurrency investors on annual profits of more than 2.5 million Won ($2,300), starting from 2023.
According to a report published in Asia Today, the country is also planning to implement a tax rate of 20% on capital gains made from stock market transactions but the minimum limit of annual profits is much higher, around 50 million Won, as compared to just 2.5 million won in case of cryptocurrency gains.
Finance Magnates reported in November about South Korea’s plan to delay the implementation of the crypto tax rule. The country originally planned to enforce the mentioned tax rule in October 2021 but the cryptocurrency exchanges operating in South Korea raised concerns about the limited time given by the Government to build an effective taxation infrastructure.
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New Cryptocurrency Rule
According to the newly introduced amendment, the tax authorities in South Korea will consider the higher amount of, either the market price or actual acquisition price at the end of every year, as the acquisition price to calculate gains and enforce the 20% tax rule. The recent initiative by the South Korean authorities to delay the implementation till 2023 shows that the government has addressed the concerns raised by local exchanges and politicians.
“We need to listen fully to the infrastructure and readiness of the (industry). I feel that the young people can react with greatness, and it is good to implement it quickly, but it is important to calmly take on the system while securing a considerable degree of sympathy,” the Democratic Party’s employment wing member said in a statement a few weeks ago.
South Korea has always been an important destination for leading cryptocurrency exchanges worldwide. The country has introduced several blockchain-based initiatives in the past to disrupt the fields of digital identity and blockchain voting through innovative technology.