Crypto Tax to Take Effect Next January...Industry Says Standards and Infrastructure Need to Be in Place Before Implementation
TECHWORLD ·
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With crypto asset taxation set to take effect next January, the industry said tax standards and tax infrastructure need to be put in place.
The United States and the United Kingdom levy capital gains taxes on profits from crypto asset transactions, while Japan, in principle, classifies transaction income as miscellaneous income and taxes it accordingly.
The government said it will maintain the principle of taxing income where it is earned while comprehensively reviewing market changes and institutional conditions.
With crypto asset taxation set to take effect next January, the industry is calling for a review of tax standards and the tax infrastructure. According to an industry announcement on the 21st, the rapid growth of the crypto asset market and the diversification of trading methods have raised the need to supplement the existing tax framework.
Countries around the world are pushing ahead with tighter regulations while also pursuing reforms to crypto asset taxation. Some countries already impose crypto asset taxes.
The United States and the United Kingdom levy capital gains taxes on profits from crypto asset transactions. Japan, in principle, classifies income from crypto asset transactions as miscellaneous income and taxes it accordingly.
South Korea is moving to impose crypto asset taxes. The country's crypto asset tax system was established with the revision of the Income Tax Act in 2020, and income from the transfer or lending of crypto assets is classified as other income. A tax rate of 20% applies to annual income exceeding KRW 2.5 million, and crypto asset businesses withhold tax on such income earned by nonresidents and foreign corporations.
In South Korea, the implementation of crypto asset taxation has continued to be delayed even after the revision of the Income Tax Act. The implementation date has been postponed three times. The delays have been attributed to a lack of tax infrastructure and inadequate investor protection systems.
As the January implementation approaches, the industry is emphasizing the need for reasonable tax standards. The same argument was raised at an on-site discussion on crypto asset taxation held by the Ministry of Economy and Finance on the 20th.
Industry officials who attended the discussion requested clear tax standards and also called for sufficient preparation time. They said that, as trading methods are becoming more diverse and more complex, measures are needed to remove uncertainty for taxpayers and businesses.
Crypto asset industry participants explained that trading methods are becoming more diverse and more complex as the market develops. They also said it is necessary to remove uncertainty for taxpayers and businesses by establishing clear tax standards.
They also said that businesses need time to prepare systems for submitting tax data and verifying them, and that fairness in taxation should be considered for users of overseas exchanges. They also said domestic market conditions and the global policy environment need to be considered comprehensively.
Experts in academia agreed on the need for reasonable tax standards, while saying that when establishing those standards, changes in the system resulting from the enactment of the Digital Asset Basic Act, which is currently under discussion, should also be taken into account.
Hoon Park, a professor at University of Seoul, noted that major overseas countries, including the United States, the United Kingdom, and Japan, are already implementing crypto asset taxation. Hoon Park, a professor at University of Seoul, pointed out that domestic crypto asset taxation has been deferred three times. He then argued that a comprehensive roadmap is needed for the implementation and stabilization of a reasonable tax system.
The government said it intends to maintain the principle of taxation. It also said it will comprehensively review market changes and institutional conditions.
Dae-young Kwon, first vice minister of the Ministry of Economy and Finance, stressed that the principle of taxing income where it is earned must be respected. Dae-young Kwon, first vice minister of the Ministry of Economy and Finance, said there is a need to build tax infrastructure and a market discipline framework at the same time. He also said the government will comprehensively review preparations, including conditions for information exchange between countries, tax standards by transaction type, and filing convenience. In addition, he said the government will fully review industry opinions before consulting with relevant ministries.
With only about two months left until crypto asset taxation takes effect, the industry's demands and concerns have become clear, and to prevent market confusion afterward, it is urgent for the government to quickly establish effective tax infrastructure.
Source: TECHWORLD · Kim Hye-jin
Original: https://www.epnc.co.kr/news/articleView.html?idxno=408527
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Source: TECHWORLD
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