Hong Nam-Ki, the Finance Minister of South Korea, has announced plans to tax cryptocurrency income. Hong Nam-Ki revealed the news during a parliamentary finance committee meeting held on June 17, 2020.
Although the exact taxation plan has yet to be finalized and made public, Hong Nam-Ki told parliamentarians that the Ministry of Finance “has continued to realign its tax system to reflect changes in market conditions, but it is especially working to refine its list of taxable items and types of tax this year.”
Earlier this year, South Korean newspapers reported that a 20% tax on cryptocurrency income was being considered by Hong Nam-Ki and the Ministry of Finance. Initially, tax experts in the country speculated that profits from cryptocurrencies would be classified as other income and would be subject to traditional taxes on capital gains.
In response, the Korean Tax Policy Association suggested the government implement a two-stage taxation structure. This framework would begin with a low-level trading tax on cryptocurrency that would eventually give way to a more formal cryptocurrency income tax. It remains unknown if this structure will ultimately be adopted.
The South Korean Minister of Finance also mentioned that the government is engaged in international talks on creating a global digital tax structure. Hong Nam-Ki hasn’t been shy about his support for global crypto taxes.
While Hong Nam-Ki’s ministry would benefit from taxing foreign firms operating in South Korea, he is well aware that South Korean companies would be subject to foreign taxation as well.
Earlier this year Bithumb, the popular South Korean cryptocurrency exchange elected to litigate an $80 billion won tax bill from the National Tax Service. Bithumb has paid the bill, but contends that bitcoin doesn’t qualify as an asset according to the way current laws are written.