Lawmakers from South Korea’s National Tax Service announced over the weekend that they might be taxing Bitcoin users in the near future.
Commissioner for the National Tax Service, Han Seung-hee, was responding to a question about a taxation plan for Bitcoin to which he responded that he was in the process of discussing the taxation of Bitcoin.
This follows the value of crypto currencies or virtual money surpassing the value of the Kosdaq. The Bitcoin price is currently at $5650 following an all-time high of over $6 000 in anticipation of another Bitcoin fork.
Han elaborated by saying that the department was already engaging with the Ministry of Strategy and Finance regarding VAT and tax, and in specific, gift tax. This specific tax may have to be supplemented, and using Bitcoin may open the door to the evasion of gift tax. New methods of taxation may have to be implemented to ensure this does not happen.
The commissioner was quoted saying that the process of making these decisions may be concluded soon. The department is allegedly monitoring cryptocurrency transactions.
It also came to light during the same event that Japan has declared that cryptocurrencies as “general assets” and eliminates taxes. It was made clear during the event that one may buy goods with Bitcoins but profits from these transactions may be taxable. The Japanese National Tax Agency said these transactions are “miscellaneous income.”
In the meantime, Koreans who hold Bitcoin are sitting on the edge of their seats in anticipation for the approval of the so-called “Bitcoin Regulation Act”. To date, the act has been submitted but no further action has been taken or any announcements made.
Han used Japan and the United States as an example of how to deal with the taxation of crypto currencies and said Korea has to follow suite.
In early September talks were held regarding crypto currencies in Korea that may be subjected to strict verification processes. This will not only impact investors but also exchanges. These exchanges will also be called upon to perform due diligence. Towards the end of last month, the South Korean government banned initial coin offerings (ICOs) following in the footsteps of China.