With the South Korean government planning to include taxation on cryptocurrencies in its tax reform plan for next year, tax experts pointed out at a seminar held on Feb. 21 that a low level of trading tax should precede gradual transfer income tax application.
The government is scheduled to announce its tax reform plan in the second half of this year.
Experts from the Korean Tax Policy Association said at the seminar that profits derived from cryptocurrency trading should be subject to transfer income taxation. They noted that the transfer income defined in the Income Tax Act must include crypto-assets through prior legislation.
The Korea Blockchain Association made the same proposal. “Still, related laws are still absent and the taxation infrastructure is still insufficient to cover cryptocurrencies and, as such, some supplements need to be added on the expense calculation side,” it explained.
The Korea Blockchain Association pointed out that the expense calculation improvement should start from cryptocurrency acquisition costs so that transfer income taxation can be possible after trading tax imposition. “Acquisition costs need to be clarified for transfer income tax imposition, but cryptocurrency acquisition costs are hard to clarify because the currencies are traded in various exchanges and related information and data are restricted,” it said, adding, “Infrastructure needs to be established after case-by-case trading tax imposition.”