South Korean government is setting new tax for cryptocurrency income this year. After Japan, the country might be the second in Asia to apply tax on cryptocurrency assets.
South Korea is one of the biggest cryptocurrency markets in the world. Currently, it is home to the world’s leading exchange as well as some breakthroughs in a cryptocurrency wallet. Because of it, it is only fitting that the government set official rules for the taxation system.
According to Coindesk, the country is considering a 20% tax for crypto.
Meanwhile other countries’ taxation authorities see cryptocurrency as an asset of economic value. They impose capital gains taxes on cryptocurrency trading profits.
The U.S. National Tax Service (IRS) has already announced a detailed plan to deal with taxing cryptocurrency. According to the IRS’s 2019 announcement, the taxation criteria have two kinds. They are short-term investments and long-term investments based on one year.
For short-term investors, the tax levied from 10 percent to up to 37 percent by including cryptographic money returns in the overall revenue. But if owned for more than a year, it is a long-term capital gain. Thus, it taxes 0 percent, 15 percent, and up to 20 percent. If the long-term investor’s return is between $20 and $2 million, it will have to pay an additional 3.8% investment income tax at the 20% tax rate.
The cryptocurrency tax in Europe
In the case of the European Union, it has not enacted a special law regarding the taxation of cryptocurrency. Now each country has a policy of levying virtual currency in accordance with its own tax code.
The HMRC, the UK’s taxation authority, defined in its policy report in December 2018. It said the tax is distinct from the ‘money used as a means of payment and settlement for cryptocurrency.
There are two individual cryptocurrency transactions. Financial transactions or investment transactions based on the frequency and behavior of transactions. While in financial transactions, a gain on sale is levied as a personal income tax. And if classified as an investment transaction, it is subject to taxation on capital gains.
Continue reading the Cryptocurrency Tax Around the world in Part 2.
