South Korea is set to enforce its upcoming crypto tax law in January 2022 instead of the earlier proposition of October 2021. This will give crypto stakeholders operating within its jurisdiction one more year to sort out in-house tax reporting infrastructure.
A South Korea local news agency dubbed ‘Yonhap’ reported yesterday that the National Assembly’s Strategy and Finance committee met on Nov 30 and agreed to include the amendment into the recently proposed tax code. Last week, the committee had raised this suggestion, and now it seems that there is consensus on the date of implementation.
This piece of legislation is expected to capture South Korea’s active crypto market in matters tax, an issue that remains complex for most jurisdictions. As we reported earlier, South Korea’s government’s tax code was finalized in July and was awaiting parliament approval.
Some of the pertinent highlights in this tax code are that crypto assets will be considered commodities, attracting a 20% income tax. However, this will only apply to above 2.5 million Korean Won ($2,000).
Other than crypto trading activity, the tax code also captures gains from mining and income attributed to ICO’s. While it is a financial reprieve for the government, some stakeholders believe that smaller players will be forced out given the activity in South Korea’s crypto markets.
Notably, South Korea had already begun intense crypto oversight, especially when it comes to KYC and AML practices by exchanges. The country legalized crypto trading in March this year, requiring that exchanges comply with the real-name trading account stipulations.
Meanwhile, they have taken a ‘watch first’ approach in the Central Bank Digital Currency (CBDC) space, with the digital Won test scheduled for next year. This initiative is currently in its second phase, where stakeholders are being consulted before token distribution rolls out next year.