Novel Asset Class
The nature and classification of crypto-assets has posed a problem for government agencies around the world for the past few years as they were uncertain whether to consider them commodities, currencies or a novel asset class. As a result, this has made tax laws difficult to pinpoint.
South Korean Tax Laws
One of the earliest cultures to bloom in the world of crypto, South Korea has made a decision to implement a 20% taxation on crypto gains that exceed the 2,500,000 Won per annum (~$2,100).
This is in line with the previous proposal made earlier this year to consider gains generated from cryptocurrency trading as “other income”. As reported by Pulse at the time, a government official had stated: “The finance ministry is yet to finalize its direction but it surely has become more likely for the income from virtual asset trading to be labeled as other income, not as gains from transfer of capitals like real estate properties.”
In March of this year, South Korea had also cleared up regulations on cryptocurrencies for businesses, which was based on the FATF’s guidance. This required crypto-related businesses will need to comply with Anti-Money Laundering (AML) and Know-Your-Customer (KYC) rules imposed. The latter will include verification of customers’ identities as well as reporting transactions. This all is applicable to exchanges, blockchain-related projects that have raised capital through a token offering and even wallet service providers.