Taxation on Crytocurrency: Korean Gov't to Impose Income Taxes on Virtual Currency | BusinessKorea

Friday, December 15, 2017

The National Tax Service (NTS) has decided to push for the plan to impose an income tax and transfer income tax on virtual currencies.
The National Tax Service (NTS) has decided to push for the plan to impose an income tax and transfer income tax on virtual currencies.
Seoul, Korea
6 December 2017 - 10:00am
Yoon Yung Sil

There have been arguments that the government should set up the tax bases on virtual currencies, including Bitcoin, and come up with the systematic countermeasures on an act of tax avoidance using virtual currencies. In this regard, the National Tax Service (NTS) has decided to push for the plan to impose an income tax and transfer income tax on virtual currencies.

At the 2017 National Tax Administration Forum hosted by the National Tax Administration Reform Committee and the Korea Institute of Public Finance and sponsored by the NTS on December 5, Kim Byung-il, a professor of the economics and taxation department at Kangnam University, said, “There are no unified tax bases on cyber money by country and there are various taxation issues as the legal characteristics determine whether or how much to impose taxes like a value added tax. 

He said, “After examining thoroughly the legal characteristics of virtual currencies and related taxation trends in other countries, the government needs to specifically set up a detailed tax standard and introduce the exchange registration system and identification system in order to prevent tax evasion.”

Currently, major countries, such as the United States, the United Kingdom, Australia and Germany, accept virtual money as assets so they levy an income tax or a transfer income tax when income occurs. However, countries, except for some like Germany and Singapore, tend to exempt a value added tax as they recognize its “characteristics of currency and payment method.”

An official from the NTS said, “The basic principle is to tax the income. It is important to collect detailed history data like who made transactions and how in a bid to impose taxes. To this end, we are considering the improvement in systems.” It means that the NTS will make the submission of business transactions compulsory and it is the previous step of taxation.

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