The government officials of South Korea has declared a new tax scheme for cryptocurrency that aims at the holdings of overseas digital assets. National Tax Service (NTS) states that from 2022 the citizens possessing accounts for the exchange of foreign cryptocurrency will be held responsible for reporting the balance holdings crossing the limit of 500 million won ($445,900).
This law will be implemented from 1st January 2022, but the reporting of the tax will start from June 2023. Any incompetency in reporting the correct crypto holdings will result in 10-20% of the total unreported amount as a fine. The government’s prime concern, by implementing these laws, is the South Korean crypto traders who exchange their local currency into digital ones to circumvent their accountability of tax.
Moreover, the officials have the warrant to launch criminal proceedings against any concealed amount over 5 billion won ($4.47 million). Previously, these regulations spanned overseas tax deposits, bonds, stocks, funds, insurance products, and derivatives. The FSC (Financial Services Commission) of South Korea has previously given orders to its authorities, involved in the policymaking regarding cryptocurrency, to reveal their crypto assets. The FSC officials developing policies for cryptocurrency and others who are responsible for monitoring as well as the analysis of the crypto transactions, under suspicion, will come under the jurisdiction of these newly constructed digital currency laws.
Despite the crypto public revolt in Korea, new laws for tax have been in action, and the first proposal for this tax was resolute at the beginning of this year. Recently, the authorities have declared that from the start of next year, the crypto asset transfers without any sale will be considered under the category of lawful inheritance and gift tax equal to 50%.
Hong Nam-ki, the finance minister of Korea, has disclosed that cryptocurrencies cannot come under the traditional currency as they include more profit. He revealed that the implementation of tax could not be resisted after the conversion of virtual currency into the central benefits. Keeping this in view, the crypto earnings can be termed under the classification of miscellaneous income.
After the declaration of South Korea’s tax regulation for cryptocurrency, the other authorities are also stepping towards their stance regarding digital assets. For instance, an announcement for a crackdown against cryptocurrencies, considering them as a threat to economic stability, has been delivered by China.