Amid growing opposition to South Korea’s new cryptocurrency tax system, Finance Minister Hong Namki has confirmed that the government will begin taxing capital gains from cryptocurrency trading starting next year.
“This is inevitable, we will have to tax the profits from trading virtual assets,” the minister said in response to a question whether the tax should be postponed until the government puts in place proper oversight on the industry, Reuters reported on Tuesday.
Hong stressed that cryptocurrencies such as Bitcoin (BTC) will be taxed as “intangible assets”, noting that treating them as currencies is “a misunderstanding.” The minister also warned that cryptocurrency trading is vulnerable to new forms of illegal collection and fraud, and urged investors to exercise caution when making investment decisions.
As previously reported, South Korean lawmakers initially discussed a 20% capital gain from trading cryptocurrencies in July 2020 and suggested that from October 2020, any annual profit exceeding 2.5 million won ($ 2,200) will be taxed. In 2020, the South Korean government officially postponed the new tax regime on cryptocurrency gains until 2022, and has faced much criticism and rejected the proposed cryptocurrency tax from local lobbyists on cryptocurrencies.
In fact, South Korean Prime Minister Kim Bo-kyum recently pledged to look into the cryptocurrency system to ensure traders are treated fairly in accordance with the law.