South Korea Prepares Tax Rules for Bitcoin Use

South Korea is preparing a tax for bitcoin use after criptocurrency trading volume soared beyond Kosdaq. Han Seung-hee, the country's National Tax Service commissioner, told lawmakers this weekend that the issue of how to make the best tax for cryptocurrency is being discussed, including the areas of capital gains taxes, VAT, and gift taxes.

Tax for Use of Bitcoin

South Korean lawmakers held a National Tax Service (NTS) hearing meeting in Sejong on 13 October. NTS commissioner Han Seung-hee answers questions about the taxation of cryptocurrency, especially about bitcoin.

He was asked, "Because the daily transaction value of virtual money grows outside the Kosdaq, we must actively address the shift from conventional ordering. What tax plans will be provided? The Commissioner then replied:

I'm still taxing my business income, and I'm discussing whether to impose value-added tax or capital gains taxes in regards to virtual currencies like bitcoins.

According to Han, it is currently discussing the issue of VAT and capital gain tax with the Ministry of Strategy and Finance. In addition, he said that the gift tax will be reviewed as it needs to be completed, the Commissioner indicates that the use of bitcoin may result in the avoidance of the gift tax, therefore assessment methods need to be applied in respect of taxation on the granting of crypto.

Meanwhile, he confirmed that currently they are monitoring the status of [cryptocurrency] transactions and will move forward quickly.

South Korea's Cryptocurrency Regulatory Effort

MPs point out that Japan has classified the digital currency as a general asset or service and treats them as the subject of excise taxes.

Also Read: Japan Becomes the Largest Trading Market in the World

Bitcoin can be used to purchase goods, etc., as well as the profits arising from their use will be subject to income tax "in Japan, the National Tax Authority of Japan explained.

"Gains and losses (gains or losses recognized on the relative basis of foreign currency or foreign currency) arising from the use of bitcoin, as a general rule, except for cases arising in respect of actions which result in various revenues, such as business income, are classified as other income. "added Japan's national tax agency.

Han also mentioned that the United States is actively responding to taxation of virtual money as an asset and the benefits of their transactions are taxed. "We must be proactive like the United States and Japan," he said.

South Korea has been working on their regulatory framework for digital currency. In August, the "Bitcoin Regulation Act" was filed by Park Yong-jin parliamentarian but no action was taken on the matter.

The regulator then meets in early September to discuss how to deal with digital currencies. They come with several actions such as making cryptocurrency exchanges doing due diligence and implementing a more rigorous verification process. In addition, the ICT Department of Science and Communication and the Korea Communications Commission announced that they will conduct direct checks on cryptocurrencies service providers including bitcoin exchange. Then, at the end of last month, the government announced that all initial coin offerings (ICO) were banned in South Korea.