South Korean Government Proposes Tough New 22% Tax on Crypto Trading

The South Korean government has proposed obliging crypto investors to pay more than a fifth of their profits to the state.

• The Ministry of Economy and Finance tabled a proposal Wednesday to introduce a 22% tax – including the 2% local income tax – on crypto trading profits above 2.5 million KRW (~$2,000).
• If approved by Korea's National Assembly, the tax rule will come into force in October 2021.
• The new tax rule will also apply to non-residents and foreign companies who trade on Korean exchanges.
• The news was originally reported by CoinDesk Korea.
• Traders will be obliged to keep accurate records of their crypto activity and file with the National Tax Service at the end of the tax year on May 31.
• Profits will be based on the difference in the asset's won price at the time of acquisition and time of sale – if the trader doesn't know the acquisition price, it will be assumed to be 0 won.
• The government says the new tax rule is needed as many other countries have also introduced their own regimes for cryptocurrencies.
• Cryptocurrency trading profits in the U.S. count as capital gains, where individuals can pay up to 25% in tax.

See also: South Korean Government Turns to Blockchain Tech to More Securely Store Clinical Diabetes Data