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20% tax on Cryptocurrency in South Korea to reduce illegal projects

20% tax on Cryptocurrency in South Korea to reduce illegal projects

In recent years, South Korea had a profitable crypto market, featured by the “kimchi premium,” a prominent bitcoin market indicator. The kimchi premium represents the contrast between bitcoins price on South Korean bitcoins and the going rate on other worldwide exchange venues. The market variance results from South Korea’s capital controls and commands limiting foreign investors from trading on domestic exchanges.

However, Koo Yun-Cheol, chief of government policy coordination under the Prime Minister’s office, declared that South Korea plans to inflict a 20 percent income tax on capital gains from cryptocurrency after the vice-ministerial interagency meeting transactions starting next year.

Profits from digital currency exchanges will be named “miscellaneous income” and should be accounted for when petitioning for general income taxes in May 2023.

The Financial Service Commission (FSC), financial regulator, and The Science Ministry were chosen to handle the promotion and growth of the related blockchain industry and oversee and regulate the virtual asset market.

The reason for tax impose is that authorities aim to stop illegal projects from being funded with digital assets. Last year, South Korea made changes to its anti-money laundering and financial reporting laws to include cryptocurrencies. The government has also said cryptocurrencies bring more danger and are more speculative than other asset classes.

Authorities also plan to regulate cryptocurrency-related business speculators from making transactions using their own companies to limit price manipulation and unlawful activities.

At the time of publication, While Bitcoin is trading at $34,720.31 on Binance, the price of Bitcoin on Bithumb, the Korea-based exchange, is $37,762.78.


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