Korean blockchain association calls for push back on crypto tax law
The association is concerned that firms will be hard-pressed to fulfill their requirements on time
The Korea Blockchain Association (KBA) is calling for a two-year delay on the implementation of the national government’s new 20% crypto trading tax plan.
News1 Korea, a media outlet, reported that the KBA asked regulators to postpone the South Korean Government’s implementation of the new tax strategy until January 2023.
While the KBA does not explicitly state it is against the 20% tax rate, it does argue that the crypto exchanges and companies in the industry need a “reasonable period” to prepare for the Income Tax Act.
One reason that the KBA put forth a request for the delay is due to the short window between regulations that apply to the old tax scheme, and the start of the new one. Crypto exchanges have until the end of September 2021 to report on trades that are falling under the previous tax code.
However, the KBA believes that the implementation of the revised code, which Korea’s Ministry of Economy and Finance has set to be enforced starting on October 1, 2021, would make it difficult to comply with the new regulations in what could be less than 24 hours.
Oh Gap-soo, the Chairman of the Korea Blockchain Association, has implied that since this marks the first time that the government has gotten involved in the taxation of digital assets, a temporary suspension of the tax code may be called for. The regulators may not immediately be ready to accept reports from crypto firms, which has led to uncertainty as to whether they can continue to operate in October.
“The industry is having a great deal of difficulty in preparing for taxation because it is not equipped with a tax infrastructure in a situation where it is uncertain whether or not the business will continue ahead of the enforcement of the Special Payment Law. It is necessary to provide a reasonable minimum period of preparation so that it can contribute to the national economy and to secure tax revenue in the long term,” he said.
The new tax plan mandates that any gains made from virtual currencies and intangible assets are to be classified as taxable income, which is calculated on an annual basis. Any income from virtual assets that fall below $2,000 per year do not meet the minimum threshold, and will not be taxed as a result. Any income above the threshold will be taxed at a set rate of 20%.