Finance Ministry says cryptocurrency taxation is not yet possible through current law
The Ministry of Economy and Finance said that cytpocurrency investors cannot currently be taxed under the current law as cryptocurrency transactions are not specified. The ministry added it is considering various ways to tax crypto assets based on international trends. Taxation as income impossible under current law According to Finance Ministry documents shared by Liberty Korea Party Lawmaker Choi Gyo-il, the ministry’s judgment is that gains from cryptocurrency trading are not listed as income under current tax law, therefore such transactions cannot be taxed. Choi is a member of the Strategy and Finance Committee. As imposing income tax is impossible according to the current law, the ministry repeated its previous stance that it would make reforms to enable cryptocurrency taxing in the future. “We are in the process of devising a taxation plan for cryptocurrency, based on actual cases in advanced countries, compatibility with accounting standards and international discussions on money laundering prevention,” it added. “The cryptocurrency industry should be incorporated into regulation so that transaction procedures become more transparent,” said Choi. “As it’s a measure imposing a big tax burden on the public, there should be a clear and specific law reform process that strictly follows the principle of no taxation without law.” Writer’s note: National Tax Service vs. Ministry of Economy and Finance? The ministry hinted on Dec. 8 that next year’s tax law reform would include details on crytpocurrency taxation. But the National Tax Service made an early move in November by categorizing cryptocurrency as miscellaneous income and imposing withholding tax on Korea’s largest crypto exchange, Bithumb. Two government bodies appeared to contradict each other. Even after cryptocurrency tax laws are established in the near future, Bithumb’s case might set a confusing precedent.