Cryptocurrency taxation 20 percent tax starting from 2022
From 2022, all retail investors who earn more than 2.5 million won in a year through cryptocurrencies such as Bitcoin will be taxed at 20 percent. #20 percent of taxation for people who earn more than 2.5 million won through cryptocurrency The Ministry of Finance and Economy on Jan. 6 announced the details about the revised taxation policy of the cryptocurrencies. After having vice ministerial meetings and cabinet meetings, the taxation is scheduled to be promulgated in February. Under the rules, all capital gains made from cryptocurrency transactions will be classified as financial investment gains and will be the subject to the 20 percent taxation starting from next year. Investors whose annual earnings don’t exceed 2.5 million won will be exempt from the tax obligation, but all who earn more than that will face the 20 percent tax. For instance, if a person earned 10 million won through Bitcoin in a year, the person will have to pay 20 percent on 7.5 million won—subtract 2.5 million won from the gain 10 million won. The tax base, the amount on which a tax is applied, depends on the market price of the cryptocurrency. The market price of crytocurrency is decided based on the average price that the virtual asset providers announced publicly. These providers will be selected by the commissioner of National Tax Service of Korea. In case of cryptocurrencies that were owned before Jan. 1 2022, the tax base will be decided based on the market price of Dec. 31 2021. But if the buying price is higher than the market price, the base rate will be set according to the buying price. In the case of cryptocurrencies being transferred, rented by and withdrawn by foreign corporations or people who are not residents of Korea, the virtual asset providers must withhold the 20 percent of gains or 10 percent of transferred cryptocurrencies—whichever is the smaller amount—and pay it as tax. People are obligated to pay the tax once every year in May. Just like the general income tax, taxpayers must file their yearly income. Anyone who doesn’t file their annual income must pay 20 percent additional tax.