Korean Heavy Cryptocurrency Tax Terrifies The Digital Currency Market

The Ministry of Strategy and Finance in South Korea announced to impose tax on cryptocurrency exchange, including a 22 percent income tax in addition to a 2.4 percent local income tax. Consequently, this will give rise to a tremendous amount of tax liability to the digital currency exchanges.

Enhanced Transparency and Anti-Money Laundry

The digital currency taxation is the follow-up of the anti-money laundering investigation into six preceding banks in the country, which revealed a dramatical swift upward trend in commissions from cryptocurrency exchange accounts. Alongside the tax measure, it will be mandatory for the cryptocurrency exchanges to release users’ transaction data with banks to the tax authorities for tax collection, and banks have to introduce this system simultaneously by February, according to a finance ministry official. In addition, the use of anonymous virtual accounts as well as new virtual accounts have been prohibited, with juveniles and foreign traders being banned from exchanges transactions.

Huge Tax: A Drop in the Alleged Bitcoin Tax Trend

This proposed tax rate on virtual currency exchange is of the same level as its domestic corporate income tax rate for companies with annual income over 20 billion won ($18.7 million), and it could trigger tax liability equal to the amount of $56million to Bithumb, the biggest exchange in the country, based on the company’s latest financial data released. But South Korea is not the only one to target cryptocurrency transactions. Early this month, Slovakia also indicated its plan on digital platform tax and virtual currency.

Sources: Business Korea, COINTELEGRAPH, CoinJournal

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