Cryptocurrency transactions are still tax-free in South Korea due to the lack of tax regulations. Under current law, South Korean citizens are not required to pay taxes to government agencies regardless of how much won they earn from cryptocurrencies. To address this issue, South Korean regulators have begun setting a time frame for cryptocurrency tax laws.
Cryptocurrency transactions in South Korea still not subject to tax
According to South Korean media Money Today, a South Korean lawyer revealed that he earned about 30 million won in bitcoin and ether investments last year, but he did not pay any taxes on these virtual currency investments. The media quoted the lawyer as saying:
"Even if you earn hundreds of thousands of won, or even hundreds of millions of won in virtual currency investments, you are not obliged to pay taxes."
Meanwhile, if stocks are sold in South Korea, listed securities are subject to a 0.3% sales tax and unlisted securities are subject to a 0.5% sales tax. If you are a "major shareholder", you are also subject to capital gains tax, and unlisted shares are also subject to capital gains tax.
South Korean cryptocurrency taxation regulatory time frame
To rectify this situation, the South Korean tax department specially set virtual currency tax standards at the first National Tax Administration Reform Committee in 2018. In addition, according to the 2018 Economic Policy Direction released by the Ministry of Strategy and Finance of South Korea, a timetable for the cryptocurrency tax plan is expected to be set in the first half of this year. According to Money Today:
“If the cryptocurrency tax plan is included in the tax law amendment in August this year, it means that South Korea will pass the tax bill in the first half of this year, and the virtual currency tax will be implemented next year.”
Recently, some media reports that South Korea's virtual currency tax law will be introduced this June, but the country's Ministry of Strategy and Finance issued a statement to clarify, and called these media reports "untrue", they said:
“The virtual currency tax working group will consider various virtual currency taxation issues, and we are currently analyzing tax data. We have not set a specific time frame, but we are considering introducing a virtual currency tax in the first half of this year.”
It is reported that cryptocurrency exchanges will also be taxed, but according to officials of the Ministry of Strategy and Finance of South Korea, they have not yet determined the specific tax rate and are negotiating with the South Korean tax department.