South Korea considering imposing 20% tax on cryptocurrencies

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SEJONG (Jan 20): South Korea's finance ministry has been considering imposing a 20 percent tax on income from cryptocurrency transactions, reported Yonhap News Agency, citing officials on  Monday.

The Ministry of Economy and Finance has recently ordered its office of income tax to review a taxation plan for cryptocurrencies, according to officials. Previously, the ministry's office of property tax had reviewed the plan.

The move raised speculation that the government may categorise gains from cryptocurrency trading as other income, not capital gains.

A government official, who spoke on the condition of anonymity, said the finance ministry has not finalised its plan to tax cryptocurrencies.

But, there is a possibility that the government may impose a 20 per cent tax on cryptocurrencies, the official said.

Currently, other income includes gains resulting from lectures, lottery purchases and prizes.

In November last year, South Korea's tax agency imposed 80.3 billion won (US$69.2 million) in withholding tax on Bithumb Korea.

Vidente Co., the largest shareholder of Bithumb Holdings, said in a regulatory filing that it confirmed the decision by the National Tax Service (NTS) on withholding tax of foreign customers.

Bithumb Korea -- South Korea's largest cryptocurrency exchange, operated by Bithumb Holdings -- plans to take legal action against the withholding tax, according to Vidente.

Under the law, an employer paying salary, pension and other income is required to withhold income tax at the time of such payment and to pay it to the government.

The NTS decision means that Bithumb Korea has to pay the withholding tax to the government on behalf of its foreign customers and that Bithumb Korea should receive the money from its overseas clients.