South Korea’s New Crypto Tax Code Will Enter Into Force on January 1, 2022
The ruling party plans to postpone the adoption of cryptocurrency tax laws, but the finance minister is unwilling to do so.
South Korea’s Minister of Strategy and Finance Hon Nam-Ki pledged that the cryptocurrency tax code will enter into force on January 1, 2022, despite attempts by the Majority Democratic Party to push that date to 2023.
Under the new tax law, from January 1, 2022, there will be a 20% tax on income generated from cryptocurrency transactions in excess of 2.5 million won ($2,100).
Democratic Party spokeswoman Noh Woong-rae said it still intends to postpone the adoption of the cryptocurrency tax law until the end of October. But it is opposed by the finance minister, who has enormous political influence in South Korea, which he earned earlier as the country’s prime minister.
The ruling party opposes the bill because the government does not have adequate infrastructure to calculate and collect taxes on cryptocurrency. For now, the National Revenue Service (NTS) plans to rely on crypto exchanges to report user transaction data for tax purposes.
To enable exchanges to collect this data securely, the government has mandated them to undergo Information Security Management System (ISMS) certification and partner with a local bank for bank accounts with real names for each individual user. These requirements, stipulated by the amendment to the Special Reporting Law, will lead to the closure of more than 40 cryptocurrency exchanges across the country by September 24.