South Korea Announces 20% Tax on Crypto Profits

[BTC Future 3946]

 

 

South Korea reportedly imposed a 20% tax on cryptocurrency trading profits after an amendment of their tax law was announced today. The limit is set at $2000 (2,5 million Won). Traders with profits more than this amount will be taxed from October 1st, 2021. Any profits less than $2000 won't be charged.

 

According to the same reports, the tax applies to everyone trading on South Korean exchanges, even if they are not Korean nationals or not based in Korea. The exchanges will deduct the tax from trading transactions that end with profit and pay the amount to the Korean tax services.

 

South Korea has already recognized Bitcoin and other digital currencies as a form of money but with this move, they create a legal framework to tax cryptocurrency trading in parallel with the US and other countries legislation. 

 

A 20% taxation is extreme and can result in less trading volumes from the South Korean Exchanges. The only positive I see from this decision is that the new tax law will be activated after 14 months, so the effect in Korean trading volumes won't be immediate. The news was met without any major price changes for Bitcoin and other cryptocurrencies but certainly, this is not a crypto favorable regulation coming from one of the world's major economies. In the past crypto taxation in the US caused many traders to pay more than they earned and reduced trading and interest in cryptocurrencies.

Meanwhile, the Korean government decided to reduce the Stock Exchange transaction fees from 0,25% to 0,15% in 2023 which will favor Korean company stocks.

Edited July 22, 2020 by BTC Future

[Whited35 15285]

11 minutes ago, BTC Future said:

According to the same reports, the tax applies to everyone trading on South Korean exchanges, even if they are not Korean nationals or not based in Korea. The exchanges will deduct the tax from trading transactions that end with profit and pay the amount to the Korean tax services.

@BTC Future Got surprised to read this quoted line! 20% taxation for crypto traders who use Korean exchange ? Bithumb,Coinone, Upbit, etc were my some of the best Korea based cryptocurrency exchange sites but now, I have to think twice before using them for the currency exchange purposes. It would be better if Korean government has decided to bound by this rule just for Korean nationals.

Edited July 22, 2020 by Whited35

[BTC Future 3946]

19 hours ago, Whited35 said:

@BTC Future Got surprised to read this quoted line! 20% taxation for crypto traders who use Korean exchange ? Bithumb,Coinone, Upbit, etc were my some of the best Korea based cryptocurrency exchange sites but now, I have to think twice before using them for the currency exchange purposes. It would be better if Korean government has decided to bound by this rule just for Korean nationals.

They will be deducting the taxes out of your profitable trades (above 2000 USD though). Koreans will certainly not like this a lot. I guess that the law will be extended for Korean nationals using exchanges outside of the country as well as otherwise Koreans will flock to Coinbase and Binance and abandon their own exchanges. At least the date is not set for this October but for next year so it didn't affect price.

[malik6314193 5449]

In one way it is good news because now South Korea officially accept the crypto currencies and crypto trading and but it is also a bad news for their users that now they have to pay 20% tax which is too much. 

[Mehar446 280]

All the countries that are trying to be tax smart like the USA are  now enforcing a lot of taxes. They are denying the realities that the investors are afraid of such things. They just want to fill their pockets.

[Moaz 7239]

I think this is a clear recognition by South Korea of legally encrypted currencies and this is a positive thing, but impose a 20% tax on crypto profits is a high tax in my opinion and it will negatively affect traders in cryptocurrencies in South Korea

[Raqeebzy 6456]

On 7/22/2020 at 11:46 AM, BTC Future said:

According to the same reports, the tax applies to everyone trading on South Korean exchanges, even if they are not Korean nationals or not based in Korea. The exchanges will deduct the tax from trading transactions that end with profit and pay the amount to the Korean tax services.

Seriously, this is one of the foolish move I have seen. 20% is high but I am not too bothered by it if it's only for Korean Nationals, why on earth would they include all other customers!?. Well, I am not a customer of almost all the Korean based exchanges, I used either Binance, Yobit or Coinbase sometimes; I am just concerned for the customers and the whole Crypto community because seeing this, expect more countries to follow on the same path.

[estee369 489]

On 7/22/2020 at 4:46 PM, BTC Future said:

 

 

South Korea reportedly imposed a 20% tax on cryptocurrency trading profits after an amendment of their tax law was announced today. The limit is set at $2000 (2,5 million Won). Traders with profits more than this amount will be taxed from October 1st, 2021. Any profits less than $2000 won't be charged.

 

According to the same reports, the tax applies to everyone trading on South Korean exchanges, even if they are not Korean nationals or not based in Korea. The exchanges will deduct the tax from trading transactions that end with profit and pay the amount to the Korean tax services.

 

South Korea has already recognized Bitcoin and other digital currencies as a form of money but with this move, they create a legal framework to tax cryptocurrency trading in parallel with the US and other countries legislation. 

 

A 20% taxation is extreme and can result in less trading volumes from the South Korean Exchanges. The only positive I see from this decision is that the new tax law will be activated after 14 months, so the effect in Korean trading volumes won't be immediate. The news was met without any major price changes for Bitcoin and other cryptocurrencies but certainly, this is not a crypto favorable regulation coming from one of the world's major economies. In the past crypto taxation in the US caused many traders to pay more than they earned and reduced trading and interest in cryptocurrencies.

Meanwhile, the Korean government decided to reduce the Stock Exchange transaction fees from 0,25% to 0,15% in 2023 which will favor Korean company stocks.

It shows that south korea is recognizing crypto as a legal assets. But 20% is a big % and it will discourage south korean to use crypto for payments.

[gourav789 2834]

@Moaz I also think that 20% tax is really high , this isn't possible that all times we received profit sometime there Will be loss also .

hopefully tax per percentage is equal to normal tax , otherwise it's side effects we see on traders .

[TheRaed 1247]

This is smart behavior from the Korean government but it will be harmful for traders in the cryptocurrency world
Because sooner or later it will force the world to recognize cryptocurrencies

[rekter 8129]

This will probably happen in other countries too. High taxation i mean. It's a way to fight the cryptos and similarly acting like accepting them. Taxation will probably get higher in the future before fiat lose this currency war.

[Quanideola 39]

South Korea is always harsh on cryptocurrencies. They used to have policies to close exchanges to limit the development of this market. When the government places a crypto tax of 20%, many people will think when making money with it.

[Honny143 13612]

In my opinion its really good step taken by Korean government, because so many big investors earn Hugh money in crypto and didn't pay any income tax for their money, now Korean government regulated crypto currency and take 20% tax when any one earn 2000$ in trading, and this implement help their economy increase and I think other countries also follows Korean footstep and increase their economy, 

[BTC Future 3946]

On 7/27/2020 at 3:22 PM, Honny143 said:

In my opinion its really good step taken by Korean government

It is a good step for their government though, but I don't see it being good for cryptocurrencies. Certainly other countries will be thinking of taking similar steps. It doesn't affect small trades but the volumes coming from people living in Korea will probably shrink. 

I've seen something similar in the past with online gambling. There are countries that enforced a profit fee and online gambling was abandoned because of this. Of course this measure did help their population and I am 100% against online gambling. Still the effect on that market was clear in these countries.

Edited July 31, 2020 by BTC Future

[Captain Karim 0]

Well, it seems like a fair decision, and it liked me, the Korean government is behaving wisely in its dealings with cryptocurrencies, it does not want to deal in the black market, and at the same time the 20% tax seems reasonable, especially since it will not pay it unless it exceeds $ 2000, Other countries should learn from the Korean experience in regulating cryptocurrencies.

[TimopheyKa 3900]

Yes, I've heard about it! I think this is a good solution to create a more constructive system, that is, they do not restrict the user in using cryptocurrency , and also do not close it in any way , but at the same time, they create a balance so that there is at least some Commission. But it's up to you to decide whether to block it, or Commission and stability. I think so!

[Shaza Ahmad 1682]

I think that South Korea’s move towards legalizing cryptocurrencies and imposing taxes is completely correct, and many countries will find that Korea has preceded them. Therefore, they will seriously begin to study taxing cryptocurrencies and benefit from the Korean and Russian experience in this field as well.

[SuperCrypto 7193]

This tax code is supposed to take effect in South Korea from October 2021. The ministry has now terminated its classification of crypto gains as other income for tax purposes. The decision to tax cryptocurrencies on capital gains could slow the emerging market for technology.

[Sykkuno 2887]

I have read there are efforts by some south korean investment firms to block this or delay the taxation of profits from crypto trading. It is a big tax and is not helping crypto in korea so maybe there will be some changes to this law in the coming months.

[bogdanoff 3173]

So even if we trade in Korean exchanges but we are not living there we have to pay this tax? There are many traders that do this and would move to other exchanges and not use Bithumb or Upbit for their trades.

[Cryptic 0]

I think it is good in a way that the South Korea legalized the use of crypto in their country since they impose a tax on it. But in the side of traders or any use of crypto, it would be a bad thing, because in the first place the reason why they enter cryptoworld or chose it is because no single authority has control over it and definitely for tax exemption. 

[Mella 3680]

I am read about it in an early post that it was about to happen and the south Korean are not stopped but made this tax that is the big one like in other country as the England and the Israel. I am not like the taxed and I am to move if I was a trader in Korean and just try the yobit exchange to let my bictoin there and whales in Korea must think about it.

[Zeshan Khalid 2577]

This seems a bad step to some people but intact it is a better step because it will make the government to make the crypto forum more secure and safe from scams

[khan22 3478]

South Korea i the great country and soon they announce that they allow the crypto market in their country and just they apply some fee on it and after some time the other countries will also allow the crypto market to apply just some fee on the market.

[Projectcrypto 4382]

Fixing the tax to traders in any country is not a bad idea because the government will use it as a source of revenue which they will use to help some projects in the nation but the major problem here is that the amount is too much because we have small traders who this 20% will really affect and I hope they look into this situation to reduce the % to at least 5%.