South Korea has announced that it will impose a 20% tax on Bitcoin transactions. The tax in question will take effect from 2022.
The South Korean Ministry of Finance issued a new statement on February 22. It was announced that Bitcoin and cryptocurrency transactions, which have not yet been comprehensively regulated, will be taxed as of January 1, 2022.
According to local news sources, investors who earn 2.5 million won ($ 2,200) and more in a year from cryptocurrency transactions will pay 20% tax. South Korea had previously announced that taxes would be deducted from these transactions.
Bitcoin is classified as a financial asset
South Korea, which previously did not classify Bitcoin as a financial asset, classified Bitcoin as a financial asset, including “other income” before the tax move. Investors have to show their cryptocurrency earnings in the income statement as per the new decree.
Exchange investors will present the breakdown of cryptocurrency revenues to the state on a quarterly and annual basis. Penalties may be applied to those who do not show their earnings from cryptocurrencies in the income statement. The tax will be paid once in May each year.
However, the published tax decree states that taxes may be imposed on cryptocurrencies not listed on South Korea’s local exchanges or transactions made on decentralized exchanges.
Those who objected to the tax started to collect signatures
The cryptocurrency tax announced by South Korea caused domestic investors to react. Investors, united against the new decree published on February 10, collected over 38 thousand signatures. If the collected signatures exceed 200 thousand by the end of March, the state will have to make a statement.