South-Korean authorities considering taxes on virtual currencies

[OliverChassa]

With cryptocurrencies on the rise, more and more authorities are considering introducing taxes on virtual currencies. The latest one I have been reading about planning to do so are the South Korean ones.

As introduction here, it is worth mentionning that South Korea is actually the world’s No. 3 market in Bitcoin trading, after Japan and the U.S., and the largest exchange market for Ether, Ethereum’s cryptocurrency, accounting for more than 33 percent of its market share. The country is also home to two of the top 15 global digital-currency exchanges (Bithumb and Coinone), both of which have built walk-in centers where investors can conduct transactions in person.

But as in many other countries, South Korean authorities are very cautious about cryptocurrencies. In September, the country’s Financial Services Commission (FSC) ordered a ban on ICOs, while only that month start-ups there managed to raise about $89 million in digital token sales. Unlike China, South Korea has yet to implement its ICO rule and did not make companies return ICO funds. It also continues to let Korea-based investors put money into foreign ICOs and digital-currency exchanges to operate within its borders.
So, in addition to the ICOs ban, the FSC has in mind to introduce a value-added tax, a capital gains tax, or both on trades, with the help of financial authorities.An official decision is expected within the first quarter of 2018. If the plan gets implemented, South Korea will become one of the few countries to tax cryptocurrency-cash exchanges. Among the few countries doing so, so far: Germany and Singapore.
Besides, the FSC has also in mind strengthening the KYC policy by making it compulsory to collect users’ transaction data.

As regulations in every country, South-Koreans will probably find a way in order to avoid heavy taxation if such would apply. There are always other solutions, especially when money is in the game :-)

[1714010080]

1714010080

[sindikat]

I think that more taxation of the cryptocurrency will only lead to the fact that users begin to withdraw their capital from the country. Taxes cannot be collected forcibly. Remember the situation when France raised taxes on the rich. They all began to withdraw capital from the country. Who will benefit from this?

[Don Pedro Dinero]

I think that more taxation of the cryptocurrency will only lead to the fact that users begin to withdraw their capital from the country. Taxes cannot be collected forcibly. Remember the situation when France raised taxes on the rich. They all began to withdraw capital from the country. Who will benefit from this?

I don’t think so. The ones able to withdraw their capital from the country are the very rich one. The vast majority of users will have to pay tax if they trade. I live in a country where we have to pay capital gains tax and what most people do is just to pay tax. I personally hold my bitcoins, so I don’t have to pay yet. But the only way I can avoid paying tax in the future is to become so wealthy that I am able to move to another country, which I think it is very unlikely, even if bitcoin reaches $500.000.

Bear in mind that the only way to cash out large amounts of bitcoin converted into fiat is to make a transfer to your local bank account. In fact, it is the only way if you just want to cash out like more than $10.000. Prepaid anonymous debit cards have a limit of 1.000 € for non-verified users.

[Kingofbitcoin12345]

I have doubts on what purpose this regulation and taxation of one rich country and if what is this totally mean to a South Korean bitcoin users.. It is there country after all and in certainty but that still part of they’re policy and only them can oppose to it.. If this is for the benefits of the economic or the public services for the people then this is a good thing but this is to push investors away from cryptocurrency because of self interest in banking system is another story..

[Netnox]

Everything will depend on the tax rates. I don't think that the South Korean authorities will be stupid enough to enforce both VAT and capital gains tax at the same time on Bitcoin users. A 1% to 2% flat VAT will be OK with most of the users. And the rate of capital gains in South Korea is 22%, which sounds somewhat reasonable for me.

[soham]

I welcome this news. If South Korean government can provide a proper crypto currency taxing framework to its citizens, means bitcoin will become official in that country. Which will definitely bring a very positive impact on the entire crypto currency market because South Koreans are very active in crypto market and already pointed out in the article that South Koreans are the third largest user of cryptos. SO a major and positive impact will be there in the crypto market. The only area of concern is the percentage of tax and the type of taxes that will be implied. I don't think it will be anything out of the box and will definitely be at per the current taxation rate of the country.

[iamTom123]

I welcome this news. If South Korean government can provide a proper crypto currency taxing framework to its citizens, means bitcoin will become official in that country. Which will definitely bring a very positive impact on the entire crypto currency market because South Koreans are very active in crypto market and already pointed out in the article that South Koreans are the third largest user of cryptos. SO a major and positive impact will be there in the crypto market. The only area of concern is the percentage of tax and the type of taxes that will be implied. I don't think it will be anything out of the box and will definitely be at per the current taxation rate of the country.

That is the better way of looking at things on taxation. When a country is taxing a thing, there would be corresponding framework that recognized such a thing as legal and therefore anybody can be free in involving with that thing being taxed and in this case we are talking about Bitcoin. This is the trade-off we have to accept necessary so that doing business in this country can go on without any legal impediment. We have to realize that any country has the power to taxed its citizens in different transactions and so to avoid being charged with tax evasion we have no choice but to declare and pay. Of course, if there are loopholes in the law we can all exploit then we should take advantage of those as long as they are properly evaluated and approved. In life, death and taxes are certainly two certain things we have no choice but to accept. We are just asking the government to make things fair, square and rational. 

[jseverson]

Taxation has always been inevitable. Governments are always looking for ways to earn money, and Bitcoin basically hands one to them on a silver platter. It sucks, but if it's the price to pay to avoid a ban, then so be it.

It's not all bad either. People who see this move would be more likely to believe that Bitcoin is legitimate and here to stay. Governments are unlikely to waste resources on simple fads, after all. Think about it, implementing capital gains tax on Bitcoin puts it on the same level as stocks, ableit not formally. It's sure to garner a lot of interest from potential investors.

[ralf2018]

Korean exchanges are new and unproven so there is always the possibility of price manipulation.They love to gamble and because it is illegal in most parts of Korea, that makes Crypto trading a more convenient option than going to special gambling zones where it is allowed.Koreans love tech and they also love conformity, so once one person goes all in and starts blogging about it.. many more follow along like lemmings.

[exstasie]

Taxation has always been inevitable. Governments are always looking for ways to earn money, and Bitcoin basically hands one to them on a silver platter. It sucks, but if it's the price to pay to avoid a ban, then so be it.

Is that all we're talking about, though? The government convened an emergency meeting yesterday with the specific goal of "curbing cryptocurrency speculation." Taxation is one deterrent, but it's not a particularly strong one. For example, the IRS released tax guidance on cryptocurrencies years ago, and look at us now, $16k per BTC! If they really wanted to curb speculation, they might do as China did and shut down the exchanges. I imagine that price would take a hit from that.

It's not all bad either. People who see this move would be more likely to believe that Bitcoin is legitimate and here to stay.

The last time the Korean government weighed in, they banned ICOs. I'm a tad concerned that there is more on the menu here than tax regulations. I just hope South Korea doesn't become the new "China bans bitcoin" meme.

[1NV3ST0NM3]

I think that more taxation of the cryptocurrency will only lead to the fact that users begin to withdraw their capital from the country. Taxes cannot be collected forcibly. Remember the situation when France raised taxes on the rich. They all began to withdraw capital from the country. Who will benefit from this?

I don’t think so. The ones able to withdraw their capital from the country are the very rich one. The vast majority of users will have to pay tax if they trade. I live in a country where we have to pay capital gains tax and what most people do is just to pay tax. I personally hold my bitcoins, so I don’t have to pay yet. But the only way I can avoid paying tax in the future is to become so wealthy that I am able to move to another country, which I think it is very unlikely, even if bitcoin reaches $500.000.

Bear in mind that the only way to cash out large amounts of bitcoin converted into fiat is to make a transfer to your local bank account. In fact, it is the only way if you just want to cash out like more than $10.000. Prepaid anonymous debit cards have a limit of 1.000 € for non-verified users.

still quite confusing to me that how will they propose to tax bitcoin earnings? I mean you can tax those people who convert it to fiat but how in the world will you tax those who haven't realized it in fiat. The long term HODLers? They are the ones who are earning the most of the profits. The private keys are anonymous no one can tax a private key saying it belongs to Korea.

[deadsilent]

That won't be a problem at all. If that's the thing that will not not change their mind regarding to legality of Bitcoin there. Why not? Its better to charge tax to Bitcoin than to ban it. That is a messed up situation if that happen. Actually, US decided to do it to. So i don't think it's bad thing to follow US. And i think many countries will do this for sure. They should just atleast lower the tax rate and should be based on how much we earned on a particular year or month. So it wont be hurting small time traders like me.
It is okay to charge to us taxes. As long as it won't affect the relation of Bitcoin and altcoin to a country. That wont be a problem.

[stomachgrowls]

That won't be a problem at all. If that's the thing that will not not change their mind regarding to legality of Bitcoin there. Why not? Its better to charge tax to Bitcoin than to ban it. That is a messed up situation if that happen. Actually, US decided to do it to. So i don't think it's bad thing to follow US. And i think many countries will do this for sure. They should just atleast lower the tax rate and should be based on how much we earned on a particular year or month. So it wont be hurting small time traders like me.
It is okay to charge to us taxes. As long as it won't affect the relation of Bitcoin and altcoin to a country. That wont be a problem.

I would go for the same thought too which I would rather accept that they would really impose taxes rather than on totally banning it. It would be more acceptable and we can able to handle the terms and as being said taxes should really be not high because not all people do have the same capacity on making huge profits on trades.It would really hurt us up trader come to think that theres an exchange fee together with taxes then how much percentage would be left for us?

[Kemarit]

I welcome this news. If South Korean government can provide a proper crypto currency taxing framework to its citizens, means bitcoin will become official in that country. Which will definitely bring a very positive impact on the entire crypto currency market because South Koreans are very active in crypto market and already pointed out in the article that South Koreans are the third largest user of cryptos. SO a major and positive impact will be there in the crypto market. The only area of concern is the percentage of tax and the type of taxes that will be implied. I don't think it will be anything out of the box and will definitely be at per the current taxation rate of the country.

In my view, South Koreans are very much active in the crypto because it hasn't been taxed. However, if the government put and impose tax, then I don't know how Korean bitcoin community will react. So we don't know if this so called tax on crypto's by the South Korean government will point to a good direction regarding South Korean involvement in crypto's. I'm not totally sold out on the positive impact of all this tax framework or regulations.

Taxation has always been inevitable. Governments are always looking for ways to earn money, and Bitcoin basically hands one to them on a silver platter. It sucks, but if it's the price to pay to avoid a ban, then so be it.

Is that all we're talking about, though? The government convened an emergency meeting yesterday with the specific goal of "curbing cryptocurrency speculation." Taxation is one deterrent, but it's not a particularly strong one. For example, the IRS released tax guidance on cryptocurrencies years ago, and look at us now, $16k per BTC! If they really wanted to curb speculation, they might do as China did and shut down the exchanges. I imagine that price would take a hit from that.

It's not all bad either. People who see this move would be more likely to believe that Bitcoin is legitimate and here to stay.

The last time the Korean government weighed in, they banned ICOs. I'm a tad concerned that there is more on the menu here than tax regulations. I just hope South Korea doesn't become the new "China bans bitcoin" meme.

Exactly, We don't know what's the real reason behind all of this South Korean movement on bitcoins lately. I'm also hoping that they are not moving a step backward. We have seen this already. Chinese enjoying bitcoin but when the Chinese government think that its uncontrollable they step in and already we know what happens next.

[ember.suc]

South Korea is banning Bitcoin derivatives, but not Bitcoin itself.The implication is that Bitcoin will become more important in South Korea, and that the prices for Bitcoin will increase rather than drop.As i know ,btc frenzy in South Korea pushes payment premiums to 23%

[biskitop]

If the government imposes a tax on bitcoin, that means the government is already regulating bitcoin. There are 2 important points of this decision:
first, we will be taxed for every transaction
secondly, we no longer need to think about the "banned" as happened in China, because by regulating bitcoin it means the government has received and protected bitcoin.

[Domenc]

Yes, this might happen in the coming days. Just heard that south Korean called emergency meeting regarding cryptocurrency, I think there will soon tax system on virtual currencies. But somehow, I still prefer paying taxes rather than seeing it getting banned. And there is nothing bad if country thinks financially, everyone wants to secure and increase their treasury and government main funds come from taxes. It is their right according to me as taxes at the end are used for citizens benefit only.

[squatter]

South Korea is banning Bitcoin derivatives, but not Bitcoin itself.

My understanding from the report is that they are prohibiting banks/financial institutions from engaging in any cryptocurrency activities (including speculation), as well as foreigners and minors from trading on the exchanges. They are also clamping down on virtual bank accounts, which could arguably be used to evade taxes and AML/KYC regulations.

They already banned margin trading and ICOs a few months back. I'm not sure about derivatives specifically, but since financial institutions are barred from engaging with cryptocurrency, legal derivatives on regulated Korean markets seem to be off the table.

They're definitely not banning bitcoin, and they seem to be taking a softer stance towards exchanges than China.

[jesusvs_dots]

With cryptocurrencies on the rise, more and more authorities are considering introducing taxes on virtual currencies. The latest one I have been reading about planning to do so are the South Korean ones.

As introduction here, it is worth mentionning that South Korea is actually the world’s No. 3 market in Bitcoin trading, after Japan and the U.S., and the largest exchange market for Ether, Ethereum’s cryptocurrency, accounting for more than 33 percent of its market share. The country is also home to two of the top 15 global digital-currency exchanges (Bithumb and Coinone), both of which have built walk-in centers where investors can conduct transactions in person.

But as in many other countries, South Korean authorities are very cautious about cryptocurrencies. In September, the country’s Financial Services Commission (FSC) ordered a ban on ICOs, while only that month start-ups there managed to raise about $89 million in digital token sales. Unlike China, South Korea has yet to implement its ICO rule and did not make companies return ICO funds. It also continues to let Korea-based investors put money into foreign ICOs and digital-currency exchanges to operate within its borders.
So, in addition to the ICOs ban, the FSC has in mind to introduce a value-added tax, a capital gains tax, or both on trades, with the help of financial authorities.An official decision is expected within the first quarter of 2018. If the plan gets implemented, South Korea will become one of the few countries to tax cryptocurrency-cash exchanges. Among the few countries doing so, so far: Germany and Singapore.
Besides, the FSC has also in mind strengthening the KYC policy by making it compulsory to collect users’ transaction data.

As regulations in every country, South-Koreans will probably find a way in order to avoid heavy taxation if such would apply. There are always other solutions, especially when money is in the game :-)

They won't be the first doing it and neither the last, sadly that's what goverments are doing right now, ban bitcoin or start eearning by taking people who is the crypto currency, this make me sick.