Sad news from South Korea, as Bitcoin is officially not a tax-free hobby or investment anymore. The Ministry of Economy and Finance declared that the income received from trading Bitcoin or other cryptos would start being taxed from January 1st, 2022.
As a result, all traders and investors will have no choice but to pay a 20% tax if their annual income from cryptocurrencies exceeds $2,260 or 2.5 million won.
For example, let’s imagine someone has made 10 million won from Bitcoin.
Since sums up to 2.5 million are exempt, 20% of the rest, which represents 7.5 million won, will be taxed. This means the person would pay 1.5 million won in tax.
The tax will be levied on the net income that won’t include the acquisition value and the commission fee that is being paid to crypto exchanges.
In the case of virtual assets held prior to 2022, the higher value between the original buying price or the market value at the end of this year will be considered the exempted acquisition value.
The decision came as a result of the government recognizing Bitcoin as a financial asset, placing it under the “other income” category.
The profit is to be reported on income statements, and the taxes will have to be paid by May – those who fail to do so may risk a fine.
Obviously, investors didn’t take too kindly to this and a petition against the tax that is posted on the presidential office’s website has already received more than 38,000 signatures in less than two weeks. If by the end of March, the petition hits 200,000 signatures, the Blue House will have to be required to respond.