SEOUL, April 27 (Yonhap) — South Korea will levy taxes on capital gains from cryptocurrencies next year as scheduled despite growing calls by investors to postpone the taxation, the finance minister said Tuesday.
The government plans to impose a 20 percent tax on capital gains from transactions of virtual assets starting next year.
Amid a bull run, investors of bitcoin and other cryptocurrencies have cried foul over the plan, claiming that authorities should apply the same taxation standards as those imposed on stock transactions.
Starting in 2023, stock and bonds investors should pay taxes on capital gains exceeding 50 million won (US$45,000).
Finance Minister Hong Nam-ki said the government plans to levy a tax on profits from trading virtual assets as scheduled.
“When capital gains are generated from transactions of virtual assets, we cannot help imposing the tax to promote taxation equality,” Hong told reporters.
Under Korean tax codes, the country levies taxes on profits from intangible assets, including trademark rights. Crypto assets are categorized as intangible assets or inventory under global accounting rules.
Hong reiterated that cryptocurrencies are virtual assets that have no intrinsic value.
“Crypto assets are exposed to high price fluctuations and investment risks. Investors should be aware that they could suffer extremely high damage, compared with other investment assets,” he said.
South Korea’s financial authorities launched a sweeping crackdown on any illegality involving cryptocurrencies, such as money laundering, amid skyrocketing prices of virtual money.
Investors have been heavily buying virtual currency as they see it as a lucrative asset amid the new coronavirus outbreak, while the stock market remains dull.
The price of bitcoin declined to 64 million won per unit in recent trading after topping the 80 million won mark here for the first time in mid-April.
Daily transactions of cryptocurrencies on 14 local exchanges were valued at $21.6 billion, according to the virtual asset info website CoinMarketCap.
This was heavier than the average daily turnover of 19.1 trillion won in March of Korean stocks by retail investors on the main and secondary stock markets.