Reports on Tuesday 4th December 2018 had it that the South Korean government was planning to implement taxation plans on cryptocurrency. In a statement, the government remarked that it would form a task force consisting of cryptocurrency experts to establish domestic cryptocurrency taxation rules.
“We are planning to come up with a taxation policy for cryptocurrency and initial coin offerings in the country,” remarked Hong Nam-Ki, South Korea’s minister of finance. The recently appointed minister went on to further comment, “A task force consisting of experts from relevant government agencies including the National Tax Service and the private sector will be formed. The team will be tasked with examining overseas examples and carve out an appropriate taxation plan for our country.”
A new concept in the country
The minister acknowledged that cryptocurrency is a new concept, not just in the country but also across the globe, and many people do not understand it. He opined that there is a need for a regulatory framework in the sector to protect investors.
“Cryptocurrency is a new phenomenon across the globe and so there is no internationally agreed regulatory framework,” commented minister Hong. He added, “There are lingering problems in the sector such as overheating and investor protection. It is for these reasons that we ought to be careful and cautious when building a regulatory framework.”
No tax benefits for cryptocurrency startups
The South Korean government also excluded cryptocurrency exchange programs from being termed as startup businesses. This exempts the startups from receiving tax benefits that startups from other sectors enjoy. The minister believes that this exclusion is reflective of the government’s concerns that crypto-exchanges are very vulnerable to illegal acts. The minister went on to add that crypto-exchange is merely a brokerage service and it is very different from Blockchain.
The news has raised eyebrows from crypto-enthusiasts in the state. Many have termed the move as a project meant to stifle digital currency operations in South Korea.