South Korea has declared that it will impose a 20% tax on cryptocurrency mining activities. This is a move to curb excessive speculation in digital currencies, the government said on Friday. The Ministry of Strategy and Finance and the Ministry of Trade, Industry and Energy issued a joint statement on the government’s plan to reduce the excessive speculation in cryptocurrency trading through a levy on virtual currency mining.
In a move that may further dampen enthusiasm for cryptocurrencies in South Korea, the country’s National Assembly has just passed a bill to impose a 20% tax on miners. The bill is expected to be signed into law by South Korean President Moon Jae-in within the next few weeks. In the wake of the bill’s passage, trading on one of the country’s largest exchanges, Bithumb, has dropped by as much as 45%.
The cryptocurrency industry in South Korea is still facing regulatory challenges, and it seems the dust is far from settling. Miners of cryptocurrencies must now pay taxes, following the same path as traders of digital assets.
to be regulated from 2022
According to a report published by Donga, minors should be responsible for paying taxes by deducting the amount from their income.
Officials at South Korea’s Ministry of Strategy and Finance plan to apply the new rule to those who earn more than $2,220 a year in chips and set a tax rate of 20 percent.
However, regulators have clarified that cryptocurrency miners will be able to deduct electricity from their total taxable income in their tax returns, as it is considered a necessary expense. An official from the Ministry of Strategy and Finance, quoted by Donga, said:
You have to prove how much virtual currency you gained by putting your computer in a certain place and how many electricity bills resulted from that.
Transaction costs on total income are also taken into account for tax purposes. In addition, miners of digital assets in the country are required to file tax returns in May each year indicating the value of virtual currencies mined in the previous fiscal year, the report said.
The new tax scheme could take effect from January next year.
Is taxation of crypto-currencies becoming a hot topic for the government?
South Korea is tightening its stance by imposing taxes on all crypto currency related activities. As Bitcoin.com News reported earlier this year, the government will impose a 20% tax on profits from virtual currency trading starting in 2022.
But financial regulators are also actively monitoring and identifying tax evaders who have not reported possession of cryptocurrencies on their tax returns.
For example, the Seoul city government recently seized $25 million worth of digital assets from hundreds of investors allegedly guilty of tax crimes.
This combination is being undertaken by some political parties to attract young voters to the upcoming presidential elections, as these measures have caused a negative reaction among this demographic in South Korea.
What do you think about the tax on cryptocurrency miners in South Korea? Let us know your comments in the section below.
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