- South Korean finance minister Hong Nam-ki has declared the country’s proposed crypto tax rules will be enforced in 2022.
- The country will introduce a 20% tax on personal crypto income worth 2.5 million South Korean won or more.
- NFTs have not been be labeled as “virtual assets” and remain tax free.
South Korea will begin its crypto tax regime in 2022. However, NFT taxation rules are yet to be formulated.
South Korea Introduces 20% Crypto Income Tax
South Korea is excluding NFTs from its crypto tax rules.
On Wednesday, South Korean finance minister Hong Nam-ki declared that the country’s previously proposed crypto tax rules would be enforced from next year.
By announcing the tax mandate, South Korea’s Ministry of Economy and Finance has rejected a popular petition that called on the government to delay crypto taxes.
The new regulations, commencing Jan. 1, 2022, state that all personal income above 2.5 million South Korean won (about $2,100) generated by “virtual assets” will be taxed at 20%. The minister noted that the South Korean crypto sector has grown to the size of its stock market, hence tax laws should not be delayed.
To enforce tax rules, the country’s Financial Services Commission ruled in July that all crypto exchanges would need to register with the government.
Interestingly, NFTs have been excluded from the mandate, Nam-ki confirmed at the National Assembly. NFTs, otherwise known as non-fungible tokens, have become one of crypto’s most talked-about technologies. They hit the mainstream for the first time this year, with digital artists, musicians, and celebrities rushing to release and collect their own tokenized assets on the blockchain.
NFT sales volume expanded to $10.7 billion in the third quarter of 2021, most of it transacted on Ethereum. A large portion of the sales volume comes from the widespread adoption of digital art and collectibles, as well as play-to-earn games like Axie Infinity.
Despite their growing popularity, NFTs are yet to be categorized as virtual assets in South Korea. The regulators have not decided whether NFTs should be labeled as “virtual assets,” which would make them subject to the same income taxes that apply to transactions on other crypto assets like Bitcoin and Ethereum.
While the absence of laws makes NFTs tax-free for the moment in South Korea, the situation could change in the future. In other countries such as the U.S. and U.K., NFT sales are subject to capital gains tax.
According to a KoreaTimes report, Jeong Eun-bo, Governor of the Financial Supervisory Service (FSS), said that regulations on NFTs could be brought in consultation with other government bodies to close regulatory loopholes.
Regardless of the emerging regulatory environment, cryptocurrencies and NFTs are expected to continue gaining traction in the country.
In fact, besides the country’s retail investors, several top tech firms and venture capitalists including Naver, Kakao, and Samsung have jumped onto the blockchain gaming and NFT bandwagon in recent months. South Korea also has the fifth-largest gaming market in the world. NFTs are popularly used in gaming as they can give players true ownership of in-game items. If NFTs continue to attract mainstream interest, it’s likely the country will see wider adoption of the technology.
The information on or accessed through this website is obtained from independent sources we believe to be accurate and reliable, but Decentral Media, Inc. makes no representation or warranty as to the timeliness, completeness, or accuracy of any information on or accessed through this website. Decentral Media, Inc. is not an investment advisor. We do not give personalized investment advice or other financial advice. The information on this website is subject to change without notice. Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information.
You should never make an investment decision on an ICO, IEO, or other investment based on the information on this website, and you should never interpret or otherwise rely on any of the information on this website as investment advice. We strongly recommend that you consult a licensed investment advisor or other qualified financial professional if you are seeking investment advice on an ICO, IEO, or other investment. We do not accept compensation in any form for analyzing or reporting on any ICO, IEO, cryptocurrency, currency, tokenized sales, securities, or commodities.
South Korea Proposes to Seize Crypto from Tax Evaders
The tax authorities in South Korea have introduced a bill to amend current tax codes and property seizure procedures to allow confiscation of crypto assets held in digital wallets, the…
South Korea Tells Crypto Exchanges to Register or Face Jail
South Korea is cracking down on overseas crypto exchanges. The Financial Services Commission has warned 27 companies to stop serving South Korean nationals without reporting or having licensing norms in…
Efficient Market Hypothesis: Does Crypto Follow?
The Efficient Market Hypothesis (EMH) is a concept in financial economics which states that security prices reflect all the available information about a financial instrument. EMH is one of the…
After Beeple, CryptoPunks Are Coming to Christie’s
After selling Beeple’s “Everydays: The First 5,000 Days” for $69 million, popular auction house, Christie’s will now sell nine rare CryptoPunks in May. Christie’s Continues NFT Mania One of the…