South Korea plans to impose taxes on cryptocurrencies

South Korea announced that the country's National Tax Service will be working to impose a new framework focused on enforcing taxes on cryptocurrencies. The National Tax Service is South Korea's agency in charge with collecting internal taxes.

The tax authority will be implementing a plan under which it will impose an income tax and a transfer income tax on all cryptocurrencies, including bitcoin. In order to discuss with specialists about this topic, local media reported that the National Tax Service sponsored the 2017 National Tax Administration Forum. At the event, one of the topics was how to impose such taxes.

Authorities are yet to determine the legal status of cryptocurrencies

One of the guests, a professor at the Kangnam University, specialized in economics and taxation, stated that there are still some issues that the authorities will have to first decide upon. One of these issues is the legal classification of cryptocurrencies. According to this guest, this is a must in order to "determine whether and how much to impose taxes like a value-added tax."

Speakers at the event also called on authorities to determine what cryptocurrencies really are in terms of classification, as well as to examine their legal status and taxation system in other countries. However, the speakers at the forum believed that authorities have the duty to introduce a cryptocurrency exchange registration and identification system that can help them prevent tax evasion.

At the same time, the National Tax Service is looking to improve its tax filing systems to be able to include a provision on the obligation to submit cryptocurrency transactions. The South Korean tax service explained:

“The basic principle is to tax the income. It is important to collect detailed history data like who made transactions and how in a bid to impose taxes. To this end, we are considering the improvement in systems.”

This is not the first time when the financial authority of South Korea makes it clear that it is interested in introducing some regulations to the way the cryptocurrency market and cryptocurrency exchanges are functioning. Last week, the regulator said that it was close in finishing a draft for its regulatory proposal.