The Korea National Tax Service (NTS) has decided to implement a plan to impose an income tax and transfer tax on virtual currencies, including Bitcoin, and has come up with systematic countermeasures for acts of tax avoidance related to virtual currencies.
At the 2017 National Tax Administration Forum hosted by the National Tax Administration Reform Committee and the Korea Institute of Public Finance, Professor Kim Byung-il, a professor of the economics and taxation department at Kangnam University said, “There are no unified tax bases on cyber money by country and there are various taxation issues as the legal characteristics determine whether or how much to impose taxes like a value added tax.
Professor Kim also said, “After thoroughly examining the legal characteristics of virtual currencies and related taxation trends in other countries, the government needs to set up a detailed tax standard and introduce the exchange registration system and identification system in order to prevent tax evasion.”
Major countries, such as Australia, Germany, the United Kingdom and the United States accept virtual money as assets so they levy income taxes and transfer income taxes when income occurs. However, other countries including Germany and Singapore exempt a value added tax on crypto currencies as they recognize its “characteristics of currency and payment method.”
Officials from many countries are also trying how to determine losses from Bitcoin and other crypto currency investments should be handled. Should losses be carried forward or deducted for only the investment term?
An official from the NTS said, “The basic principle is to tax the income and 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.” Currently the NTS is expected to make the submission of all crypto currency business transactions compulsory and is expecting to start generating tax revenue from crypto currency investors.