The South Korean government has announced a new set of tax law amendments. Under this proposal, bitcoin exchanges will no longer be eligible for income and corporate tax deductions currently enjoyed by small and medium-sized businesses. The regulators have also been considering imposing capital gains tax on the sale of cryptocurrencies.
Also read: Yahoo! Japan Confirms Entrance Into the Crypto Space
Stripping Away Tax Benefits
The South Korean government has announced its proposed Revised Tax Law 2018. In the official statement published Monday, the government wrote, “from next year, virtual currency handling businesses will be excluded from the industries eligible for the tax reduction for SMEs [small and medium-sized enterprises].”
The South Korean government announcing 2018 tax amendments.
News1 explained that crypto exchanges “have been considered as venture companies or small and medium-sized businesses for tax purposes until now,” allowing them to benefit from considerable income tax deduction. Citing other favorable tax treatments such as depreciation of assets acquired during the first four years, the publication elaborated:
Under the current tax exemption rules, income tax and corporation tax are reduced by 50% to 100% for five years for business startups, SMEs and venture companies.
Crypto Exchanges to Pay Higher Taxes
According to the news outlet, the government has decided to exclude crypto exchanges from the list of entities eligible for SME tax deduction “because the cryptocurrency trading business lacks the effect of creating added value.” The revised tax law will be submitted to the National Assembly and, if passed, will go into effect next year.
Crypto exchanges are currently liable to pay corporation tax of up to 22%, Seoul Finance described, adding that “considering that virtual currency exchanges earned huge amounts of money in the last year and earlier this year,
